States Use Stimulus Money for Short-Term Needs

The Government Accountability Office, finds that the $787 billion stimulus package is being used to "cushion" state budgets, prevent teacher layoffs, make more Medicaid payments and head off other fiscal problems.

Gee, who woulda thunk?

Please consider States Using Stimulus Money for Short-Term Needs, Audit Shows.

Cash-strapped states have used federal stimulus dollars to close short-term budget gaps and avert major tax increases but generally have not directed the money toward long-term expansion, according to a new report.

The report released Wednesday by the Government Accountability Office, Congress' investigative arm, found that the $787 billion stimulus package is being used to "cushion" state budgets, prevent teacher layoffs, make more Medicaid payments and head off other fiscal problems.

The Congressional Budget Office estimates that only 10 percent of the Recovery Act funds have been released so far, with about half of the money expected to be spent by October 2010. That dispersed money is being used to prioritize short-term projects and needs over more ambitious goals, the GAO report states.

For example, the GAO said about half the money set aside for road and bridge repairs is being used to repave highways, rather than build new infrastructure. And state officials aren't steering the money toward counties that need jobs the most, auditors found.

Taxpayers have also recently complained that the federal government has wasted money by advertising stimulus-funded construction projects with road signs which costs between $500 and $1,200 to produce.

Interestingly I talked about that very thing the other night on Coast-To-Coast and online in No Amount of Stimulus Will Work.

All this talk of multipliers is nonsense. If government spends money in a manner that private industry would not, the multiplier is far less than 1, and perhaps even negative.

Case in point: There are numerous road construction and repaving operations where I live. The thing is, most of the roads did not even need repair. Money came in for roads, Obama said use it or lose it, so the roads were "fixed". Now what?

They can "fix" every road in the country that does not need fixing and as soon as the roads are fixed, we will be back at square one, in need of still more stimulus, with Krugman whining for still more.

There is an economic benefit for fixing roads that genuinely need fixing, however, all that does is push up the curve a bit. Then what?

Sign, Sign Everywhere A Sign

On Coast-To-Coast I even mentioned the signs. They are everywhere. In attempting to tell us how they are stimulating the economy wasting money, they are wasting even more of it.

Gee, who coulda thunk?

The report states that the federal money generally has not prevented state governments from dipping into their rainy-day funds or eliminated the need to take further action to balance future budgets.

Highlighting the delicate fiscal picture in many of the states, the report warned that officials are trying avoid the so-called "cliff effect" -- or problems associated with the end of stimulus funding for states.

Rep. Darrell Issa, ranking Republican on the House Committee on Oversight and Government Reform, complained at a hearing to review the report that stimulus dollars have gone to the "maintenance of many jobs," and that the money has been shifted to projects it was not originally intended for.

Note how ridiculous this whole "stimulus" thing is. Some bureaucrats in DC expect to tell bureaucrats in the states how best to spend money. The truth is neither knows and that is why all this "stimulus" is not going to do a damn thing except weaken the dollar and stimulate gold.

Moreover, because the stimulus plan cannot possibly work, Battle Lines Form Over "Son of Stimulus" guaranteed to waste still more money.

Please keep in mind every country on the planet is following the same stupid Keynesian Handbook so on a relative basis the US is not as bad as appears at first glance. Don't expect a complete collapse of the dollar to happen anytime soon.

Obama Creates 150,000 Jobs

President Obama had always pitched the stimulus package as a way to "save or create" 3 million to 4 million jobs. The president announced in late May, 100 days after the stimulus bill was signed, that 150,000 jobs had been created since its enactment.

150,000 Jobs have been created? That's news to me. Where? Can we have a breakdown please? Then again, perhaps we have discovered the best role for president Obama: In the BLS where he can oversee the Birth-Death Model.

Stimulus Proclaimed A Success

Acting Comptroller General Gene Dodaro testified at the hearing that by helping states relieve "fiscal stresses," the stimulus has been successful to an extent.

"It's clear that the Recovery Act has helped in accomplishing one of its objectives, which was to help stabilize state and local government budgets," he said.

Robert Nabors, deputy director of the White House Office of Management and Budget, said Wednesday that the execution of the stimulus is a "work in progress" but insisted the administration is making "steady progress."

When All Else Fails , Change The Mission Statement

If the Mission Fails, the first thing any bureaucrat will do is change the definition of the mission so that it accomplishes a new goal that was not seen at the time of the legislation.

Misreading The Economy

After Vice President Biden said over the weekend that the administration "misread" the economy, Nabors also suggested the administration underestimated the severity of the recession.

"All of us knew the economic situation was bad," he said. "None of us anticipated just how weak the economy truly was though."

The administration needs to fire all its experts and start reading a few more blogs.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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