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Follow the (Stimulus) Money...if You Can

posted by Stephanie Dhue, Correspondent at 6:00 PM on 05/12/09

Stephanie DhueThe rhetoric about "tracking every dollar that is spent" has gotten far ahead of the reality of doing that. The recovery.gov website that was set up to track stimulus money has very little useful information at this point, and it won't be truly operational until October. Even then, the information needed to "track every dollar" might not exist.

So far, the Obama Administration is only requiring federal agencies to track the money to the second point. Using the example in my report tonight, this means if the U.S. Department of Transportation granted money to New York State, it would be reported. If New York State then granted money to New York City, it would be reported. But the reporting would end there. We wouldn't know who ultimately got the money and how it was specifically spent.

There are also concerns about how the money is reported. Right now, the fund recipient reports back to the entity that gave them the money. Then the federal agency reports that data to the recovery.gov website. That builds in a reporting delay. Craig Jennings of OMB Watch says there is also danger the information has too much potential to be "scrubbed" to tell the story in its best possible light.

But the rhetoric from the administration is in the right direction. I used to work for investigative columnist Jack Anderson. One of his favorite sayings was, "sunlight is the best disinfectant." If the reality catches up with the rhetoric, the recovery.gov effort could bring a lot of sunlight to the process of government spending.

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I think the Obama camp has extended its campaign mode---promise them what they want to hear, get their vote and worry about it later---into the administration. Except now it's not for votes, it's for approval ratings. They'll tell us what we want to hear now and hope we'll forget about. If we don't they can always blame the inability to carry through on someone else---like maybe the CIA.

All good points.

But the promise was made by the administration to "track every dime" at recovery.gov and that isn't happening. The expectation wasn't set by the public but by the President, and that's a difficult thing to pull back from now that the genie is out of the bottle.

They are going to renege on this commitment and leave the public wondering where the dollars actually went, even it it should be the responsibility of the states or municipalities to track it (an unfunded mandate, by the way, from the federal government with the legislation and subsequent OMB directives).

Thanks Jon, you made my point.


Let's take your example of the buses purchased in Miami and San Fran. Do you think it's the federal government's responsibility to watch over a $50,000 inefficiency within a $787 Billion program? Or do you think it's the federal government's responsibility to determine that one company is better at filling potholes and can do it 15% cheaper? I agree that someone has to do it, but that responsibility must drill down to local government.


Just about everyone (except for me) who posted on this exchange believes there should be a detailed reporting available to the public and the federal government of where every dollar finally ends up. I don't agree with that because the magnitude of it will render it useless. As a result it will be a wasted effort and a further inefficient use of federal funds. Here's a real example--


In 2004 labor unions spent a lot of treasury money on the November elections. Political watchdog groups lobbied the Department of Labor for a more detailed LM-2 report that would show not only where every dollar went, but who it went to and what it was for. In 2006 the DOL changed the reporting requirements, effective for fiscal years ending in 2007, and went so far as to add a further breakdown of all expenditures into five functional categories. A lot of money was spent reprogramming accounting systems to accomodate the change. For some labor unions what used to be a 50 page report turned into one with over 1,000 pages.


And what effect did it have? Labor spent 3 times as much in the 2008 elections as it did in 2006. Labor spent the same way in 2008 as it did in 2004, just more of it. Some of the watchdog groups haven't updated their sites since the 2006 data. And while the labor unions' LM-2 are available to the public on the DOL's website (12/31/08 reports posted by 3/31/09), I've not seen a single article or inquiry by the media, watchdog groups or the general public about how the unions' treasury dollars were spent in the 2008 general election. So my point is, there's a saturation point where more information serves no useful purpose.


I don't understand "granular metrics" and all the other catch-phrases used by economists and academics. I guess I'm old school- sort of like the guy who counted Chrysler products in the parking garage and decided that none of the work plans, projections and bailout stuff with Chrysler was going to work because no one was buying Chryslers. Maybe the academics and think-tankers should get out of their chairs and go out and kick the tires.


I also think NBR is getting exactly what it expects from "this audience." It's getting diverse opinions.

You're missing the point.

