No single event highlights the lack of job prioritization and failure of President Obama's stimulus plan more than the recent news flowing from the Chicago Transit Authority. In September, the CTA received $241 million in funds from the Economic Recovery Act only to announce yesterday that the agency will increase employee furlough days, eliminate holiday pay, and layoff 70 employees.
On September 21st, the CTA announced the receipt of $241 million in Federal Stimulus funds. The funds, however, were not to be used to shore up the CTA budget suffering from revenue shortages. Instead, the stimulus funds were to be used for track replacement, the rebuilding of a station and the purchase of 58 hybrid buses.
Although the administration claims that such funds were necessary to save and create jobs, the failure of this funding was marked by the reality that the CTA stimulus funding has failed to create a single job. Proponents of President Obama and the stimulus plan would cite that money used to purchase new buses would lead to job creation within the manufacturing industry. However, in the case of the CTA that argument does not hold up. The CTA contracts bus purchases from a Canadian firm, New Flyer Industries, a Winnipeg, Manitoba based company. Although the company maintains two Minnesota based manufacturing facilities, the St. Cloud, Minnesota facility announced 300 layoffs at the plant despite the CTA purchase. As a result, not only did millions of stimulus funds fail to create manufacturing jobs, but a large portion of the money flowed out the United States.
The more important lesson to be derived from the CTA experience is the reality that federal stimulus dollars failed to live up to the "jobs bill" description that congress and the President tauted. The $241 million received by the CTA was not utilized to shore up a failing budget, but rather required the money be used on capital projects that could have been delayed. As a result, the transit authority issued a disturbing press release yesterday. The CTA announced a projected $300 million shortfall, much of which could have been offset by the stimulus funds. As a result, the agency is forced to eliminate of 70 jobs, defer merit pay raises, eliminate holiday pay and require up to 12 additional furlough days for non-union employees. Even more disturbing than the announced layoffs is the reality that such cost-cutting measures only apply to the CTA's non-union employees. Despite the $300 million shortfall, union employees will continue to receive paid holidays, are not subject to furloughs and will receive a 3.5% pay raise next year. Apparently, what is good for the goose is not good for the gander.
Although the $241 million received by the CTA represents only a small fraction of the overall stimulus spending, it highlights the hundreds of such wasteful stimulus programs that have not led to the creation of single job. The Economic Recovery Act was nearly five times larger than any stimulus plan in history and yet has failed to speed up economic recovery. In February, prior to the passage of the Economic Recovery act, the Federal Reserve expected the recession to end in the second half of this year, yet despite passage of the stimulus bill the economy still shrunk in the third quarter.
Comments
Good call reminding everyone that Canada is not the United States, the money should be spent at home. It is possible however that New Flyer would have layed off even more employees were it not for the CTA order. The goal was to create or retain jobs after all.
You are mistaken that CTA could have delayed capital projects. Rail transit all over the country has been postponing capital maintenance and rehabilitation projects for too long. When we fail to make such investments service suffers first and safety not long after that. The CTA is textbook example of the tragedies that can occur when infrastructure is neglected.
The idea that capital projects in this case could not wait until a recovery is ridiculous. As far as Dave's "retain jobs" argument, get real. The DOL reported that new job openings and hires have consistently dropped since the porkulus bill passed. If this stimulus plan, five times larger than any in history was working, then why is congress discussing another stimulus package. This administration will bankrupt this nation and our economy will suffer under 10% unemployment for a decade.
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