Friday, October 01, 2010

stimulus package gets high marks dispite public dumbing down by GOP

The massive economic stimulus package President Obama pushed through Congress last year is coming in on time and under budget - and with strikingly few claims of fraud or abuse - according to a White House report to be released Friday.

Coming barely a month before November's midterm elections, which will determine whether Democrats retain control of Congress, the report challenges public perceptions of the stimulus aid as slow-moving and wasteful - an image that has fueled voter anger with the dominant party. Even some former skeptics who predicted that the money would lead to rampant abuse now acknowledge that the program could serve as a model for improving efficiency in government.

By the end of September, the administration had spent 70 percent of the act's original $787 billion, which met a White House goal of quickly pumping money into the nation's ravaged economy, the report says. The administration also met nearly a dozen deadlines set by Congress for getting money out the door.

Meanwhile, lower-than-anticipated costs for some projects have permitted the administration to stretch stimulus money further than expected, financing an additional 3,000 projects, according to the report.

Despite the speedy spending, the report says that stimulus contracts and grants have so far been relatively free of the fraud charges that plague more routine government spending programs. Complaints have been filed on less than 2 percent of awards under the program.

"Certainly, the fraud and waste element has been smaller than I think anything anybody anticipated," said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan watchdog group. "You can certainly challenge some projects as questionable economically. But there haven't been the examples of outright fraud where the money is essentially lining somebody's pocket."

The report, a copy of which was provided to The Washington Post, is one in a series of assessments prepared by Vice President Biden, who was charged with overseeing implementation of the stimulus money, the largest effort in U.S. history to counteract the effects of a recession. The Congressional Budget Office originally estimated the package of tax cuts, state aid and direct federal spending would cost $787 billion over the next decade, a figure that has since been revised to $814 billion.

Biden delivered the report to Obama on Thursday during the president's daily economic briefing. In addition to assessing how the stimulus program has been carried out, the study restates the administration's case that the package has been effective economically, arguing that it staunched the worst bleeding in employment and led the economy to rebound late last year.

Many prominent economists agree with that assessment. The CBO has forecast that the package may be on track to meet the administration's goal of preserving 3.5 million jobs by the end of the year.

Congressional Republicans and many conservatives challenge those claims, arguing that the stimulus package led to record budget deficits while doing little to improve the economy. With the unemployment rate stuck at 9.6 percent, polls show that about two-thirds of voters agree with that view.

"The administration predicted that unemployment wouldn't rise above 8 percent if the trillion-dollar stimulus became law. We know how that turned out," Senate Minority leader Mitch McConnell (R-Ky.) said Friday. "Unemployment, now at 9.6 percent, has hovered near double digits since the stimulus passed; we took on an additional trillion dollars in debt, and Americans' confidence in the administration's economic arguments never recovered."

Signed into law by Obama in February 2009, the package was designed to stimulate economic activity and preserve jobs at a time when private-sector activity had virtually collapsed and employers were shedding an average of 750,000 jobs a month. Speed was of paramount importance, and the administration vowed to get 70 percent of the money out the door within 18 months.

The report shows that the administration has met that target, spending $551 billion of the original $787 billion. That figure includes $242 billion in tax breaks to families and businesses and $232 billion in payments to states, unemployed workers and other victims of the recession, the report says. The administration has also written $77 billion in checks for thousands of public works projects, with an additional $127 billion unspent but committed, the report says.

Meeting the 70 percent goal "is an important accomplishment," said Jared Bernstein, Biden's chief economist. "The fact that the impact of this program was quickly felt in the economy and quickly went to work breaking the back of the great recession is something we wanted to take note of."

Administration officials also highlighted the relatively small number of complaints about contracts related to the stimulus package. An independent board established to provide oversight has received just 3,806 complaints - less than 2 percent of more than 200,000 awards. Prosecutors have initiated 424 criminal investigations, representing 0.2 percent of all awards.

Typically, 5 to 7 percent of government contracts attract complaints, Bernstein said.

Stan Soloway, president of the Professional Services Council, which represents government contractors, said the unprecedented focus on oversight clearly paid off and should be analyzed for lessons that could be applied throughout the government.

"Given the ambitious nature of the stimulus, the fact that things have gone relatively smoothly suggests that they did put appropriate and adequate resources" into program oversight, said Soloway, an early skeptic of the package. "They definitely deserve credit for that," he said.

Bernstein said "people's feelings about the recovery act or the role of government in society" are unlikely to change because of Friday's report. "We have a ton more work left to do," he said.

But the report serves to verify, he said, that "the recovery act has accomplished much of what it set out to do."
Lori Montgomery Washington Post

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