Here is a graph of planned infrastructure spending per person (by state) against the state unemployment rate. The spending doesn't look especially targeted. But would more targeting be better? Not if that meant less useful spending. The unemployment rate in Michigan is very high but that doesn't mean it's a good idea to spend a lot of money building schools in Detroit.
Fiscal stimulus would work better if the useful spending potential happened to be in the places where the unemployment rate was high but there's no reason to expect that to be the case. Every recession requires reallocation.
The ProPublica site maps/graphs infrastructure spending per unemployed worker against the unemployment rate but in effect that puts the number of unemployed people on both sides of the regression/graph and if there is any measurement error this can result in bias. The graph with spending per unemployed worker is similar to the above but with a slightly more negative slope.
I don’t understand your point about targeting and re-allocation. When I look at this, I see that disproportionately large per capita infrastructure spending is going to states with small populations. That’s all I see and I don’t find it surprising.
Hm. I recall reading that DC and the surrounding area had one of the lowest unemployment rates in the country. Guess I was wrong.
Wow, this really looks like an “Empty and Northern” effect. Looks like the results are being driven by four contiguous unpopulated outliers. AK and VT are also unpopulated and northern as well…and DC…we could have guessed that one. I’m worried that the results are being driven by these few outliers.
Senate malapportionment guarantees that when the Senate writes a formula to distribute federal dollars to the states (such as infrastructure spending in the stimulus bill), each state’s allotment will not be proportional to its population. Low population states always secure the highest per capita dollars when the Senate writes a formula. You will also find that state Medicaid funding in the stimulus bill bears little relationship to state unemployment levels.
This isn’t a function of the inabilities of the Michigan delegation; it’s a function of the Constitution that grants equal voting power to states regardless of population.
Why didn’t the House insist on a formula that targeted dollars according to need? Think Ben Nelson (Nebraska), Susan Collins and Olympia Snowe (Maine)!
I haven’t read any discussion of this, but I always wondered if the long writer’s strike was going to exacerbate California’s budget problems. Has anyone estimated tax revenue losses for this? Maybe I’m overstating the case…
Maybe this will help clear the housing market as people move to where there are jobs. I think this because I think the fastest cure to the housing problem is the take to loss now.
I would say that California should consider secession, but with the direct democracy going here we wouldn’t last long.
The surrounding area is low, but DC itself is not. The DC Metro area, which includes a lot of non-DC, is low.
Like St. Louis proper, DC is a very small part of its own metro area.
Fixed.
Of course, if DC only charged reasonable usage fees and congestion charges for the Metro and roads, it wouldn’t be such a problem.
control for tax base?
still try to connecting that to be politically correct, gvt consider to spending more initiative in infrastructure investment rather than reducing tax incentive .. mm
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Wow. As a fairly libertarian Michigan resident, I didn’t think I could dislike the stimulus any more than I already did. But this graph does it. Thanks, Alex
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