Gotcha on stimulus spending? 

Ace numbers-cruncher Nate Silver in his 538.com blog criticizes the study Veronique de Rugy conducted for George Mason University’s Mercatus Center, in which she showed that congressional districts represented by Democrats got about twice the funds ($692 per capita) from the 2009 stimulus package that Republican districts did ($362 per capita). Silver says that this is in large part because districts that contain all or parts of a state capital received a lot of money. De Rugy in a response concedes that she didn’t take this factor into account. She also reiterates her conclusion that there is no correlation between unemployment levels and stimulus spending. Silver has responded with a graciousness not always seen in his confreres on the left.

There was something of a Gotcha! tone to Silver’s initial post. He continues to express skepticism that Democrats designed the stimulus package to funnel money to Democratic districts. But he ignores another political implication of his correct finding that state capital congressional districts got so much from the stimulus package. Why did districts with state capitals rake in so much money? Because one-third of the stimulus dollars went to state and local governments. The obvious purpose was to shield public employee union members from the economic distress and uncertainty faced by so many Americans in the private sector—to pay off the unions (most of whose members are public employees) which contributed something like $400 million to Democrats in the 2008 cycle. I suppose this has some stimulative effect on the macroeconomy, though perhaps not as much as would have come to sending stimulus checks directly to Democratic donors. But it leaves Democrats vulnerable to the charge that they are favoring public sector employees (and public sector union leaders) over the far larger number of Americans who depend on the private sector.

In this recession we have lost about 7 million private sector jobs, while job loss in the public sector has been just about zero. I suppose Silver might argue that pumping money into the public sector is a good thing because it maintains desperatelty needed public services and countercyclical spending like unemployment benefits. But does he really want to defend the proposition that you can't cut even one public sector job without damaging the public?

An additional note. Silver expressed surprise that stimulus spending was relatively high in the 3rd district of South Carolina, which doesn’t include Columbia. He might have noted as well that lots of stimulus dollars went to the 4th district of Washington, which is on the other side of the Cascades from Olympia, and which with the South Carolina 3rd is the only non-state capital district among the top 25 districts on de Rugy’s list. What these two districts have in common is the presence of two Energy Department nuclear manufacturing sites—the Hanford Site and the Savannah River Site. These have had huge pollution problems, and have been part of a multi-year, multi-billion-dollar cleanup process. I gather that the Energy Department was in a position to ramp up this process quickly and got a lot of stimulus funds to do so. This may be a worthy use of federal dollars; these sites were contaminated because we were sloppy in the development of nuclear weapons during World War II and the Cold War, and it may very well make sense to clean them up. In effect we’re paying for past wars, as we do when we pay for veterans’ benefits. But it’s not clear to me that this has much of a stimulative effect on the American macroeconomy.

You may be wondering which other non-state capital districts attracted the most stimulus spending. The answer: New York 14 (midtown Manhattan), Illinois 7 (Chicago Loop), Maryland 7 (Social Security headquarters), Tennessee 3 (Oak Ridge nuclear installation), New York 8 (lower Manhattan). In other words, financial centers, government bureaucrats, another nuclear site. Silver, in seeking to discredit the argument that stimulus spending was targeted at Democratic districts, has raised questions about where it was targeted, the answers to which may not help Democrats politically.

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Doug Graham

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