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«Sen. Tom Coburn Sen. John McCain Stimulus Checkup |2 Introduction Good jobs for millions of Americans. Investments in priorities that create ...»

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December 2009

Stimulus Checkup

A closer look at 100 projects funded by the American Recovery and Reinvestment Act.

Sen. Tom Coburn

Sen. John McCain

Stimulus Checkup |2

Introduction

Good jobs for millions of Americans.

Investments in priorities that create sustainable economic growth for the future.

Those were the promises made to uneasy Americans when Congress approved the $787

billion American Recovery and Reinvestment Act, or economic stimulus bill, in February.

Nine months later, with over $200 billion of stimulus funding already spent,1 the rolls of the unemployed have grown by millions and, by any measure, more jobs have been lost than created.

Since the stimulus bill was enacted in February, nearly three million Americans have lost their jobs2 and the percentage of people who are without work has risen to 10 percent.3 Many who had been looking to the government for help have already lost hope.

As this and the last report, 100 Stimulus Projects: A Second Opinion,4 suggest, billions of dollars of stimulus funding have been wasted, mismanaged, or directed towards silly and shortsighted projects. Many projects may not produce the types of jobs that most Americans had hoped for or expected.

Some of the close to seven billion dollars in projects in Stimulus Checkup create few jobs;

benefit private interests over the public good; or make improvements where they are not necessary. Some send money to companies facing fraud charges. Others take millions of dollars to do work local officials and experts admit are not needed or will not help.

Stimulus money has been, or will be, spent on dinner cruises, golf courses, puppet shows and stimulus road signs. Many Americans will question whether investing $787 billion in these projects are the highest national priorities.

Spending $25,000 for a puppet show may not seem like a big deal in Washington, for most Americans it is a lot of money. Washington, D.C. politicians blithely spend billions of dollars a week, but every dollar wasted is also a dollar borrowed—and a dollar to be paid back with interest in the future.

Recovery.gov website, ―Overview of Funding,‖ http://www.recovery.gov/Pages/home.aspx, accessed December 4, 2009; As of November 27, 2009, $217.6 billion of the American Recovery and Reinvestment Act has been paid out. This includes 92.8 billion in ―tax benefits,‖ $60.8 billion in ―contracts and grants,‖ and $84 billion in ―entitlements.‖ 2 Bureau of Labor Statistics, Household Data, Seasonally Adjusted, ―A-3. Employment status of the civilian noninstitutional population by sex and age, seasonally adjusted,‖ ftp://ftp.bls.gov/pub/suppl/empsit.cpseea3.txt, accessed December 4, 2009.

3 Bureau of Labor Statistics, News Release, ―THE EMPLOYMENT SITUATION – NOVEMBER 2009,‖ December 4, 2009, http://www.bls.gov/news.release/pdf/empsit.pdf.

4 Report can be found on the Website of Senator Tom Coburn,

–  –  –

Why Does It Matter?

Over the past ten years, the national debt more than doubled as Congress went on a spending spree—and yet we still find ourselves in the midst of an economic downturn.

Americans who have lost their job, health insurance, or home, are facing mounting personal debts, but are also faced with the question of who will pay off the staggering national debt that has grown by more than $1.4 trillion over the past year.

The federal government must join American families in prioritizing its spending by making tough decisions. When we downplay wasting money on a $6 million project, it is easy to do it again ten more times. Once $60 million is out the door, it is easy to spend another $60 million and before you know it, billions of dollars we do not have are spent on things we do not need. Sadly, this type of spending is excused in Congress because ―it‘s always been done that way.‖ The American people have always rejected arguments based on ―it‘s always been done that way,‖ and will continue to do so. Congress needs to make hard choices and eliminate things that are a low priority—even if doing so is unpopular—so we can preserve this country for future generations.

In the previous report, one hundred questionable projects were identified that did not appear to hold out promise for helping the economy grow. The Administration was quick to review these projects and to its credit addressed a number of them. In the months that followed, many more questionable stimulus projects costing millions and even billions of dollars were identified. This follow-up, Stimulus Checkup, takes a closer look at 100 more projects that raise questions about how stimulus money has been used so far.

Sincerely, Tom Coburn, M.D.

U.S. Senator

–  –  –

1. “Almost Empty” Mall Awarded Energy Grant ($5 million) If you build it, they will come. Or, at least that is what Tom Beehan, mayor of Oak Ridge, Tennessee is hoping. He has supported a local experiment to turn a struggling shopping mall into an economic engine by converting it into one of the ―greenest‖ malls in the area.5 Only, the problem is that the mall has few shoppers and fewer stores.

The Department of Energy has announced an award for up to $5 million6 to install a geothermal energy system capable of heating an ―almost empty‖ mall in Oak Ridge, Tennessee.7 The owners of Oak Ridge City Center are hoping the expected reductions in energy usage, and subsequent heating bills, will lure potential new tenants.8 Just last fall, Oak Ridge city councilwoman Ellen Smith, who despite supporting the project, noted that a new geothermal HVAC system is ―not much use at a shopping center unless the center has some commercial tenants.‖ 9

–  –  –





―OR City Center wins $5M DOE grant,‖ The Oak Ridger, November 3, 2009, http://www.oakridger.com/news/x558076435/OR-City-Center-wins-5M-DOE-grant.

