Hope and Fail

‘Shovel ready’ was a load of … well, you know

Remember all the talk from the president last winter about “shovel ready” projects in the $787 billion stimulus package that were supposed to get Americans back to work right away? They were transportation projects that were supposedly ready to go, and were supposedly going to to put a dent in unemployment.

An Associated Press analysis, which the organization had economists from five universities review, shows that the billions in transportation spending included in the stimulus package has had no effect on unemployment.

AP’s analysis, which was reviewed by independent economists at five universities, showed the strategy of pumping transportation money into counties hasn’t affected local unemployment rates so far.

“There seems to me to be very little evidence that it’s making a difference,” said Todd Steen, an economics professor at Hope College in Michigan who reviewed the AP analysis.

And there’s concern about relying on transportation spending a second time.

“My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who also reviewed AP’s analysis.

For the analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department’s monthly unemployment data to assess the effects of road and bridge spending on local unemployment and construction employment. The analysis did not try to measure results of the broader aid that also was in the first stimulus such as tax cuts, unemployment benefits or money for states.

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

“As a policy tool for creating jobs, this doesn’t seem to have much bite,” said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP’s analysis. “In terms of creating jobs, it doesn’t seem like it’s created very many. It may well be employing lots of people but those two things are very different.”

So much for “shovel ready.” Keep all of this in mind as the Senate takes up “Stimulus II,” which the House already passed.

President Obama began talking about “shovel ready” projects before taking office. From a USA Today account of a December 2008 edition of “Meet the Press:”

The president-elect declined to say Sunday how much his economic stimulus plan would cost. Obama called it the largest public-works program since the creation of the interstate highway system in the 1950s.

The plan includes spending on what Obama called “shovel-ready” projects to rebuild roads, make buildings energy efficient, modernize schools and upgrade hospital technology.

He also touted the projects after the stimulus package passed, claiming they would generate 150,000 jobs. From the Chicago Tribune:

President Barack Obama claimed today that 150,000 jobs will be created or saved by the end of next year with the road-building provisions of the $787-billion economic stimulus that he signed.

“We are seeing shovels hit the ground,” Obama said in an appearance this morning at the Department of Transportation.

The number of jobs that will be created or saved by the highway construction program will exceed the number of jobs lost during the past three years by the Big-Three automakers, Ford, Chrysler and General Motors, combined, Obama said.

The Obama administration maintains that the American Recovery and Reinvestment Act will create or save 3.5 million jobs overall by the end of next year.

Of course, the AP is telling Americans what they already know: That the stimulus hasn’t worked as well as promised. Unemployment is still at 10 percent, well beyond the president’s promise of an 8 percent limit once the stimulus was passed.