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Why does Obama keep telling reporters there are 'no shovel-ready projects'?


Perhaps I should've written this post before interviewing Jared Bernstein, the vice president's chief economist, on the same subject. But if you read that interview closely, you'll see a White House that doesn't exactly know what to do with the president's comments. The administration doesn't think the stimulus failed. At the end of the day, the law met its spending targets. As promised, it dispensed with 70 percent of the funds within two years. Most of the remaining money will pay out when projects that are underway reach completion. Today, the White House released a video in which Austan Goolsbee, the chairman of the Council of Economic Advisers, argues that the intervention saved the job market (though by looking only at private-sector jobs, he stacks the deck, as the public sector is where recent job losses have been concentrated).

So why did the president tell Peter Baker -- and before him, David Brooks -- that there are no "shovel-ready programs"? Those were three of the most important words used to sell the program -- and the president's decision to walk them back is giving plenty of ammunition to his enemies. And shovel-ready is not a controversial concept: It's what Rep. Pete Sessions, the Dallas conservative, called his city's rail project when he wrote Transportation Secretary Ray LaHood asking for some of the stimulus funding that he opposed.

And Sessions is no isolated case: Over the past two years, the stimulus has funded more than 15,000 transportation projects. In total, it's funded more than 75,000 projects. Those efforts weren't ready for shovels the morning after the bill passed, but it didn't take more than a couple of months to break ground on many of them, and all of them hit within the stimulus's two-year target range.

And even if the president was disappointed by the progress, why is he giving ammunition to the stimulus's critics only weeks before the midterm election? He couldn't have told Baker they'd conduct the interview Nov. 3?

The big news on the stimulus going into November should've been this report from the Center for Public Integrity pulling together the many, many letters Republican lawmakers sent asking the administration to use the stimulus to fund projects in their district and saying, forthrightly, that those projects would create jobs and improve the economy. Obama should be going around the country, setting up a podium at each of those projects and making clear just what it is the stimulus did, and just what it was that Republicans opposed. Instead, he's telling reporters that the foundational phrase of his sales pitch for the stimulus was a mistake, which implies to voters that the Republicans are right when they say the stimulus didn't work. File this one under "unforced errors," I guess.

Photo credit: J. Scott Applewhite/Associated Press.

By Ezra Klein  | October 19, 2010; 11:50 AM ET
Categories:  2010 Midterms, Stimulus  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: 'The Warmth of Other Suns'
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EZRA: This is a repeat for those who only read the latest of your blogs. The original is after your column interviewing Bernstein.

Obama is right and unusually perceptive for him on financial matters.

The fact is that most of the stimulus money was spent on state operating budgets, not projects on any kind. The 75,000 figure is pure myth. What has occured is that states have made long term commitments to projects and spent a little seed money to get them into print. Then they took all the rest of the moeny and spent it on things like pension fund payments and salaries. This way they can say they met the goal, and at the same time saved the state from banruptcy.

It's about the same as claiming that there is a Social Security Trust Fund. What you have is an acknowledged long term committment but no obligation to actually spend the money on it today.

Here's why that's good and bad. It's no myth that a lot of jobs were saved by the stimulus. Far more states than will publicly acknowledge it are on the edge of bankruptcy. In many of these states, state workers jobs like teaching etc. were saved.

Here's why it's bad, or at least not so good. The projects that we discuss in theory, the infrastructure stuff, much of which didn't happen, creates more ancillary jobs than government jobs. Most of these companies have tons of subs working for them, that only hire when the time comes to start the job. This has a ripple effect that works it's way through the economy, in a way that saving jobs does not.

If you are REALLY interested in how state money is actually spent, you have to look up their CAFR, which is often wildly different than their stated budget. That's how you find out where the money was really spent.

This is really "inside baseball" though, and there is no way that Ezra (forgive me) would understand it. he goes to governmental and collegiate ecnomists and accepts their words at face value.

Correct me if I'm wrong though, but I have never seen Ezra quote from an economist who actually has skin in the game so to speak. That would be someone who works for a major financial firm and who loses their company millions and billions of money if they're wrong. Ezra, I apologize in advance if you have previously interviwed such people in your column and I missed it.

Ironic that EK would have to talk with Bernstein, who was the other half of Christina Romer's totally incorrect forecasting at the start of the administration. I wonder when he will follow her and jump, or get pushed, into a faculty position at a prestigous university. Being an ecnomist for a government or university means never having to say you're sorry!

Posted by: 54465446 | October 19, 2010 11:58 AM | Report abuse

Apparently because the president tells Republicans things he believes they want to hear. Honestly, can anyone find a single significant area where Obama has governed to the left of George H.W. Bush, or of Mitt Romney in Mass? The rhetoric may sometimes be different (but as in this case, not always) but the actions are all pro-business, pro-elite, pro-surveillance state,pro-bank lawlessness, anti-accountability and frankly anti-Democrat.

There are no shovel ready projects because that would put too much emphasis on actual people needing actual jobs who might actually lift shovels. Obama, like all of Washington it seems, doesn't believe the solution is EVER actually directly helping those who aren't already fabulously wealthy. Hence no shovel-ready projects for you.

