A Waste of Stimulus Money

In the year 2007, a liquidity shortfall in the U.S. banking system triggered one of the worst financial disasters to ever hit the United States and the world. It was considered as the worst financial crisis since the Great Depression in 1930. The results were staggering as large financial institutions and banks collapsed. The stock markets of various countries experienced downturns. Also, the U.S. housing market suffered huge losses resulting in foreclosures and evictions. Just as Barack Obama was stepping in to replace George Bush as President of the most powerful nation in the world, he already had the serious task of bringing back stability in the American economy and elevating the already deteriorating quality of life of Americans.

One of the most destructive effects of the financial crisis was the rise of unemployment levels. The American working sector was the most seriously affected sector since the crisis started. Because large institutions were faltering, thousands of employees were removed and jobs were beginning to be scarce. Washington was very concerned that job scarcity will result in less consumer spending and a possibility of a double dip recession. Congress immediately passed a stimulus package amounting to over $800 billion. The goal was to borrow and spend more money in order to offset the reduced demand from the private sector brought by the crisis.

More than a year later since the stimulus package was announced, Los Angeles city controller has released a 40-page report on how the city spent its share of the package. The results were horrible and disappointing as improvements were very minimal. Los Angeles city controller Wendy Greuel, stated that with a local unemployment rate of 12 percent which is higher than the national average of 9 percent, Los Angeles was only able to create or retain 55 jobs out of the $111 million allocated for the city.

The Los Angeles Department of Public Works was only able to create seven private sector jobs and saved seven more while spending $70 million in stimulus. In a staggering display of stimulus usage, the department was spending $1.5 million for ever job it saved or created. If you think that was worst already, wait till you here the audit of the Lost Angeles Department of Transportation. While they spent $40 million of the allocated stimulus, they were only able to create 9 jobs in total. It solely means that the department spent $4.4 million in taxpayer’s money for every job it created.

There were numerous factors cited by Greuel as reasons for such unlikable results. First, he mentioned about four highway projects that didn’t undergo bidding until seven months after they were authorized. Second, instead of going through a competitive bidding process in the private sector, projects went to city workers instead. The third reason was that stimulus money was not properly accounted for in various departments. Stimulus money was continuously spent without undergoing evaluation. And lastly, the departments mentioned were not able to consistently report about their job trends. Stimulus controllers were only able to find out about the problem when the stimulus money was already spent.

With weeks to go before the November midterm elections, Washington has been very busy working on a master plan that will create more jobs and please more people. Democrats, in particular, are weighing in on their options to support Obama’s plans. The result of this stimulus plan will most certainly influence the votes come November.

In Defense of the Stimulus Package

Since the passing of the $814 Billion stimulus package that was strongly supported by most Democrats and U.S. President Barack Obama, American citizens had doubts whether this bill will in fact create jobs or instead add up to the already ballooned budget deficit of the government. The stimulus packages calls for massive borrowing and spending which will compensate the reduced spending of consumers and private sectors. A year later, thousands of Americans are still without jobs and people now believe that the stimulus is in fact a huge failure. Despite of what people perceive as a huge failure in attempting to revive the economy, various authors of the bill are still able to highlight key accomplishments since the bill was passed.

Republicans have been ultimately aggressive in claiming that the stimulus is just a waste of taxpayer’s money as the national average for unemployment is now reaching 10%. Last Friday, a report released by Vice President Joe Biden negated criticisms on the stimulus program by showcasing over 100 projects that satisfied the goal of the bill which is to create more jobs and stimulate economic growth. One such project was the $175 million spent by Department of Transportation of the City of New York to rehabilitate bridges, eight vehicular and one pedestrian, and one parking field. An audit showed that more than 120 people got to work for the project aside from the boost it has given to the local economy of New York.

In Ohio, the transportation department has been busy constructing a newer, 8.5 mile, four-lane highway within Nelsonville. It aims to remove freight traffic from local roads while also helping trucks reach their destinations more quickly. With a budget of $138 million, the project has reportedly created 300 jobs since its groundbreaking during the last fall. A research on a possible cure for cancer was also implemented through the initiative of the Cancer Genome Atlas project which reportedly cost more than $153 million in stimulus fund. The project is considered wide-scale as it involves 15 research institutions across the country. More than 150 researchers are directly involved in the project. Not only did it give jobs to people but it also gave human cancer patients a fighting chance to cure their disease.

The stimulus package and job creation are issues that will surely influence the votes this coming November. We the continuous dipping of Obama’s trust and confidence rating, Democrats are now coming up with ways in convincing the public that a Democratic majority in the House and Senate will be best for the country. The White House was only able to disclose 20 out of the 100 projects as the report hadn’t been fully released yet.