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What the Stimulus Package Really Stimulated

Tuesday June 17th, 2014   •   Posted by Craig Eyermann at 4:02pm PDT   •  

9491639_S It sometimes takes years to get a clear picture of historical events. Take 2009’s “stimulus” package, also known as the American Recovery and Restoration Act, which was supposed to revitalize the private sector of the U.S. economy at a time of crisis. Via Jim Pethokoukis, we find that the St. Louis branch of the Federal Reserve has weighed in on a big reason why President Obama’s trillion-dollar increase in government “stimulus” spending failed to meaningfully stimulate the U.S. economy:

Over one-half of the fiscal spending component of the American Recovery and Reinvestment Act (ARRA; i.e., the Recovery Act) was allocated via grants, loans, and contracts. Businesses, nonprofits, and nonfederal government agencies that received this type of stimulus funding were required to report the number of jobs directly created and saved as a result of their funding. …

It is estimated that at the one-year mark following the start of the stimulus, 166,000 of the 682,000 jobs directly created/ saved were in the private sector. Examples of private sector stimulus jobs include social workers hired by nonprofit groups to assist families, mechanics to repair buses for public transportation, and construction workers to repave highways.

Examples of government stimulus jobs include public school teachers, civil servants employed at state agencies, and police officers. While fewer than one of four stimulus jobs were in the private sector, more than seven of nine jobs in the U.S. economy overall reside in the private sector. Thus, stimulus-funded jobs were heavily tilted toward government.

Doing some quick math with the Fed’s numbers, President Obama’s 2009 “stimulus package” went toward creating or saving 516,000 government jobs out of the 682,000 jobs created or saved that have been attributed to it. That means that government workers claimed nearly 7 out of every 9 jobs created or sustained by the federal government’s near trillion dollar increase in spending over previously budgeted levels that year. Or very nearly the direct opposite ratio that exists for private sector jobs with respect to all jobs.

Why, it’s almost as if the politicians and bureaucrats who were running the U.S. government in 2009 were looking out more for their own interests rather than those of regular Americans! Meanwhile, six years later, millions of Americans are wondering why the economic recovery following the stimulus is taking so long.

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June 2014