Friday, November 20, 2009

The Problem With... President Obama's Stimulus Package.

[Editor's Note: Yep, it was bound to happen.]

When President Obama announced plans for the American Recovery and Reinvestment Act of 2009 (aka: the stimulus package), I was in agreement. By taking a huge amount of gubb'ment money and using it for the purpose of rebuilding crumbling infrastructure, making investments in the future, and extending unemployment and healthcare benefits to those less fortunate, the Act would both save and create jobs, as well as provide a Band-Aid to possibly lessen the financial devastation of those out of work.

As details of the plan rolled out, I was less enthused. The original amount for providing infrastructure upgrades (aka: creating jobs) was far less than originally intended, since the Democrats on the Hill caved in and let the GOP load it up with pointless tax breaks. Ditto for the amount allocated for pre-K programs, also sharply reduced in the name of bipartisanship.

In the end, although a whopping 2/3 of the money allocated for the act ended up being for tax breaks and entitlements which don't create jobs even in the best scenario, I was still down. The remaining $275B would be spent to keep Americans working or put them back to work. Or so I thought.

Nearly a year later, unemployment has soared to 10.2%, with no reversal in sight. Much of the money that should be creating jobs has yet to be rewarded, tied up in the bureaucratic soup of DC politricks. I guess you could see this as a good thing: nobody wants taxpayer money (or more charges on our ChinaOne MasterCard™) to be blown on stuff that doesn't save or create jobs. Going over grant and contract applications with a fine toothed comb is essential to limiting fraud.

Or so I thought.

In recent weeks, stories have trickled out about how initial stimulus money has been spent, and how it's been attributed to jobs created on the gubb'ment watchdog site And my friends, the early returns are not pretty. In fact, they're pretty infuriating, as you'll find if you read a compilation of reports that the local fishwrap, the Washington Examiner just culled together. Here's merely a smattering of what the report mentioned.
More than ten percent of the jobs the Obama administration has claimed were "created or saved" by the $787 billion stimulus package are doubtful or imaginary, according to reports compiled from eleven major newspapers and the Associated Press.

Based only on our analysis of stimulus media coverage in the last two weeks, The Examiner has documented exaggerated stimulus claims. The report, which will be updated as new revelations appear, currently reflects an exaggeration by the Obama administration of about 75,000 jobs, out of the 640,000 jobs supposedly "created or saved."

This reflects reports from The Wall Street Journal, The Boston Globe, the Sacramento Bee, The New York Times, USA Today, the Las Vegas Sun, the Detroit Free Press, the New York Post, the Milwaukee Journal-Sentinel, the Associated Press, the Chicago Tribune, and the Atlanta Journal-Constitution. It remains a work in progress because relatively few newspapers have scrutinized stimulus spending so far.

The Obama administration has claimed that the $787 billion economic stimulus package "saved or created" some 650,000 jobs. But almost as soon as the White House trotted out this figure, news organizations found huge exaggerations in the reported data. Many of the jobs reportedly created do not exist or cannot be accounted for.

The Southwest Georgia Community Action Council claimed to have saved 935 jobs with the $1.3 million it received, even though only 508 people work there. In fact, the group used most of its grant to give raises and now says it created 9.35 jobs.

“The Bergen County Community Action Program in Hackensack, N.J., noted the nearly $213,000 it received went to cover raises for existing staff only, but it also reported saving 85 jobs.”

The Child Care Association of Brevard County reported creating 129 jobs with $98,669 in stimulus money. In fact, “the cash was used to give her 129 employees a 3.9 percent cost-of-living raise.”

Koring Group in Toledo, Ohio reported hiring 52 people, but it turns out that they double-counted jobs that “only lasted about two months.” The FCC estimates that “actual job count is closer to five.”

The Mid-Willamette Valley (Oregon) Community Action Agency reported 205 jobs created or saved with $397,761. The money was actually used for pay raises.

