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Obama Addresses Criticism on Stimulus Spending

August 5, 2009 at 12:00 AM EDT
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Amid the continuing debate over the effectiveness of the federal stimulus funds, President Obama unveiled new grants that he said can help rebuild the economy. A ProPublica reporter discusses how some hard-hit areas are getting more money, but others are not.
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U.S. PRESIDENT BARACK OBAMA: I intend to keep my promise.

JEFFREY BROWN: Nearly six months to the day he first visited Elkhart, Indiana, one of the cities hardest hit by the recession, President Obama returned, this time to tout the success of his stimulus plan.

BARACK OBAMA: It is great to be back in Indiana.

JEFFREY BROWN: Mr. Obama spoke at the Navistar R.V. factory in nearby Wakarusa, about 100 miles east of Chicago. The area is known as the capital of recreational vehicles, but as gas prices rose and the economy bottomed out, Elkhart’s unemployment soared. It’s now nearing 17 percent, much higher than the national average and a 10 percent rise from the year before.

BARACK OBAMA: This area has been hit with a perfect storm of economic troubles. The Elkhart area has experienced the second-greatest increase in the rate of unemployment in the country, up 10 points in a year. It’s an astonishing statistic. And there have been times where nearly 1 in 5 people in this area have been looking for work.

JEFFREY BROWN: Today, amid a continuing debate over the effectiveness of the stimulus money so far, the president unveiled new grants that he said can help rebuild the economy in Elkhart and around the country.

BARACK OBAMA: That’s why innovation is more important than ever.

JEFFREY BROWN: Mr. Obama announced a $2.4 billion investment in electric vehicles and advanced batteries.

BARACK OBAMA: With these investments, we’re planting the seeds of progress for our country and good-paying, private-sector jobs for the American people. Right here in Elkhart County, Navistar, which has taken over two Monaco Coach manufacturing facilities, will receive a $39 million grant to build 400 advanced battery electric trucks with a range of 100 miles, like the trucks here today.

You know, just a few months ago, folks thought that these factories might be closed for good, but now they’re coming back to life.

JEFFREY BROWN: It’s one small part of the administration’s $787 billion American Recovery and Reinvestment Act, the largest domestic spending effort in U.S. history.

BARACK OBAMA: Indiana is the second-largest recipient of grant funding, and it’s a perfect example of what this will mean.

JEFFREY BROWN: The city of Elkhart has already been promised some $14 million in federal stimulus money, for improving roads, an airport runway and a sewage treatment plant.

U.S. VICE PRESIDENT JOSEPH BIDEN: We also need to have a vision.

JEFFREY BROWN: Vice President Biden was also on the road today, defending the stimulus plan, part of an overall effort by the administration this week that’s included cabinet officials.

And we take a closer look now at some of the stimulus spending and where the money’s going. Michael Grabell is the lead reporter covering the stimulus beat for ProPublica, an independent, nonprofit news Web site that features original and investigative reporting.

Welcome to you.

MICHAEL GRABELL, ProPublica: Thank you.

Mixed picture on stimulus

Michael Grabell
ProPublica
There are some really hard-pressed counties that are getting a lot of stimulus money. And there are some really hard-pressed counties that are getting very little at this point.

JEFFREY BROWN: One issue you've just looked at is whether the money is going to communities most in need, places like Elkhart, and it sounds like you found a mixed picture.

MICHAEL GRABELL: We did. What we did -- we were able to get, put together a database of nearly all the contracts, grants and loans that have been awarded so far in the stimulus package, and we found kind of a mixed picture.

There are some really hard-pressed counties that are getting a lot of stimulus money. And there are some really hard-pressed counties that are getting very little at this point.

A perfect example of this is Trigg County, Kentucky. It's an area that saw its unemployment rate going to 15.8 percent last month as a result of sort of the spiraling of the auto industry crisis. They had a car seat manufacturer that went out of business.

And they, in turn, now have received about -- you know, a large road project, Forest Service contracts. They've received a biomass facility or funding for a biomass facility. And it works out to -- if you tally it all up -- it works out to about $2,400 per person.

On the other end of that is LaGrange County, which is actually right next to Elkhart, hit by the same R.V. industry problem that Elkhart's having. It has the same unemployment rate as Trigg County, but it's only getting $33 a person, pretty much nothing more than the education and rural housing funds that every county is getting.

JEFFREY BROWN: So when you ask the White House or the administration for an explanation of what looks a little bit like a haphazard process here, what's the explanation?

