Much touted "infrastructure" kick-start the 'stimulus' was supposed to provide was a myth-it was never intended for that. Per GAO, 63% of stimulus cash was funneled to "Medicaid and education funding." Medicaid cash was 'fungible' allowing states to use it for budget shortfalls and "delay the pain." Rather than 'kick-starting the economy,' it allowed public sector workers to remain employed longer than private sector workers: "Between June 2008 and June 2010, according to data from the Bureau of Labor Statistics, the number of private-sector employees fell
- by six percent, but the number of
- state and local government workers declined by
- less than one percent....
2/18/11, "Stimulus turns two: What's changed?" MSNBC Tom Curry
"Infrastructure got the attention, but there was more focus on state jobs"
"Initially, there was a somewhat exaggerated focus on roads, bridges, and infrastructure from both Democrats who voted for the stimulus and from media outlets that covered it.
But most of actual stimulus outlays have not gone to building highways, airport runways, and wind farms.
Instead, a large part of the stimulus was dedicated to bolstering government jobs — public school teachers, police officers, state caseworkers, and other public-sector employees — by funneling federal money to the state and local governments.
- The money went chiefly in two channels:
- added funds for Medicaid and for public schools.
According to GAO, about 63 percent of the stimulus outlays has been provided in the form of the increased
- Medicaid funding and education money.
Donald Boyd, a senior fellow at The Nelson A. Rockefeller Institute of Government at the State University of New York, said, “There’s no doubt that the stimulus has helped maintain state and local government employment. It may be a little hard to measure,” he said, but “it was a lot of money for two years that was largely fiscal relief (to the states), meaning that they had some flexibility. If it hadn’t been for that, they would have been making major cuts.”
Between June 2008 and June 2010, according to data from the Bureau of Labor Statistics, the number of private-sector employees fell by six percent, but the number of
- state and local government workers declined by
- less than one percent....
But now, he said, “with the stimulus going away and as state fiscal problems have continued, there have actually been very substantial cuts in state government employment.”
With stimulus money now beginning to fade, states “face really severe choices and clear voter sentiment largely against any tax increases.
So that leads you to the spending side of the budget.”...
Stimulus Delayed the Pain
The largest flow of money has been to help states cope with people seeking health coverage in the Medicaid program. As in previous recessions, states saw a surge of people who had lost their jobs and their health insurance and were now eligible for Medicaid.
In its very first report on the stimulus in April of 2009, the GAO said state governments were using the influx of Medicaid money not only to maintain their current level of Medicaid benefits and cover increased Medicaid caseloads, but also “to offset their state general fund deficits thereby avoiding layoffs and other measures detrimental to economic recovery.”
As state officials said in their reports to GAO, the additional Medicaid money was fungible, so it allowed state governments to keep state employees on payroll. GAO said that Arizona officials, for example, “reported that the state used funds made available as a result of the increased FMAP (Medicaid money) to pay down some of its debt and make payroll payments, thus allowing the state to avoid a serious cash flow problem.”In a July 2009 report GAO found that the Medicaid money had freed up other money in state coffers which was used to pay for non-Medicaid operations and to keep state workers on the job. GAO found that states were “using or planning to use the freed-up funds to help finance their state budgets. Five states — Arizona, California, Colorado, North Carolina, and Ohio — reported using or planning to
- use these funds solely for this purpose.”
- keep teachers on the payroll.
In new research published this month, two Dartmouth College economists, James Feyrer and Bruce Sacerdote, found that “Following the passage of the stimulus package, education employment had a small increase and then a slow decline" to about 10.4 million jobs by June 2010. "There is a sharp drop in employment (80,000 jobs) after June 2010. This timing may anticipate the fall in ARRA outlays that happens toward the end of 2010.”
They said that stimulus money might have “allowed schools to maintain their staffing patterns without increasing taxes or having states incur additional debt in order to support the schools in their state.”
They said stimulus money for education “may have funded staffing that would have occurred anyway but would have been financed through increased taxation and state and municipal debt as opposed to Federal debt.”...
The stimulus, or American Recovery and Reinvestment Act, has been a bit misunderstood from the start, by both friends and foes....
Although it was touted as a program to build things and get people back to work, tax cuts/breaks account for 40 percent ($326 billion) of the total cost of the bill —
- this, according to the staff of the congressional Joint Committee on Taxation.
The tax breaks included the “Making Work Pay Credit” for people with jobs and an extension
- of first-time homebuyer credit."...
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There are reasons for the invented debt crisis. Obama knew this day was coming before he walked in the door, so he diverted a trillion taxpayer dollars to delay the bad news, mostly to the public sector as the economy shrank. Then he passed ObamaCare. He had complete control of both the House and the Senate through 2010, never passed a budget and still hasn't.
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Note to readers: This post has lines drawn through sections of it. I've written before that my posts have been defaced and vandalized for at least 2 years, several times a week. At this point, google appears to be the only possible party doing this. My blogs are quite small but appear to bother them a great deal. Susan
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