The Corner

Some May Be Surprised

Back at the beginning of the year, when the usual suspects began to try to sell President Obama’s $787 billion “stimulus” package, they conjured up images of 1930s-era highway projects and bridge repairs. To some Americans, this may have looked attractive, because at least after spending the money there is a long-lived asset that can plausibly be argued to create real economic value.

Setting aside the problems even with that conception of government stimulus, the fact is that the president’s bill had little to do with infrastructure projects. As Governing magazine reported last month, most of the half-trillion in spending authorizations in the “stimulus” package were really pass-through grants to state and local governments. And most of that — 63 percent — flowed immediately to wobbly Medicaid programs. Another 13 percent went into general-fund budgets to plug other holes.

In other words, the single-largest expenditure of “stimulus” dollars was little more than a bailout of organizations that had been irresponsibly managed in the years leading up to the crisis. Sound familiar? And as we speak, governors and legislators are lobbying Congress and the administration to renew the bailouts in 2011–12. As for taxpayers, they will have been pushed further into debt not to build a new Blue Ridge Parkway or interstate-highway system. They will have been pushed further into debt so that states could avoid reforming their unsustainable Medicaid programs.

John Hood is a syndicated columnist and the president of the John William Pope Foundation, a North Carolina–based grantmaker.

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