Surprised? Public works spending provides no "stimulus"

According to a study completed by the AP, "a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry." This should come as no surprise to those that have studied history. No matter how much Paul Krugman and others insist that these types of measures bear fruit, in practice this has simply not been the case.

Spend a lot or spend nothing at all, it didn't matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama's argument that more road money would address an "urgent need to accelerate job growth."

Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are "at the heart of our effort to accelerate job growth."

The article continues:

Even within the construction industry, which stood to benefit most from transportation money, the AP's analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

"As a policy tool for creating jobs, this doesn't seem to have much bite," said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP's analysis. "In terms of creating jobs, it doesn't seem like it's created very many. It may well be employing lots of people but those two things are very different."

There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.

In spite of this, it seems that the President and Congress are determined to pass another "stimulus:"

Despite the disconnect, Congress is moving quickly to give Obama the road money he requested. The Senate will soon consider a proposal that would direct nearly $28 billion more on roads and bridges, programs that are popular with politicians, lobbyists and voters. The overall price tag on the bill, which also would pay for water projects, school repairs and jobs for teachers, firefighters and police officers, would be $75 billion.

It's time for Americans to insist that our government forgo what is popular in favor of what actually works. The only way to improve our economic outlook is to opt for true stimulus, which involves shrinking the size of government by reducing government spending and cutting taxes for everyone.