Is the Federal Stimulus Benefiting Missouri at the Expense of Wisconsin?

The editorial board at my hometown newspaper, the La Crosse Tribune, is critical of the way that federal stimulus funds are being spent in Wisconsin. An editorial published yesterday, “They’re feeling the stimulus … in Missouri,” laments that public works projects in western Wisconsin are being awarded to out-of-state contractors instead of to local ones.

So here’s a scenario that’s a result of force-feeding the U.S. economy through the tube of federal agencies: While $12.5 million in stimulus money will fund projects on French Island and Brice Prairie, projects that local contractors say they could handle, only a handful of out-of-state firms are allowed to bid them.

In one case, a Kansas City, Mo., company got the nod to build a $6.1 million district office on French Island for the U.S. Fish and Wildlife Service. And only three firms, all out of state – one them a Missouri-based subsidiary of an Australian steel company – are in the running to handle two projects at the Upper Mississippi Environmental Sciences Center.

It’s rare that I read an article that interests me on a both a biographical and a public policy level. Initially, I feel compelled to pick sides — but which should I support: the state in which I lived for 20 years or the state in which I live presently? Ultimately, I must decide that my conflict of interest is false, because I disagree that the subject of the editorial is even an issue.

The purpose of the fiscal stimulus was to incite economic recovery on a national level, not for certain states on an individual level. Therefore, the La Crosse Tribune shouldn’t lament the fact that a project wasn’t awarded to a Wisconsin-based firm — instead, it should celebrate the fact it went to an American firm. Furthermore, federal money comes from taxpayers in all states, not just those who live in Wisconsin or in Missouri. State officials and residents shouldn’t feel that their companies are entitled to federal stimulus money simply because a project lies within its borders.

States win and lose business from each other all the time in response to supply and demand — this is the beauty of the interstate trade. Wisconsin lost at least one free-market research analyst to Missouri in the last year, along with other business, but the editorial board at the La Crosse Tribune didn’t write about that. Why, then, does it bring this particular project to light? There are probably many public works projects in Missouri that are bid on by out-of-state vendors, perhaps even from Wisconsin.

As some readers point out in the comment section, awarding the project to a Missouri-based firm may not result in as many lost jobs for Wisconsin individuals and families as suggested in the article. This is because the Missouri firm could use local laborers, including perhaps the employees of the Wisconsin-based firms that were outbid.

The practice of soliciting bids from many contractors, regardless of their origin, is very good because it encourages competition and its positive consequences. If many contractors bid for a single public works project, it drives down cost and taxpayers get more for their money.