How Is the Stimulus Money Allocated?

How Is the Stimulus Money Allocated?

April 1st, 2010

By Veronique de Rugy, National Review

 Obama is using the Stimulus for political purposes

Unemployment isn’t a factor, but politics is. Your stimulus dollars at work.

Using recipient report data from Recovery.gov, as well as economic and political data from the Bureau of Labor Statistics, the Census Bureau, GovTrack.us, and others, I have compiled a series of facts about stimulus spending. The complete dataset used for this report is available for download at Mercatus.org — it covers the fourth quarter of the calendar-year 2009 Recovery Act contracts and grants only — but here are the main facts.

First: The idea behind the $787 billion stimulus bill is that, if the government spends money where it is the most needed, it will create jobs and trigger economic growth. Hence, we should expect the government to invest more money in districts with higher unemployment rates.

Controlling for the percentage of the district employed in the construction industry, a proxy for the vulnerability to recession of a district, I find no statistical correlation for all relevant unemployment indicators and the allocation of funds. This suggests that unemployment is not the factor leading the awards. Also, I found no correlation between other economic indicators, such as income, and stimulus funding.

Second: On average, Democratic districts received one-and-a-half times as many awards as Republican ones. Democratic districts also received two-and-a-half times more stimulus dollars than Republican districts ($122,127,186,509 vs. $46,139,592,268). Republican districts also received smaller awards on average. (The average dollars awarded per Republican district is $260,675,663, while the average dollars awarded per Democratic district is $471,533,539.)

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