MICHAEL GRABELL: They say that, at this point, a lot of the money that has gone out has gone through these existing channels, these existing formulas that we have in our government. And as time moves on, some of these more discretionary programs, like the one we saw today for grants to develop advanced batteries, are going to be awarded.

JEFFREY BROWN: So the intent is try to target to places like Elkhart or at least even it out, so it's places like that that are getting the brunt, most of the money?

MICHAEL GRABELL: Right. I think that's one of the attempts that they've sort of talked about all along, is making sure that the money does seep down into the hardest-hit communities.

JEFFREY BROWN: So when you look now more broadly at the stimulus money, what kind of projects or categories have been funded at this point?

MICHAEL GRABELL: About $17 billion worth of highway projects. We have seen a lot of money, you know, showing up for Pell Grants for low-income college students.

The, you know, grants for nuclear cleanup, we saw the arts grants have gone out. We've been looking at housing assistance and some of the Title I money, which is education grants that go to the school districts through the states.

JEFFREY BROWN: And how much of the overall package has been spent to date?

MICHAEL GRABELL: About $190 billion -- I'm sorry, $70 billion has been spent to date. There's another $120 billion that hasn't been obligated. And we were able to look at about two-thirds of that, which is pretty much everything that they have reported awarding at this point.

JEFFREY BROWN: Well, there were always questions about how quickly you could spend this money and how quickly it would be spent. What have you found?

MICHAEL GRABELL: Well, it's really interesting, because this has become the debate now. Is the stimulus going too, really -- you know, going too slow to really have an impact?

And what's happened is, there's sort of a natural lull right now in the stimulus package, where stuff is -- you know, products are moving through the contracting process.

There was this expectation at the beginning, if you remember, where the things that we were hearing were every day that we don't pass a stimulus package, thousands of people are losing their jobs.

So I think that American public sort of expected that to mean that the stimulus package would be spent really quickly. But if you look back to the independent estimates of the Congressional Budget Office, this is kind of how it was intended to move, and that most of the money was going to be spent in this quarter, next quarter, and the first quarter of 2010.

Impact on jobs

Michael Grabell
ProPublica
Right now, we don't know how many jobs have been created. The best estimate we have...[is]...48,000 jobs. When our reporters...looked at it,...it was actually somewhere in the neighborhood of 9,000.

JEFFREY BROWN: Now, another big question, of course, was, how many jobs would be created through money like this? How hard is it or easy even to count or to figure out where the money goes to what particular job? What have you found?

MICHAEL GRABELL: It is extremely difficult. The number that we keep hearing is that the stimulus package will create 3.5 million jobs. And we're about to hit the six-month mark, and pretty soon, unless they change the estimates, we're going to be hearing that the stimulus package has created or saved 750,000 jobs.

But this is sort of based on a little bit of economic guesswork. The counting of the actual jobs is much more difficult. Right now, we don't know how many jobs have been created.

The best estimate we have has come from the House -- you know, a congressional committee in the House of Representatives. And they're reporting 48,000 jobs.

When our reporters, Amanda Michel and Chris Flavelle looked at it, they did some truth-squadding on it and went back to the DOTs and asked them, how many jobs have you actually created? And it was actually somewhere in the neighborhood of 9,000, because they were counting, if a construction worker works one week on a paving project and then that project's done, and then the next time he works, takes another job that takes two weeks, that's a job.

If he goes -- now he has a product that's going to last three months, now that's, you know, three jobs that they've been counting, where in reality he's had one job for -- you know, he's had a quarter of a year being able to work.

JEFFREY BROWN: But so in the meantime, though, all of these things, like the number of jobs, the speed of it, where's it all going, what kind of communities, clearly -- you've been covering this -- is clearly now bubbling into a political debate?

MICHAEL GRABELL: Exactly. And, you know, what we were hoping to do with this story that we have out today is to really put some, you know, data and analysis behind it, because so much of this has been based on anecdotes or smaller pots of money that we were able to examine.

So this right now is the most comprehensive that we can get in the information that has been put out in the administration to look at where the money is going and is it seeping down to those hard-hit communities.

JEFFREY BROWN: All right. Well, Michael Grabell from ProPublica, thank you very much.

MICHAEL GRABELL: Thank you.

GWEN IFILL: You can find out how much stimulus money may be going to projects in your state at ProPublica's Web site, and you can link to ProPublica from newshour.pbs.org.