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Federal Stimulus

White House and Congress Take Issue With AP’s Transport Stimulus Claims

The Associated Press published a piece today that, after putting "economists and statisticians" to work on analyzing $21 billion in federal stimulus money for transportation, reached a volatile conclusion:

cityroom_20090914_ahill_85420_Mino_large.png(Photo: WBEZ)

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."

The very idea of measuring the immediate effects of transportation stimulus spending on joblessness is highly dubious, for two reasons underscored by the U.S. DOT's quickly blogged pushback to the AP story.

Firstly, for all the White House's talk of "shovel-readiness," the need to put transport projects out to bid, sign contracts, and hire workers means that stimulus dollars take some time to affect broader local economies. The latest congressional data shows that work has started on 57 percent, or $19.7 billion, of the stimulus law's $34.3 billion in road and transit funding.

That ripple effect for transport spending ironically could end up helping states, such as Florida, that were slow out of the gate in allocating stimulus money but continue to struggle with high unemployment.

Secondly (despite the best efforts of some senior Democrats) transportation only accounted for 6 percent of the stimulus' $787 billion in total spending. Why expect such a small slice of the legislation to have a major impact on unemployment rates? House transport committee chairman Jim Oberstar (D-MN) and his top lieutenant, Rep. Pete DeFazio (D-OR), today compared the AP's assumptions to "saying it is a waste of time to feed a
homeless family because that one act does not cure poverty."

Also from Oberstar and DeFazio's rebuttal to the AP:

Furthermore,these statistics do not include indirect and induced jobs in the supply chain,such as positions that produce construction materials or manufactureequipment.  The impact of these jobs is not limited to a single state orlocal community.  For example, the Virginia Railway Express in NorthernVirginia used Recovery Act funds to purchase 15 locomotives manufactured inBoise, Idaho.  VRE will begin receiving the new locomotives later thissummer.  While this local decision creates jobs in Virginia, the impact isalso felt in Idaho and throughout the country’s vast supply chain.  Whenyou include these indirect and induced jobs, the Committee calculates thattotal employment from transportation investments under the Recovery Act reachesover 760,000. 

Perhaps the most curious of the AP reporters' rhetorical flourishes was this sentence:

Even within the construction industry, which stood to benefit most fromtransportation money, the AP's analysis found there was nearly noconnection between stimulus money and the number of constructionworkers hired or fired since Congress passed the recovery program.

It's true that the transportation represents a small sector of the broader construction industry. But that industry is dominated by home building, which is still coming down from an unprecedented bubble-bursting.

And expecting the industry as a whole to benefit from transport-specific spending that was funneled through state DOTs is rather like expecting the industry to benefit from more spending on military aircraft; after all, Boeing works on construction as well ...

Even transport reform advocates who found the stimulus bill something of a letdown emerged today to scratch their heads at the AP's work. Laura Barrett, executive director of the Transportation Equity Network, said in a statement:

In a perfect world, we could spend years constructing a perfectly efficienteconomic stimulus program. In the real world, people need jobs today. Mosttransportation jobs pay good wages and help build careers that lift familiesout of poverty. We need more transportation spending in the new jobs billbefore Congress, not less — especially in the public transportation sector, whichcreates nearly twice as many jobs per dollar as road construction does, and helps protect ourenvironment at the same time.

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