The Dark Side Of the Stimulus

The dark side of the stimulus…well, that’s a funny thing to say. There was never any side of the stimulus that was not dark. Some may believe the Stimulus was feckless but benign. It wasn’t. It did actual harm by destroying job creation. See this post at Powerline showing how job creation 22 months after the official end of the recession is the lowest in history. The graph constructed there from U.S. Labor statistics shows that new job creation and stimulus spending were inversely related.

Now we find out from the Government Accountability Office that many companies that received Stimulus money were tax cheats, owing millions in unpaid taxes. Did they use Stimulus money to pay their taxes? Well, money is fungible so if they paid their taxes after receiving money from the Government it is no different than having the Government forgive their delinquent tax liability. Good work if you can get it, and it appears many did.  No doubt some just took the money and still didn’t pay their taxes.  Senator Carl Levin, D-Mich., chairman of the investigations subcommittee that will be holding hearings, said it’s been known for years that a few federal contractors and grantees don’t pay their taxes.  So, the Government gave them Stimulus money anyway?  Yeah, and apparently it was not just a “few.”

Quoting from the GAO report the Associated Press states:

Thousands of companies that cashed in on President Barack Obama’s economic stimulus package owed the government millions in unpaid taxes, congressional investigators have found.

The Government Accountability Office, in a report being released Tuesday, said at least 3,700 government contractors and nonprofit organizations that received more than $24 billion from the stimulus effort owed $757 million in back taxes as of Sept. 30, 2009, the end of the budget year.

The report said the tax delinquents accounted for nearly 6 percent of the 63,000 contractors and grantees examined and cautioned that the real number might be higher because the known tax debt does not measure such factors as income underreporting.

Some of the corporations receiving Stimulus money are said to have owed unpaid payroll taxes for past years.  If so, it’s a mystery they were still in business.  There is no worse company killer than when managers fail to turn over to the IRS money withheld from employee paychecks.  Any lawyer and most accountants will advise a client to pay that first, before any other creditor.  The IRS saves its strong horse for collection of those taxes.

Stimulus, porkulus, job destruction, crony capitalism, Keynesian crapola — it’s the kind of mess Government uniquely creates.

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