Transportation Secretary Attacks AP Report, Draws Blanks

Transportation Secretary Ray LaHood took to the blog today to try to refute a devastating AP report showing that the the stimulus's highway and road funding has done next to nothing to improve the unemployment situation. Though he offered a couple of valid points, LaHood, pictured right in a file photo, actually did very little refuting.

The AP asserts in its report that "there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it."

LaHood points out--fairly--that the AP examines the construction industry as a whole while the seven percent of the $787 billion that went towards funding highway and road construction (roughly $55 billion) only affects the transportation construction industry, not the industry as a whole.

But in doing so LaHood admits, as NRO's Steven Spuriell notes, that the stimulus "saved or created" jobs for at the very least $213,000 a piece. This statistic assumes that the stimulus saved every single job in the transportation construction industry--LaHood estimates the industry is comprised of 258,000 Americans--so the actual cost is probably much higher (surely at least a few highway construction workers would have kept their jobs without the stimulus).

Furthermore, the AP report seems to take into account the differences between construction spending generally, and spending on road and highway construction. It sought to determine, after all, whether the level of such spending had a discernible effect on employment, and found that it did not. Since the stimulus is designed to put people to work, and not just in the transportation construction industry, overall employment is the ultimate--indeed, the only--measure of its success.

The AP reported,

"Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

With the nation's unemployment rate at 10 percent and expected to rise, Obama wants a second stimulus bill from Congress including billions of additional dollars for roads and bridges — projects the president says are "at the heart of our effort to accelerate job growth." …

But AP's analysis, which was reviewed by independent economists at five universities, showed the strategy of pumping transportation money into counties hasn't affected local unemployment rates so far.

"There seems to me to be very little evidence that it's making a difference," said Todd Steen, an economics professor at Hope College in Michigan who reviewed the AP analysis.

And there's concern about relying on transportation spending a second time.

"My bottom line is, I'd be skeptical about putting too much more money into a second stimulus until we've seen broader effects from the first stimulus," said Aaron Jackson, a Bentley University economist who also reviewed AP's analysis.

The AP's report seems pretty cut and dry. The administration was very quick to issue its rebuttal of the report, but the response was lukewarm, and didn't actually refute the inescapable findings of the study: pumping money into the transportation construction industry is not helping the unemployment problem or the larger economic ills facing the country.

Appointments Economy Unemployment Wages & Prices Recession Stimulus Associated Press Online Media Government & Press Ray LaHood