The Inevitable Waste and Corruption of “Stimulus” Spending

A good theory has predictive power. A prediction doesn’t automatically make a theory true, but it’s a good first test in my opinion.

Quite a while ago, I made the case, based on praxeological reasoning, why bureaucracy can’t ever accomplish its stated objectives in the long run.

Based on that theory I suggested many times over that government stimulus programs will not be a panacea to economic sluggishness, quite the contrary.

In particular I wrote almost 3 years ago:

The $800 billion spending bill that is currently being discussed will not fix the US economy.
This bill was never [Obama’s] bill. It was the Congressional Democrats’ bill, led by Harry Reid and Nancy Pelosi. Now Obama has made it his bill. All the scandals, wasteful projects and corruption that will be uncovered under the projects funded by it will be associated with him.
To ignore [those who oppose it] would be the biggest mistake Obama could make now.
If he continues doing it, the political retaliation will ensue sooner or later in the next Congressional elections and maybe in the next presidential elections. This is an unnecessary, harmful, and avoidable political gamble.

Here we are, almost 3 years later, with an unemployment rate higher than it was at the time (~9% now vs. ~8% then), which I would submit as one piece of evidence that the stimulus did not work. (My readers will know that there are many more, but that’s not the main point of this post!)

(And yes, I know the good old argument that “it would have been much worse, had it not been for the stimulus” etc. I would only kindly ask that anyone wanting to submit such an argument please logically refute the counter arguments that I have already laid out very clearly in The Trouble With Bureaucracy, and empirically supply specific examples that corroborate this thesis and that outweigh any evidence that may exist to the contrary.)

But in addition to that, I would say that the corruption, scandals, waste, and the ensuing political backlash that I predicted above, have only just begun to unravel: The case of Solyndra is suddenly a big thorn in the administration’s side, and it doesn’t seem to be going away any time soon:

Pressure on the Obama administration over the loan guarantee given to Solyndra ratcheted up after the discovery of e-mails from a White House official warning of possible political ramifications of the loan. As Carol Leonnig and Joe Stephens reported:

A White House official fretted privately that the Obama administration could suffer serious political damage if it gave additional taxpayer support to the beleaguered solar-panel company Solyndra, according to newly released e-mails.


Solyndra, the first renewable-energy company to receive a loan from the stimulus law creating the guarantee program, had its headquarters raided by the FBI last week. As AP reported:

The FBI raided Solyndra’s headquarters last week and interviewed company executives at their homes. A U.S. official, who spoke on condition of anonymity because the case is under seal, said the search was related to a fraud investigation into whether Solyndra filed inaccurate documents with the government.

The Silicon Valley company was the first renewable-energy company to receive a loan guarantee under the stimulus law, and the Obama administration frequently touted Solyndra as a model for its clean energy program. President Barack Obama visited the company’s headquarters last year.

Even as Obama declared that “the future is here” during a May 2010 visit to Solyndra, warning signs were being sent from within the government and from outside analysts who questioned the company’s viability.

At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program.

… and as was predictable, Republicans are happy to pounce:

“What did the stimulus give us last time? It gave us Solyndra,” Bachmann said to cheers at a packed Tea Party fundraiser this week in liberal Marin County. “Wasn’t that great?”

Bachmann is among the growing ranks of Republicans, including the lineup of 2012 GOP presidential candidates, who are increasingly salting their stump speeches, press releases and talking points with references to the Fremont firm that once was a poster child for the Obama administration on alternative energy jobs before it shut down last month.

The Minnesota Congresswoman and Tea Party darling delights audiences when she dryly quotes Vice President Joe Biden’s past observation that the federal government’s $528 million loan to Solyndra “was exactly what the stimulus act was all about.”

“It’s exactly true,” she said to cheers and applause from conservative activists in Marin on Thursday. “I tell you … we have so much material, it’s going to be a joy.”

Read more:

I would actually be shocked if this will remain the only example of blatant stimulus waste that will come back to haunt the president.

Actions have consequences; stupid decisions, whose long term impact you are unable to assess, will come back to bite you in the ass, particularly during election year. From the Republicans’ viewpoint, Obama could not have picked a better time for pushing the stimulus bill, since it usually takes at least a few years for all the filth and corruption of giant government programs to build up and trickle through the shiny, pompous, and mindless facade of politics.

But as I have come to realize about politics a while ago, the best thing to do in my opinion is to abstain from participating in these spectacles, sit back, relax, and don’t hurt your head too much about petty, boring, and small minded sociopaths who aspire to exercise power over millions of people year after year.

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