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August 28th, 2011
 

Stimulus Reality Check

Millions of dollars of taxpayer money were spent in Iowa as a result of the the stimulus bill, and Senator Tom Harkin (D-IA) and Rep. Bruce Braley (D-IA) have recently declared that we need an additional “booster shot” to create jobs.  Yet a recent analysis of government statistics by The Iowa Republican (TIR) reveal that few, if any, jobs were created as a result of the stimulus package.

At a campaign event in Cedar Rapids on Monday with Congressman Braley, Harkin noted sadly that the stimulus bill is winding down and that a “booster shot” would be needed to create more jobs, though, as the Daily Iowan noted, neither Democrat “propose[d] any specific policies.”

This isn’t the first time Harkin has talked about another stimulus package.  In June, The HIll reported that: “Some Democrats, such as Iowa Sen. Tom Harkin, who serves as chairman of the Health, Education, Labor and Pensions Committee, think [a large infrastructure package funded by tax increases] could lower the unemployment rate by as much as two percentage points.”

Last year the Washington Post reported that Harkin “proposed a $23 billion bailout…to help avert layoffs of tens of thousands of teachers and other school personnel in the coming academic year.”  And, judging from Harkin’s own website, he’s a one-man-stimulus package himself—Harkin Announces Over $990,000, Harkin Announces over $3 Million, Harkin Announces Over $2 Million, Harkin Announces Over $6 Million.

But before talking about a second stimulus package, do the government’s own numbers show that the initial $787 billion package worked?  Braley and Harkin claim that the money created 5,000 jobs in Iowa.  Technically, as Iowa’s Newz Liter noted, recovery.gov shows that 4,645 jobs were saved or created.

Iowa’s Newz Liter continues:  “How much did that last round cost us?  From February 17, 2009 to June 30, 2011 the total amount spent in Iowa is $2,180,532,663.  That equals, according to my considerable math cyphering skills, $469,436 per job.”

Unfortunately, a look inside the numbers reveal an even more disturbing picture.  Fox News recently reported that a “federal stimulus grant of nearly $500,000 to grow trees and stimulate the economy in Nevada yielded a whopping 1.72 jobs, according to government statistics.”  Sadly, Iowa can boast statistics far worse than that.

By clicking randomly on recovery.gov’s map of Iowa, TIR was able to come up with the following miscellaneous examples of your taxpayer money at work.

Miscellaneous Examples:

(Table 1)

Recipient Location

Money Awarded

Jobs Saved/Created

Maharishi University $11,736,000 1.2
DNR in Dennison $3,680,482 0.00
DNR in Emmetsburg $862,075 0.00
Albia School District $871,954 0.00
Webster County $12,914,030 2.00
Allamakee County $939,429 0.00
Maple Valley Community School District $2,652,435 0.00
Western Dubuque County School District $1,931,723 0.00
Town of Hartley $1,473,705 0.00
Shelby County $13,866,462 0.00
Plymouth County $3,343,007 0.00
Mt. Pleasant $3,567,908 0.00
Monona County $1,120,301 0.00
Dyersville $1,488,000 0.00
Decatur County $17,255,286 20.26
Town of Leon $5,000,000 0.00

Unfortunately, these numbers just scratch the surface of inefficiency and ineptitude.  Looking at the chart above, it appears that grants in only the single-digits of millions of dollars can’t do the job, you need at least $10 million if not more to save or create a job or two.  So how did those who received the most stimulus money do?

Recovery.gov lists the top 15 Iowa recipients as:

(Table 2)

Recipient

Amount Awarded

1. IOWA DEPT OF TRANSPORTATION $297,120,281
2. UNIVERSITY OF IOWA $107,796,623
3. EXECUTIVE OFFICE OF THE STATE OF IOWA $85,305,864
4. IOWA STATE UNIVERSITY $60,492,308
5. DES MOINES INDEPENDENT SCHOOL DISTRICT $38,162,619
6. AMES CONSTRUCTION, INC. $33,779,641
7. AREA EDUCATION AGENCY 11 (INC) $32,715,009
8. GRAND RIVER MUTUAL TELEPHONE CORPORATION $29,565,170
9, BUCCANEER COMPUTER SYSTEMS & SERVICE, INC. $27,471,136
10. IOWA OFFICE OF ENERGY INDEPENDENCE $24,302,132
11. SOUTHERN IA RURAL WATER ASSOCIATION $22,526,400
12.  CITY OF BELMOND $21,600,000
13. AREA EDUCATIONAL AGENCY 267 $21,511,855
14. IOWA DEPARTMENT OF EDUCATION $20,385,389
15. GRANT WOOD AREA EDUCATION AGENCY $20,049,871

Despite all the talk about transparency, that’s all the information Recovery.gov will give per recipient.  Instead, one has to pull up each individual grant awarded a recipient to see how many jobs that one grant created or saved.  You then have to add up all the jobs created by the various grants to find out the total number of jobs created or saved by a single recipient.

