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PolitiFact: Stimulus focused more on tax cuts than infrastructure


Just over eight years ago, President Barack Obama signed the American Recovery and Reinvestment Act, more commonly known as the stimulus.

Its supporters give it a measure of credit for making the Great Recession milder than it could have been. But critics, including President Donald Trump at a town hall Tuesday for CEOs, say it was a whole lot of nothing.

“You know, there was a very large infrastructure bill that was approved during the Obama administration, a trillion dollars,” Trump said. “Nobody ever saw anything being built. I mean, to this day, I haven’t heard of anything that’s been built. They used most of that money on social programs, and we want this to be on infrastructure.”

Let’s take a look at what the stimulus did, and didn’t, achieve.

Not primarily an infrastructure bill

The stimulus ultimately cost just over $800 billion. (Earlier estimates had been higher, so we won’t quibble with Trump’s rounding it up to $1 trillion.)

The “shovel-ready” aspects of the stimulus tended to attract the most attention. But if you look at how the funds were allocated, only a fraction was ever intended to go to infrastructure.

According to the Council of Economic Advisers, about 35 percent of the expenditures went for tax cuts for individuals and businesses; about 18 percent went for aid to cash-strapped state governments to offset cuts to health and education programs; and about 14 percent went for “safety-net” expenditures paid to individual Americans, such as added unemployment payments.

That leaves 34 percent for “public investment.” And the amount actually spent on infrastructure was even smaller than that, since the “public investment” category also covers such things as Pell grants, education for disabled students and scientific research.

In his book, “Money Well Spent? The Truth Behind the Trillion-Dollar Stimulus, the Biggest Economic Recovery Plan in History,” ProPublica journalist Michael Grabell estimated that only about $80 billion, or roughly one-tenth of the act’s spending, was devoted to what people would normally think of as “infrastructure.” And of that, he found, only about $27 billion was spent specifically on roads and bridges.

By the numbers, then, it would be at least as accurate to call the stimulus a tax-cut bill as it would be to call it an infrastructure bill.

Meanwhile, saying the bill spent money on “social programs,” as Trump did, is an exaggeration at best.

Perhaps the safety-net expenditures and aid to governments could be considered “social programs.” Either way, they would total less than one-third of expenditures.

Building did occur under stimulus

Even observers who see some value in the act acknowledge it was far from perfect.

For instance, Grabell concluded in a 2012 op-ed that a lesson of the stimulus is that “government can create jobs — it just doesn’t often do it well.”

Grabell wrote that “money was spread far and wide rather than dedicated to programs with the most bang for the buck.”

” ‘Shovel-ready’ projects, those that would put people to work right away, took too long to break ground,” he wrote. “Investments in worthwhile long-term projects, on the other hand, were often rushed to meet arbitrary deadlines, and the resulting shoddy outcomes tarnished the projects’ image.”

That said, the stimulus did build things.

“The notion that the New Deal built bridges and dams while all the stimulus did was fill potholes isn’t entirely true,” Grabell wrote in his book. “Generations from now, there will be countless projects that communities can point to as the enduring legacy of the American Recovery and Reinvestment Act. The $80 billion for roads, runways, waterworks, rails, federal buildings, and parks was one of the largest investments in the nation’s infrastructure since President Eisenhower established the Interstate Highway System in the 1950s.”

Just to cite a few of the bigger projects, the Recovery Act helped push to completion the $1 billion DFW Connector highway in Dallas-Fort Worth; a $650 million elevated truck route to the Port of Tampa; and new light-rail lines in Salt Lake City and Dallas.

Our ruling

Trump said, “There was a very large infrastructure bill that was approved during the Obama administration, a trillion dollars. Nobody ever saw anything being built.”

His characterization is flawed.

The single biggest portion of the law actually consisted of tax cuts. As for the infrastructure portion of the law, it did indeed produce results, even if they were somewhat more underwhelming than its backers had initially hoped.

We rate the statement Mostly False.



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