Congress, Associated Press, Argue Whether Stimulus Actually Stimulated Anything

The Associated Press published a piece
today that, after putting "economists and statisticians" to work on
analyzing $21 billion in federal stimulus money for transportation,
reached a volatile conclusion:

cityroom_20090914_ahill_85420_Mino_large.png(Photo: WBEZ)

Local unemployment rates rose and fell regardless of how much stimulus
money Washington poured out for transportation, raising questions about
Obama’s argument that more road money would address an "urgent need to
accelerate job growth."

The
very idea of measuring the immediate effects of transportation stimulus
spending on joblessness is highly dubious, for two reasons underscored
by the U.S. DOT’s quickly blogged pushback to the AP story.

Firstly, for all the White House’s talk of "shovel-readiness,"
the need to put transport projects out to bid, sign contracts, and hire
workers means that stimulus dollars take some time to affect broader
local economies. The latest congressional data shows that work has
started on 57 percent, or $19.7 billion, of the stimulus law’s $34.3
billion in road and transit funding.

Ironically, that ripple effect for transport spending could end up helping states, such as Florida, that were slow out of the gate in allocating stimulus money but continue to struggle with high unemployment.

Secondly (despite the best efforts
of some senior Democrats) transportation only accounted for 6 percent
of the stimulus’ $787 billion in total spending. Why expect such a
small slice of the legislation to have a major impact on unemployment
rates? House transport committee chairman Jim Oberstar (D-MN) and his
top lieutenant, Rep. Pete DeFazio (D-OR) today compared the AP’s
assumptions to "saying it is a waste of time to feed a
homeless family because that one act does not cure poverty."

Also from Oberstar and DeFazio’s rebuttal to the AP:

Furthermore,
these statistics do not include indirect and induced jobs in the supply chain,
such as positions that produce construction materials or manufacture
equipment.  The impact of these jobs is not limited to a single state or
local community.  For example, the Virginia Railway Express in Northern
Virginia used Recovery Act funds to purchase 15 locomotives manufactured in
Boise, Idaho.  VRE will begin receiving the new locomotives later this
summer.  While this local decision creates jobs in Virginia, the impact is
also felt in Idaho and throughout the country’s vast supply chain.  When
you include these indirect and induced jobs, the Committee calculates that
total employment from transportation investments under the Recovery Act reaches
over 760,000

Perhaps the most curious of the AP reporters’ rhetorical flourishes was this sentence:

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.

It’s
true that the transportation represents a small sector of the broader
construction industry. But that industry is dominated by home building,
which is still coming down from an unprecedented bubble-bursting.

And
expecting the industry as a whole to benefit from transport-specific
spending that was funneled through state DOTs is rather like expecting
the industry to benefit from more spending on military aircraft; after all, Boeing works on construction as well …

Even
transport reform advocates who found the stimulus bill something of a
letdown emerged today to scratch their heads at the AP’s work. Laura
Barrett, executive director of the Transportation Equity Network, said
in a statement:

In a perfect world, we could spend years constructing a perfectly efficient
economic stimulus program. In the real world, people need jobs today. Most
transportation jobs pay good wages and help build careers that lift families
out of poverty. We need more transportation spending in the new jobs bill
before Congress, not less — especially in the public transportation sector, which
creates nearly twice as many jobs per dollar as road construction does, and helps protect our
environment at the same time.

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