A Kentucky shoe-store owner claimed he created nine jobs on an $889.60 contract. In fact, he supplied nine pairs of shoes to the Army Corps of Engineers.

Stetson University in DeLand, Fla claimed to have created or saved 483 jobs with a grant of only $193,469.

Officials at East Central Technical College in Douglas, Ga. “said they now know they shouldn't have claimed 280 stimulus jobs linked to more than $200,000 to buy trucks and trailers for commercial driving instruction...The 280 were not jobs, but the number of students who would benefit...”

In DC, $3,500 purchase of paint was credited with saving or creating a job.

The California State University system received $268.5 million in stimulus funds and claimed that the money allowed them to save over 26,000 jobs or half its workforce. But when pressed, the California State University system admitted they weren't really going to lay off half their workforce, and that in fact few or none of these jobs would have been lost without the stimulus. "This is not really a real number of people," a CSU spokesman said. "It's like a budget number."

Of the 34,500 jobs allegedly saved or created by the stimulus in Washington State, 24,000 belong to state teachers already under contract to finish out the school year, whose jobs were never in jeopardy. Rather, stimulus money was shuffled to them and their money went to offset budget cuts elsewhere.

In Arlington, VA $100,000 in stimulus money is being used to start a wine bar.

Two child care centers in central Colorado claimed to have created 292 jobs with $650,000 in grant money. In fact, the money went to pay raises.

The local Head Start program in Greenfield, Mass. claimed 90 new jobs, but actually created no new jobs, and used its $245,000 grant to give pay raises.

The company Teletech claimed to have created 4,300 jobs from a $28.4 million contract, but in fact 3,000 of the jobs lasted only a month.

Bridgewater State (CT) College claimed to have created 160 jobs with a $77,000 grant. The college acknowledged the mistake, and said no new jobs were created.
Before anyone goes off on a tangent about this being some rightwing conspiracy, a majority of these accounts were reported by The Associated Press, which is about as close to a non biased news agency as you'll find. If you think this is all BS, just go read the report and google the stories themselves. Nothing's being made up here.

As I said earlier on, anytime you send this sort of money out the door, the possibility for fraud and waste is pretty much a given. People will game the system. But it's the gubb'ment's job to make sure that those who receive the money are on the up and up, and are being truthful about the money being spent and the jobs saved and/or created. There is simply no excuse for this sort of numeric trickery by states, counties, and cities wasting money to such a degree. Some reports on have stimulus money going to Congressional districts that don't even exist. I should also note that the money being burned is spread evenly across the electoral map, so this ain't a partisan issue. Everyone's gaming the system, and it's a damn shame.

There are plenty of fingers to point here. The folks in DC needed to better scrutinize the grants and contracts they awarded. The state/local authorities needed to be more truthful. shouldn't have reported job claims without substantiation. A gauge of true "jobs saved" is curiously absent.

But ultimately, the real culprit here is Obama himself. Sh*t rolls upstream, and ultimately the buck stops with the guy who introduced the idea in the first place. I suspect Republicans are being eerily silent on all this waste because their hands are also in the cookie jar, but the handful of Governors who refused stimulus funds last Spring are suddenly looking like geniuses, even if in each case they were overruled by their state's legislatures.

This is a textbook example of a great concept with piss-poor execution. And let the record reflect that I still support the President overall, but given the exaggerated job claims, the lack of accountability, and the billions in blown money that could have been better allocated (or simply not allocated at all), I have no choice but to label the American Recovery and Reinvestment Act of 2009 an Epic (and very Expensive) Fail.

Question: What do you think about this report? Did you originally support the stimulus package? What could have been done to ensure greater accountability and less fraud? How does the country reverse this freefall of lost jobs?

75,343 Bogus jobs 'created or saved' by the Stimulus [Washington Examiner]

Stimulus saves jobs in nonexistent districts [Washington Examiner]

Stimulus Funding For A Wine Bar? [WUSA9]


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