Why Obama’s Stimulus Failed: A Case Study of Silver Spring, Maryland


Reason TV’s Jim Epstein has a new piece looking at how the stimulus money was spent in his own city of Silver Spring, Md.

Epstein looks at the promises made and the results, before he digs into where and how the money was spent. For instance, he finds that well-established government contractors got money to do things that they would have been hired to do anyway:

Yet that’s what happened in downtown Silver Spring, where $138 million dollars in stimulus grants and contracts went to 46 organizations. Just three firms took home a majority of the money. These three firms—Synergy Enterprises, Senior Service America, and Social & Scientific Systems—were major government contractors before the stimulus was signed. In fact, these firms received a combined $71 million in stimulus funds. Over that same period, they got $702 million in other government contracts, according to

So the stimulus money was like icing on the cake. Take Palladian Partners, a communications firm in Silver Spring that’s received $97.5 million dollars in government contracts over the past 12 years. The National Insitutes of Health (NIH), which is Palladian’s biggest client, tacked $363,760 stimulus dollars on to an existing contract, and then followed it with two more awards totaling $431,333. Palladian was to spend the money collecting and disseminating information about how the NIH was spending stimulus money.

Palladian was well paid for its work, but with the project 80 percent complete, its main activities have included building a website, and publishing 29 short articles for the site. The stimulus grant went to hire two new employees, neither of whom was unemployed before coming to Palladian. That’s no way to jumpstart the economy.

And of course, stimulus money was spent on green jobs — at least that was the stated goal:

The stimulus bill set aside $500 million for a program to train and recruit people for the new green economy. The program promised to place 80,000 people in so-called green jobs. The grant period is more than half over, and the program has placed only 8,000 people in jobs, according to a report by the Department of Labor’s Inspector General.

In downtown Silver Spring, a union-backed organization called the International Transportation Learning Center got $5 million in stimulus dollars partly to recruit thousands of new workers and train them in new “green job” skills. But because transit workers already face low unemployment and low turnover and the new jobs weren’t materializing, the group is instead using the entire grant to teach new skills to workers who already have jobs.

“The spirit of the stimulus shouldn’t be to get people who already have jobs to get more money to do the same thing, just bigger,” says de Rugy. Under stimulus theory, she says, ”government spending should be going to places where unemployment is very high, going to people who are poached from unemployment lines.”

He also reveals what happened to weatherization and infrastructure projects paid for by with stimulus money. This is a great but depressing example of how much of taxpayers’ money were and is still wasted in the name of creating jobs.

The whole thing is here.


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