Alan Reynolds takes a nuanced approach to where stimulus funding went, and why it didn’t “create jobs” or increase GDP, and probably increased unemployment:
[T]he GDP report clearly said the gain “reflected an increase in private inventory investment, a deceleration of imports and an upturn in nonresidential, fixed investment that was partly offset by decelerations in federal government (defense) spending and in personal consumption expenditures.”
Since federal spending accounted for exactly zero of the only significant increase GDP, how could such spending possibly have “created or saved” 2 million jobs?
The bill was launched last year amid grandiose promises of “shovel ready” make-work projects.
In reality, as the CBO explains, “five programs accounted for more than 80% of the outlays from ARRA in 2009: Medicaid, unemployment compensation, Social Security … grants to state and local governments … and student aid.”
In other words, what was labeled a “stimulus” bill was actually a stimulus to government transfer payments — cash and benefits that are primarily rewards for not working, or at least not working too hard.
In 2010, as in 2009, the ARRA is mainly a stimulus to government. ..
My own estimate, in past articles available at cato.org, is that the stimulus act added about 2 percentage points to the unemployment rate.
Andrew Cline also has a good piece on the logic of the stimulus and “job creation”
The question is not: How many jobs were funded by the stimulus bill? The question is: How many jobs would have been funded if that same money had been put to other uses? The American people seem to think, not unreasonably, that more jobs would have been created without the stimulus bill than with it.