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  • What Exactly Was the Stimulus?

    Was the stimulus (A) a job creation bill or, (B) a liberal spending wish list? A new Government Accountability Office (GAO) study suggests that option B is closer to the truth. Small wonder it did not bring unemployment down.

    Obama publicly argued that America needed the $862 billion bill to create jobs and singled out “green job” spending as the key to an economic recovery. The stimulus itself, however, looked a lot like not letting “a good crisis go to waste” and pouring public money at liberal special interests.

    Remember all the green jobs weatherizing homes that Obama said the stimulus would fund? Because Obama would not waive regulations that benefit unions the Department of Energy has weatherized just 1 out of every 65 homes they planned to.

    The Davis-Bacon Act (DBA) requires contractors on all federal construction projects to pay “prevailing wages.” In theory, those prevailing wages are supposed to be market wages. In practice, the Department of Labor uses slow, error-ridden, and unscientific methods to estimate them. As a result Davis-Bacon rates typically echo union wage scales: an average of 22 percent above market wages. By law the government hires four construction workers for the price of five.

    Unions love this. No one can charge taxpayers less than they do. Jobs that would otherwise go to nonunion workers instead go to them at wages no one else would pay.

    Obama’s stimulus spent billions on home weatherizing and then required contractors to pay Davis-Bacon wages. That meant that the Department of Labor first had to estimate Davis-Bacon rates for home weatherizing. It took them until September to do it. Then state and local governments had to train their staff to comply with the Act’s paperwork, which meant more delays. The GAO found that these delays caused the Department of Energy to weatherize just 9,100 of the 593,000 homes it intended to last year.

    President Obama could have cut through this red tape with the stroke of a pen. The law allows the President suspend the Davis-Bacon Act. Doing so would have allowed his “green jobs” programs to go forward immediately. The savings from paying market wages would have also funded more infrastructure projects and an additional 160,000 construction jobs.

    But those jobs would not go primarily to union members, as they will under Davis-Bacon restrictions. So Obama kept Davis-Bacon restrictions in place. He chose to wait and to create fewer jobs in order to ensure that the stimulus spending benefited primarily union members. Which sort of answers the question of whether the stimulus was about economic recovery or spending on liberal interest groups.

    Posted in Economics [slideshow_deploy]

    6 Responses to What Exactly Was the Stimulus?

    1. Ozzy6900, CT says:

      The Porkulus Bill was nothing but a slush fund to be used at the Administration's whim. No jobs came from Stimulus but lots of spending (Porkulus) was taken up. I still can't get over a $1.4 million turtle bypass culvert in FL!

      Wait! That DID create some jobs for a short time but the cost was not worth it!

    2. Kevin Habib, Glen Bu says:

      Wow – where do you get your facts? I used to have so much for the conservative thinkers at Heritage, but you have just become another nocon sounding board with misleading info.

      $862 stimulus package? The very same GAO report you link, and every other single economic report, show the cost was $787. How can you and heritage have that simple fact wrong?

      And then to go on and call it a liberal spending wishlist? Wow, James – that;s pretty disappointing.

      One-third of ARRA was tax cuts. Are tax cuts part of liberal wish list?

      Nearly 200b over two years for education and Medicaid funding for states that would have had to make drastic cuts/tax raises to balance budgets – you call these liberal wishlists?

      The rest going to infrastructure and aid to low income workers – like unemployment and food stamp extensions.

      It's so sad how Heritage is goign the path of the far right and no longer has interest in facts.

    3. bill colvin,Pearl,Ms says:

      obama once said he was going to have a website where you could go and find out where and when every penny of the timulus money was being sent.Please provide that website to me..

    4. KLIMAX BALTIMORE, MA says:

      If the Davis Bacon Act was not in effect the jobs would have gone to illegal aliens !! Is this the answer to the problem??!! Now that E-Verify is said to only catch 50% of the illegals (Identity theft causes people to be overlooked) the system needs to be tweaked but Obama will stop a repair from happening!!! The American Citizens need to stop Obama and November is the time to vote Republican since the Democrats have not done anything about the illegal alien problem!!!!

    5. Pingback: » Voting With Your Wallet: Are You Helping to Fund America’s Impending Bankruptcy? - Big Government

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