OPINION:
President Obama’s stimulus plan will be remembered for decades — not for what it did for the economy, but what it did to the economy. By the reckoning of the Heritage Foundation, taxpayers will be paying down the $3.3 trillion in principal, interest and debt service costs of the American Recovery and Reinvestment Act until 2019.
The Agriculture Department’s inspector general took a trip down memory lane with “Lessons Learned from the Recovery Act,” a look at the benefits of spending $28 billion to stimulate agriculture. The audit concluded $5 billion of this amount went to “questionable or unsupported costs,” which is auditor-speak for “money flushed down the drain.”
The audit compiled results from 80 investigations that came up with 401 recommendations on what the department should do to get its act together. The prime lesson was that programs that are supposed to “quickly pump money into the economy by immediately executing infrastructure and labor-intensive projects” failed because the “programs were not ’shovel ready.’” The department was incapable of managing the boondoggles, mostly because they had no “meaningful or realistic” measures of success.
The Natural Resources Conservation Service, for example, opened up the subsidy cafeteria and began serving 27 “shovel-ready” projects. Six of the projects failed before starting. Two more went unfinished at a cost of $943,000.
Officials of the Rural Development agency inappropriately handed out an estimated 1,772 home loans worth $208 million to borrowers with “no history of stable and dependable income,” who “had a credit history that did not indicate the ability and willingness to repay a loan,” or who “did not meet repayment ability guidelines.” The Forest Service burned through stimulus dollars so haphazardly that $92 million went up in “questionable” flames.
The stimulus ramped up food stamps, which are administered by the Agriculture Department, by more than $45.2 billion. Nobody bothered to see whether the extra money would help anyone or stimulate business.
Auditors, however, determined the job-creation numbers were “inflated because recipients reported cumulative job numbers, instead of the number of jobs created or saved during the quarter being reported.” The Rural Utilities Service produced just 20 percent of the jobs promised in the grant applications.
Since nobody was paying attention to the details where the devil hangs out, schemers and scammers soon realized they could sign up for “free money” from the government by filling out false applications. One man received a $6 million loan to renovate a factory and create jobs. He hired his own son to perform “work” that never was actually performed. They were caught after the fact by the inspector general and his investigators.
None of this should surprise anyone because the stimulus was always about politics, never the economy. The orders from the White House were to get the money spent, as if that was all that was needed to give the economy the prescribed shot in the arm.
The disciples of British economist John Maynard Keynes hold as their first article of faith that government spending has a “multiplier” effect. Spend $10 million on ditch digging, and the construction company will take that cash and spend it a second time, so that the cash is never truly wasted, no matter how wasteful the project.
Mr. Obama’s jobless stimulus package is proof that Keynes and his followers got it wrong. They forgot that we’re all on the hook for our share of the $3.3 trillion. It’s hard to pay back that much money when millions are still without jobs.
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