Federal Stimulus Is Govt Growth

Katy Grimes: Claiming to save or creating jobs for federal workers, at a cost of $94,000 per job, San Francisco officials are touting a building renovation project as a way to “stimulate” the cities’ economy. Mayor Gavin Newsom and U.S. Senator Barbara Boxer have each boasted recently about the seismic upgrade and renovation of the historic Federal Building at 50 United Nations Plaza.

The General Services Administration is even taking some of the credit: “We are contributing to our nation’s economic recovery through our reinvestments in our public buildings and we are supporting the President’s vision for a clean energy future.” Don’t you just love it when a government agency, funded entirely with taxpayers’ money, claims the “investment” as their own.

Recently Mayor Gavin Newsom, together with officials from the GSA “celebrated a major milestone in the seismic upgrade and renovation of the historic 50 United Nations Plaza Federal Building.” The 80-year old building was selected by the American Recovery and Reinvestment Act “due to the leadership of President Barack Obama, Speaker Nancy Pelosi and Senators Dianne Feinstein and Barbara Boxer for $122 million in federal stimulus funding to bring the historic building to 21 st century standards.”

Leadership now requires being able to spend other people’s money, really well.

“The seismic renovation and transformation of this historic federal building into a sustainable, energy efficient new landmark is another major step towards the revitalization of UN Plaza and the Central Market neighborhood,” said Mayor Newsom at a recent press conference. “San Francisco is the birthplace of the United Nations, and this important federal stimulus project will create 1,300 new jobs and catalyze new economic and cultural activity in historic UN Plaza.”

Sen. Boxer posted on her website about “the good news about an exciting project that will create more than a thousand new jobs in San Francisco.”

This one renovation project, which according to GSA “will create or save 1,300 jobs,” is being funded with a $122 million investment from the American Recovery and Reinvestment Act.

But the real kicker is that GSA will move into the building from its current San Francisco headquarters in early 2014. Since when does a government agency get $122 million to renovate and redesign its own office space?

Boxer and Newsom claim that the renovation project will “lead to additional economic growth in and around UN Plaza while helping to revitalize the entire Central Market neighborhood. This project is yet another example of how the Recovery Act has saved and created jobs while providing much-needed improvements to our nation’s infrastructure.”

How very Keynesian. The stimulus fund has done virtually nothing for the private sector, but at least explains why we still see expansive public sector growth. Keynesian economics pushes a large role of government as well as the public sector.

The Obama administration and Congress justify staggering government borrowing and spending by insisting that it constitutes “fiscal stimulus.”

But many level-headed, common sense economists disagree. “It is no wonder then that when President Obama told the public last month that stimulus projects were under budget, Nobel economist Paul Krugman cried “boo,” pointing out that this meant “less stimulus.” He backed his point with a quote from the 1936 General Theory of Employment, Interest and Money, in which John Maynard Keynes suggested that the government could raise employment, real income and capital wealth merely by burying money under rubbish heaps and inviting private enterprise to dig it up,” wrote Benn Steil, an International Economics director at the Council on Foreign Relations.

Steil explained that there are two distinctive brands of economic remedy: “The first are government measures intended to eliminate obstacles to the adaptation of supply to changing demand. This is the now much-maligned classical brand of remedy. The second are fiscal and other government measures designed to force demand to adapt to supply. This is the Keynesian brand of remedy, now beloved in Washington, based on the belief that under-employment is a congenital defect of the economic system.”
So will the federal building restoration project in San Francisco successfully stimulate the economy? It’s doubtful. And at $94,000 per job, the construction workers will complete the project in a year or two… and then what? At least the base rate for their unemployment checks will have increased.

$5.5 billion is going to be spent to renovate 265 government buildings in the country – government buildings. Where exactly is the stimulus?

DEC. 28, 2010