The only way to measure job creation (or that mythical "jobs saved" metric) is to more granularly report spending data. If you can't measure job creation (the primary goal of the stimulus legislation), how can you claim the spending is effective? You can't. Sure, you can point at unemployment numbers going down or the stock market going up, but you can't tie that to the recovery act without metrics. Without metrics you can't prove or disprove that it isn't the result of basic cyclic economics which would have self-corrected anyway. There is no efficacy argument without metrics.

Moreover, how can you improve government spending and the expected ROI on tax dollars without granular metrics? Successful businesses measure and evaluate every expenditure, and they use the knowledge of the expenditure and its efficacy to improve future expenditures. Should we expect any less from the government when it is spending our money? If on average 7% of total governement spending is lost to fraud, wouldn't you like to know the characteristics of those projects most likely to be fraudulent so that you can preemptively take action in future spending? With technology that is available today we should be prognostic, not diagnostic, and while the audits conducted by GAO have value they are often too late to impact fraud, waste and abuse. On such a large amount of capital how can you possibly justify losing tens of billions of dollars because someone didn't have the foresight to put tracking mechanisms in place in advance.

Let's assume you're accepting of fraud as routine and unavoidable. What about simply identifying inefficiencies in government spending? As a real example, when a natural gas powered bus in San Francisco that is funded by stimulus dollars costs 50% more than the exact same bus in Miami, how do you identify the problem?

These aren't trivial issues. They do require more than a three wise monkeys approach. Passiveness and apathy only serve to exacerbate the issue, and I would expect more from this audience.

People, we live in an imperfect world...Can any of these, gigantic government entities truly do as it was intended? Greed rules the land these days. Greed, in it's purest form. Haven't we become so big we no longer can see our feet? The almighty dollar isn't worth what it use to be, so let's just print some more. "The road to hell is paved with good intentions", it seems these days they are using gold in place of asphalt.

As a journalist, I believe that the more information is available, the better. But I can see that there could be a point when the process of reporting and collecting that information becomes inefficient. Maybe some people won't care about what happens to the money after the second point, but unless you know where the money ends up, I don't see that the information can be used to hold government accountable. At a minimum, you would have to know who got the money to do the work. Even better is to know how that money was spent. If you knew, for example, how much money was spent to fill how many potholes, you could learn who was the most efficient contractor.


As a non-New York resident I really don't need to know--nor do I really care-- how NY City spends the stimulus money given to it by NY State. My only concern with NY State is why did they receive $x-billions while my state got only $y-billions. If this website shows me how much my state received and shows me how much went to my city, I can contact my elected state representative and get the information I want.

somethings will never change with the government.

everything is hush hush, and we wont find out what really happened until the next POTUS steps in

Robert

When a public administrator tells me that I don't need to know what happens to the stimulus money he's handling for me and the public, it creates a burning desire to dig further to find out how stimulating that money is actually turning out to be.


If the NYDoT grants $X million dollars in stimulus money for shovel-ready road construction projects to another agency, I think we deserve to know when those projects actually get a 'notice to proceed' and the workers start getting hired. After all, it's my children that are paying for those projects.


I'm not happy with the 'you don't need to know' response. No one else should be either.


--John Kiljan

I'm actually surprised the reporting even goes to a second point. I think that's good enough. Going beyond a second level of accountability does two things and neither accomplish anything. First it provides the public with more that it really needs to know. And second, it makes the federal agency doling out the money responsible for who gets the money in the end. The Feds give to NY State, NY State gives to NY City, and NY City gives to one of its agencies, and that agency gives to a contractor, and the contractor gives to subs, and the subs give to workers and whomever. If we were to track the funds through each of these stages, we'd be micro-managing macro-dollars. Let GAO worry about who gets it after point two.


But I'm not so sure beyond point two will become an issue. As I understand it, there are no restrictions on how a state can spend its stimulus money. If that's true, and all but a couple of states are projecting FY 2009 and 2010 budget deficits, I don't see much of the money leaving state government. I see it going towards deficits in pension funding and deficits created by decreased tax revenue. That which trickles down to the cities will be use by the cities to fund their deficits created by their decreased tax revenue. The "stimulus" comes not from creating but from maintaining.

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