In a series of campaign-style speeches, President Obama has laid out recycled economic proposals, which include yet another tax increase to pay for $50 billion in new infrastructure stimulus spending. This after Washington already spent $70.6 billion under the American Recovery and Reinvestment Act in 2009. The trouble is that Washington can’t afford more spending.
The President’s latest tax-and-spend proposals also ignore the effects of that first stimulus. Setting that embarrassing lack of “shovel-ready” jobs aside, researchers at the Mercatus Center at George Mason University found that “stimulus dollars created more job shifting than actual new jobs.” Economist Garett Jones reported that as a result of the stimulus, “less than half of the workers came from the unemployment line, and instead were hired away from other firms and businesses.”
A case in point is the first “shovel-ready” project funded by the stimulus: the resurfacing of Route 650 in Maryland. Instead of creating new jobs, however, the stimulus money Maryland received was used to pay for the salaries of full-time employees.
Maryland Governor Martin O’Malley (D) cut the state’s infrastructure budget because of the $771 million gained in stimulus funds. He also raided the state’s Transportation Trust Fund, which is intended to pay for highway repairs, diverting $861 million over three years to help balance the state budget. According to Reason, “[E]ven with the stimulus, [Maryland] state spending on transit infrastructure has seen a net decrease of $90 million since 2009.”
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