An AP analysis finds that the transportation piece of the stimulus bill had “no effect” on unemployment:

WASHINGTON – Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.
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.”

This is old news, but it’s good to see the AP reporting it. In case you’re wondering why road spending offers so little bang for the buck, consider this description of the strings attached (from the GAO):

The Recovery Act provides funding to states for restoration, repair, and construction of highways and other activities allowed under the Federal-Aid Highway Surface Transportation Program and for other eligible surface transportation projects. The Recovery Act requires that 30 percent of these funds be suballocated, primarily based on population, for metropolitan, regional, and local use. Highway funds are apportioned to states through federal-aid highway program mechanisms, and states must follow existing program requirements, which include ensuring the project meets all environmental requirements associated with the National Environmental Policy Act (NEPA), paying a prevailing wage consistent with federal Davis-Bacon Act requirements, complying with goals to ensure disadvantaged businesses are not discriminated against in the awarding of construction contracts, and using American-made iron and steel in accordance with Buy America program requirements. While the maximum federal fund share of highway infrastructure investment projects under the existing federal-aid highway program is generally 80 percent, under the Recovery Act, it is 100 percent.

Translation (from our editorial last month): “Road projects must clear numerous environmental hurdles; workers must be paid a prevailing (union) wage; and the money must be distributed evenly among the states to satisfy members of Congress, even though such conditions create a drag on the effectiveness of the spending.”

The administration’s fall-back position – which is that, okay, maybe road spending doesn’t have a huge multiplier effect now, but improving infrastructure will yield increased productivity “down the road” (har har) — is also open to question. I doubt that spending $1.1 million to fix a guardrail “near a manufactured lake in a desolate patch of the Oklahoma Panhandle,” to name just one of many make-work projects receiving stimulus funding, is going to have a huge effect on GDP someday.

It would be more accurate to say — as recent research from economists Carmen Reinhart and Kenneth Rogoff suggests — that all the debt we’re incurring to pay for Obama’s repaving America initiative(s) is going to create a drag on future economic growth. In that sense, I’m not sure the AP’s conclusion that the stimulus bill’s transportation piece had “no effect” on employment is accurate. The effect may turn out to be negative.