Stimulus War: The Left's Attack on Veronique de Rugy

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In March 2010, Veronique de Rugy of the Mercatus Center at George Mason University released a study about President Obama’s stimulus package. It contained many informational gems:




  • Public entities received 42 percent of awards under the stimulus package, but received over half of dollars awarded (meaning they got larger chunks of change than private contractors);

  • Even according to the administration, $285,814.61 was spent to create each job under the stimulus;

  • On average, Democratic districts received 1.53 times the amount of awards that Republicans were granted, with Democratic districts receiving 2.65 times the amount of stimulus dollars Republican districts received. Democratic districts received 73 percent of the total stimulus funds awarded, and Republican districts received 27 percent of the total amount awarded.


De Rugy claimed that “a district’s representation by a Republican decreases the stimulus funds awarded to it by 41.7 percent.” She also found that unemployment did not correlate with stimulus funds received. In other words, much of the money under the stimulus was directed at Democratic districts for political reasons.



The mere suggestion that politics had anything to do with allocations under the stimulus got the journalistic left’s panties in a wad. Some of the criticism of de Rugy’s study was worthwhile. Nate Silver at FiveThirtyEight.com pointed out that de Rugy had not taken into account the fact that cash was allocated largely to districts containing state capitols, since money allocated to states generally flows through state capitols (which are overwhelmingly represented by Democrats). There is something to be said for this criticism, of course, which is why de Rugy proceeded to re-run the study taking into account the effect of allocations to state capitols – and found that the average Democratic district still gets 30 percent more cash than the average Republican district.





Of course, that didn’t stop the rest of the journalistic left from trashing de Rugy with inordinate glee before she had the chance to re-run the numbers. Partisan hack Jonathan Chait accused de Rugy of “living [a] well-compensated [life] of pure ideological hackery.” Idiots Paul Krugman and Derek Thompson chimed in, too. They didn’t bother reading the study, of course – they simply parroted Silver’s point, which de Rugy had already accepted, and was busily integrating into her study.



The key finding of de Rugy’s study went unnoticed, of course: if the stimulus was supposed to stimulate employment, the cash should have gone to districts with the highest unemployment. It didn’t. That means that something else was in play – politics.



Ironically, de Rugy’s leftist critics made the argument that something else was in play, namely that states that paid more taxes clearly deserved to get more benefits, even if those states did not have the highest rates of unemployment – an argument that more deservedly belongs on the right side of the spectrum, where we actually care who pays taxes. Wasn’t the whole point of the stimulus to spread the wealth around, according to the left?



In fact, we can obviate the state capitols question by looking at the stimulus package allocations over the breadth of the states as a whole. Listed below are the top twenty states by population and the amount allocated under the stimulus package (statistics via Recovery.gov). Using California as a baseline, I calculated the proportionate amount each state should have received based on population alone, then calculated how much more or less than that amount the state actually received. I have labeled each state blue or red based on how it voted during the 2004 election, rather than 2008, since Congressional and state political make-up more closely reflect the results of 2004 than 2008.




vero-chart


To sum up, on average, 2004 blue states (leaving aside California) gained 14.6% more than expected; leaving out Washington (a massive outlier), they gained 5.7% more than expected. 2004 red states lost 5.1% more than expected; leaving out Tennessee (another massive outlier), they lost 10.8% more than expected. This isn’t anything near a full regression analysis, but it is suggestive.



It is not shocking to think that politics would play a role in the allocation of federal dollars to the states. It always has. Federal cash comes with strings attached, and Congressmen are famous for steering booty back to their home districts. The greatest shock would be if this bill were honest, which says something about the state of our republic today.




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