Is the Stimulus Plan Really Making a Difference?

President says recovery helped avoid a second depression.

ByJAKE TAPPER and HUMA KHAN via via logo
February 17, 2010, 8:20 AM

Feb. 17, 2010— -- Amid questions about the sustainability of jobs created or saved by the stimulus, President Obama today praised the recovery act for helping to prevent the economy from falling into a depression.

"One year later, it is largely thanks to the recovery act that a second depression is no longer a possibility," the president said on the one-year anniversary of the American Recovery and Reinvestment Act. "It's laying out the foundation for where we need to go."

Obama acknowledged that passing the $787 billion package "wasn't a politically easy decision to make," but he also criticized opponents of the plan, especially those who were taking aim at the bill even as "many of them showed up for ribbon-cutting ceremonies for projects in their districts."

Hundreds of thousands of Americans have found jobs in projects funded by the stimulus program, but one year later, it's unclear what the future holds for some of these workers.

Vice President Biden today delivered a report to the president about the progress of the stimulus. The report states that $453 billion, about 57 percent of the money has been used, but questions remain as to whether that funding has been used wisely.

The Obama administration credits the stimulus with saving or creating two million jobs. The nonpartisan Congressional Budget Office puts that figure between 800,000 and 2.4 million. Obama today projected that the stimulus funding will save or create another 1.5 to 2 million jobs this year. But a New York Times/CBS News poll out today shows that only 6 percent of Americans believe the plan has created any jobs, with 48 percent thinking it won't, a number higher than late last year.

Christina Romer, chair of President's Council of Economic Advisors, says employment will grow over time and that the state fiscal relief program in the stimulus has been effective in keeping thousands of teachers and firefighters on the job.

"Right now, the employment numbers look basically stable," she said on "Good Morning America" today. "We think we're going to see positive job growth by spring."

The 586-square-mile Hanford nuclear site in Washington state received nearly $2 billion from the stimulus package for environmental cleanup work. As of January, about $367 million had been spent and the money was credited with creating and saving 1,538 full-time jobs.

At the Utica City school district in New York, close to $12 million in stimulus helped keep jobs and make new hires.

Before the stimulus money came through, "we were actually looking at cutting about 61 jobs, and that's not just teaching jobs -- that's teaching staff, support staff and administrators," said Superintendent Jim Willis.

The money from the federal government, Willis said, helped keep those 61 jobs and add more and expand programs.

"It saved 61 jobs, it created another 73 positions, it saved a lot of programs that we were going to cut," he said.

But with the funding only going up to 2011, the district's clock is now ticking. New hires signed a document stating, "I am fully aware that the funding for this position will be eliminated in two (2) years. Therefore this position will end on June 30, 2011."

Schools Concerned About Jobs When Stimulus Funding Ends

Willis said his new hires realized that their jobs would be temporary but with New York slashing state funding and stimulus money drying up by 2011, that means all the jobs saved and/or created could be on the chopping block.

"Looking ahead [to] 2010 and 2011, not only do we lose these positions that we created and those that we saved but we are probably looking at another 30 or 40 teaching positions alone that we will probably have to cut," Willis said.

"In many school districts, the stimulus has sort of prevented layoffs up until a certain point, and now states are sort of looking at, well now what do we do without the stimulus money," said Michael Grabell, a reporter at ProPublica, a public interest group that tracks stimulus spending.

Obama today acknowledged that the current economic climate "doesn't yet feel like much of a recovery" to those who are still unemployed. The president said layoffs could even increase this year because of the dire economic situation states are facing, but he added that the stimulus would help lay the foundations for future growth.

"The recovery act was never meant to... restore our economy to full strength," he said. "It's laying out the foundation for where we need to go."

Romer says that the bang from the stimulus is not in the past, and that the administration is reviewing other ways to expand job growth.

"We have certainly seen productivity surge, and that, at one level, is a good sign about the economy. But absolutely, we've got to translate that GDP growth [in the last quarter] into employment growth," she said on "GMA." That's why again, the president has said, as good as the recovery act is, we shouldn't stop there."

A senior administration official said Tuesday that the state fiscal relief program will continue to help stave off layoffs of public sector workers like teachers, police personnel and firefighters. But as project investment increases, there will be a shift toward job creation in the private sector in what another official called "transformative industries" like clean energy technology.

"I think there is a bipartisan realization of just how much states are still suffering," Romer said.

There is also the issue of questionable stimulus spending, according to the administration's own inspector general. Twenty community agencies that are slated to receive $45 million are "at risk for fraud, waste and abuse." One example -- Illinois received $242 million to weatherize 27,000 homes, but the Department of Energy found "significant internal control deficiencies," including one instance with a "furnace gas leak that could have resulted in serious injury to the occupants."

Investigators at ProPublica, which launched a new "Stimulus Investigations" page today, found that billions in stimulus money could be lost to fraud.

"The biggest problem we're seeing is with questionable contractors who are receiving stimulus funds despite being under criminal investigation," Grabell said. "We've seen several examples of this where a contractor may be banned from getting federal contracts but still is finding a way to get stimulus money."

For example, an Oklahoma highway contractor who was suspended after being accused of conspiring to use unsuitable asphalt material within months formed a new company and began receiving stimulus contracts again.

Fraud Concerns in Stimulus

Tax credits are another area where fraud is likely. The Recovery Act has thus far provided $119 billion in tax relief, according to the administration's one-year progress report.

"I've talked to a lot of investigators on this and in one report, for example, the inspector general found that half a billion dollars of claims for new home buyer tax credit could be ineligible," Grabell said.

Then there is also the issue of questionable projects and whether they really deserve to receive the stimulus money.

"We've gone through records that said they spent money on lion and tiger dens at the National Zoo in D.C., stopped modified funding for fish sperm, resetting headstones at cemeteries, cleaning bird droppings," said Grabell.

Obama administration officials say that it is easy to overstate mishandling in stimulus projects. The money, officials told ABC News, is unfolded with great transparency. It doesn't mean there are mistakes but when they are discovered, they are fixed.

"This program has run cleanly, smoothly and transparently," Obama said today while explaining the challenges of implementing a large bill.

The administration is also working to convince Americans that the stimulus is indeed helping them, including their own supporters. On Tuesday evening, former Obama for America campaign manager David Plouffe sent an e-mail to supporters of what's now called Organizing for America, asking them if they're "wondering what ... President Obama's stimulus bill -- has accomplished?"

If so, he tells them to look a chart showing how job losses have steadily become less horrible.

Plouffe says "while this anniversary isn't a cause for celebration, there is reason to be optimistic. This chart makes it clear: We're on the road to recovery."

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