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Americans Don’t Need More of Obama’s Stimulus Spending

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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.”

The situation in Maryland was repeated across the country: “Stimulus dollars were used to cover general expenses rather than activating idle resources.” Here are some examples:

Stimulus spending—whether on education, manufacturing, or, in this case, infrastructure—did not result in overall economic growth. It only worsened budget deficits and removed resources from the private sector in the near term. Obama Administration approval of the Keystone XL pipeline is one way the federal government could help the economy. However, the types of projects funded by the 2009 stimulus bill and that Obama now proposes to fund are state and local responsibilities.

Nicolas Vega is currently a member of the Young Leaders Program at The Heritage Foundation.

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