Posted by: Bullsmith1 | October 19, 2010 12:01 PM | Report abuse

Bullsmith1, I understand being frustrated that the legislation signed by President Obama isn't as liberal as you'd like. In fact, I agree. I also understand dissapointment with his Administration's record on Civil Rights, whether it's closing Guantanamo or gay marriage. If you think he's been "anti-Democrat", however, you're out of your damn mind.

Posted by: MosBen | October 19, 2010 12:27 PM | Report abuse

MosBen -
Let's see if you feel the same way next year when he signs legislation making cuts in Social Security.

Posted by: rick_desper | October 19, 2010 12:44 PM | Report abuse

The stimulus did work, actually -- unemployment slightly decreased before increasing again. It's rather like throwing a bucket of water on a house fire and declaring victory. Far more water was needed, but "it wasn't pragmatic" to try and get it.

Posted by: stonedone | October 19, 2010 12:53 PM | Report abuse

I worked at a Metropolitan Planning Organization last year, when we "spent" all that stimulus money. A few observations:

1) There were indeed "shovel-ready" projects -- these were the projects that were mostly ready to go, for which funding had already been secured, and all the planing, environmental paperwork, etc. completed. There are not really any more shovel-ready projects in the pipeline, however.
2) It would be a waste of taxpayer money for planning organizations to plan for projects where there is no forseeable funding available. Plan for projects 10-15 years out, and you'll have to re-do the plan when the money shows up.
3) The stimulus money did not include any funding for planning. Thus, we weren't able to increase the pipeline of available projects. (Americans think of guys in hard-hats as real jobs, but bureaucrats sitting at computers are just a waste of money, I guess.)
4) You can blame the left-wing for requiring all those pesky environmental reviews. Or you can blame the right-wing for perpetually underfunding planning agencies (and, in Missouri, for being hostile to any planning activities at all.)
5) At least in the transportation field, there is a strong prejudice toward big highway projects, and away from other transporation programs such as improving bike lanes, providing funding for Transit Oriented Development, etc. We might be able to do mroe of those, but the highway people catch and spend the transportation stimulus money.
6) The paperwork requirements are comparable, regardless of the size of the project. Thus, it is 1000 times more difficult to do 1000 $1 million projects than to do one project worth $1 billion.

To sum up, we DID spend $$ on shovel-ready transportation programs. And, Obama is correct: there aren't many more shovel-ready projects left, at least without re-thinking the types of projects we'll be supporting.

Posted by: MOmark | October 19, 2010 1:07 PM | Report abuse

The walking back of the shovel ready concept is similar to the moment when he blandly informed a questioner who asked about the new revelation that Obamacare would actually increase the deficit, that you have to expect that insuring 30 million more people will cost money. Huh? When he, and his blogging press flunkeys said for months that it would bend the cost curve down? The calm taking back of what was once aggressively asserted could become a feature of the political landscape.

Posted by: truck1 | October 19, 2010 1:29 PM | Report abuse

two things.

1. shovel ready has nothing to with whether the stimulus was a success.

1. shovel ready is buzzword. its a way to shorten, "projects that are in advanced stages of planning, but need funding to move it forward." In today's age few reporters or people will read that. instead they go with shovel ready. Clearly, the communications people in the white house are failing miserably with their rebuttal. Why in the world would they give some economic person instead of a two sentence rebuttal is beyond me. incompetency comes to mind.

Posted by: fiorehoffmann | October 19, 2010 1:49 PM | Report abuse

Answer: Either because he's pandering to the right like he always does, or he really doesn't believe in the fiscal power of the government to help out the economy. Neither answer is very comforting because it means that our president either lacks convictions or can't be relied upon to help anyone but the banks.

Posted by: redscott1904 | October 19, 2010 1:50 PM | Report abuse

My Aunt always said "When you lie, you have to have a good memory."

Evidently, Obama doesn't have a good memory.

Hi, 54465446!

Posted by: janet8 | October 19, 2010 2:51 PM | Report abuse


Hey this a different sort of place for you. Not much talk about social issues, pretty dry economics. Getting more concerned about money?

Posted by: 54465446 | October 19, 2010 3:05 PM | Report abuse

"Why does Obama keep telling reporters there are 'no shovel-ready projects'?"

Why? For the same reason people say that there is no air in space. There IS air, it is just that the amount isn't significant enough to mention.

Hopefully, that answers your question. When you grow up what are you going to do for a living?

Posted by: illogicbuster | October 19, 2010 4:08 PM | Report abuse

"4) You can blame the left-wing for requiring all those pesky environmental reviews. "

Those reviews would be done by people, so that's hardly anathema to a stimulus plan geared toward putting people to work.

"Let's see if you feel the same way next year when he signs legislation making cuts in Social Security."

I can't wait to see Obama's apologists try and excuse that.

Posted by: B405 | October 19, 2010 4:28 PM | Report abuse

Can I have a job where my performance is measured by my ability to spend billions of other people's money with the only criteria being how fast I spend it and on how many different things?

Posted by: bgmma50 | October 19, 2010 5:19 PM | Report abuse

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