Sounds easy enough, except when recipients like the Iowa Department of Transportation have 12 pages of lists of individual grants awarded to them.  TIR did manage, however, to go through the listings of grants for five recipients and provide the depressing statistics below.

5.  DES MOINES INDEPENDENT SCHOOL DISTRICT

(Table 3)

Award #

Amount Awarded

Jobs Saved/Created

S394A090016 $19,940,886 Not Provided*
S386A090015 $3,344,836 4.90
S388A090016 $15,829,842 33.39
S389A090015 $51,497,022 343.02
07SE0079 $503,996 0.00
Total: $38,162,619 381.31

*This was a sub-grant that was a part of a giant education grant of $386,373,745 to the State of Iowa that is reported to have saved 1,070.66 jobs.  The description of the award reads, in part:

This funding is used by school districts and public institutions of higher education as replacement of lost state aid. Since 80% of most school budgets are personnel, the bulk of this funding is being used to cover staff salaries and benefits. Last quarter, the funding allowed these school entities to maintain over 1,000 jobs.

Remember that recovery.gov showed that 4,645 jobs had been created or saved in Iowa?  Well, roughly 1/4 of them (1,070.66 jobs) were education (union) jobs saved by this one giant grant of $386,373,745.  That’s $360,874.36 spent to save each job that, on average, pays only $42,000.

And the sad part—state aid to education was only cut $255,2 million.  In other words, stimulus money didn’t just make up for cuts in state aid, but threw in an extra $136 million for good measure.   And far from being able to create any new jobs with this excess money, public schools only managed to save 1,070.66 positions.  But you can rest assured that those 1,070.66 teachers made sure to pay their union dues…which went right back to Democratic Party…which wants to vote for more stimulus…

6.  AMES CONSTRUCTION, INC.

(Table 4)

Award #

Amount Awarded

Jobs Saved/Created

HSCGBRIDGESBURLINGTON2009 $33,779,641 0.10

 

That’s not a typo.  Nearly $34 million created 1/10 of a job.

8.  GRAND RIVER MUTUAL TELEPHONE CORPORATION

(Table 5)

Award #

Amount Awarded

Jobs Saved/Created

MO1106-D40 $2,788,293 0.16
MO1106-D40 $6,506,016 0.36
MO1106-E40 $14,189,603 1.90
MO1106-E40 $6,081,258 0.82
Total: $29,565,170 3.24

9.  BUCCANEER COMPUTER SYSTEMS & SERVICE, INC.

(Table 6)

Award #

Amount Awarded

Jobs Saved/Created

Sub-Award 1000831340 $198,704 Not Provided
Sub-Award 1000839478 $30,122 Not Provided
Sub-Award 3150-Bcssi $576,708 Not Provided
Sub-Award 06771S01588 $1,456,951 Not Provided
HHSM-500-2010-00001I $15,500,000 15.60
200-2009-31548 $143,392 0.80
HHSM-500-2010-00001I $10,249,783 16.10
Total: $28,155,670 32.5

12.  CITY OF BELMOND

(Table 7)

Award #

Amount Awarded

Jobs Saved/Created

IA-10-102319921-01 $9,000,000 30.11
IA-10-102318821-03 $3,600,000 0.00
IA-10-102318821-02 $9,000,000 12.56
Total: $21,600,000 42.67

While the last three recipients managed to save or create jobs with more efficiency than your average recipient, it is highly unlikely that they were permanent.  Especially in the case of Belmond, where all of the jobs were temporary construction workers needed to build a new addition to the Belmond Medical Center.

That’s the problem with any type of Keynesian stimulus package—whatever jobs were created or saved dry up when the flow of taxpayer money runs out.  The federal government has taken money out of the private sector to artificially inflate the labor force with stimulus projects and then, when the stimulus runs outs, it wonders where all the jobs went.  They would likely be there, and with much greater efficiency, if the government hadn’t taken the capital out of the private sector to begin with.

If these statistics show anything, it’s that a stimulus “booster shot” is not the answer.

 

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About the Author

Nathan W. Tucker
Nathan W. Tucker is a Davenport attorney and author of We The People: The Only Cure to Judicial Activism. He can be contacted at nathanwt@juno.com.




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