6 Website of Department of Energy, Press Release,‖ Department of Energy Awards $338 Million to Accelerate Domestic Geothermal Energy,‖ October 29, 2009, http://www.energy.gov/news2009/8233.htm; full list of projects awarded funds can be found here: http://www.energy.gov/news2009/documents2009/338M_Geothermal_Project_Descriptions.pdf, accessed December 5, 2009.

7 Fowler, Bob, ―Oak Ridge mall project gets $5 million stimulus grant,‖ Knoxville News Sentinel, November 4, 2009, http://www.knoxnews.com/news/2009/nov/04/or-mall-project-gets-grant/.

8 Fowler, Bob, ―Oak Ridge mall project gets $5 million stimulus grant,‖ Knoxville News Sentinel, November 4, 2009, http://www.knoxnews.com/news/2009/nov/04/or-mall-project-gets-grant/.

9 Ellen Smith for Oak ridge, ―Green Energy for the Oak Ridge City Center (mall),‖ accessed November 4, 2009, http://ellensmith.org/blog/2008/09/01/green-energy-for-the-oak-ridge-city-center-mall/.

10 Fowler, Bob, ―Oak Ridge mall's value, profits fading,‖ Knoxville News Sentinel, January 23, 2008, http://www.knoxnews.com/news/2008/jan/23/or-malls-value-profits-fading/.

11 Fowler, Bob, ―Main Street idea axed, grant returned,‖ Knoxville News Sentinel, March 29, 2007.

12 Editorial, ―Our Views: Mall opening welcome news, hopeful sign,‖ Oak Ridger, November 6, 1997.

13 Esposito, Richard B., ―White elephants and clowns,‖ The Oak Ridger, July 18, 2006.

Stimulus Checkup |5

2. Renovations for Federal Building as Expensive as New Building ($133 million) Taxpayers in Oregon may be surprised to learn that the largest stimulus project in their state is not a new road or bridge, but a $133 million makeover for the federal building in downtown Portland.14 The money will go toward ―greening‖ the Edith Green/Wendell Wyatt Federal Building in the hope of making it a model for energy efficient government offices in the Northwest.15 That said, for $133 million some may wonder why they did not simply tear it down and start over.

It is not yet clear how all of the money will be spent—those decisions will largely be made by a contractor to be hired by the General Services Administration.16 For now, agency officials expect to construct a type of vegetative skin— made of plants—on the exterior of the building, to help with heating and cooling costs.17 Vegetative facades on buildings, however, are a little studied field according to some experts.18 In 2007, a new federal building was constructed in downtown San Francisco with similar state-ofthe-art energy efficiency features for $144 million—nearly the same cost to merely renovate the Portland Federal Building.19 Both buildings are eighteen stories tall, built with energy efficient technologies, and house federal agency offices. The major difference is that the San Francisco building is much larger, with an additional 100,000 usable square feet in comparison with its counterpart in Portland.20

Website of the General Services Administration, Memo of the GSA Public Buildings Service, ―Federal Buildings Fund:

American Recovery & Reinvestment Act Spending Plan ($ in Thousands),‖ March 31, 2009 (rev.), http://www.gsa.gov/graphics/pbs/American_Recovery_and_Reinvestment_Act_2009.pdf, accessed December 5, 2009.

15 Esteve, Harry, ―Portland federal building due for big green makeover,‖ Oregonian, August 24, 2009, http://www.oregonlive.com/politics/index.ssf/2009/08/portland_federal_building_due.html.

16 FedBizOpps.gov website, Solicitation Number: GS-10P-09-LT-C-0052, accessed December 5, 2009, https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=9b33af19b714461cc45c1a874ff75868&_cview=1.

17 Esteve, Harry, ―Portland federal building due for big green makeover,‖ Oregonian, August 24, 2009, http://www.oregonlive.com/politics/index.ssf/2009/08/portland_federal_building_due.html.

18 Ip, Kenneth, Marta Lam and Andrew Miller, ―Shading performance of a vertical deciduous climbing plant canopy,‖ Building and Environment (Journal), May 22, 2009,

Abstract

found at http://dx.doi.org/10.1016/j.buildenv.2009.05.003.

19 Website of the General Services Administration, News Release, ―New San Francisco Federal Building Leads the Way,‖ #S-6http://www.gsa.gov/graphics/ogp/S-6-07NewSanFranciscoFedBldgGSA.doc, accessed December 5, 2009.

20 San Francisco Federal Building – 605,000 gross square feet, Rocky Mountain Institute, ―High Performance Building:

Perspective and Practice: San Francisco Federal Building,‖ http://bet.rmi.org/files/casestudies/gsa/US_General_Services_Administration.pdf; Portland Federal Building – 500,000 square feet, FedBizOpps.gov website, https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=9b33af19b714461cc45c1a874ff75868&_cview=1.

Stimulus Checkup |6

3. DTV Advertising Agency Generates Three Jobs ($5.9 million) An advertising agency that ultimately reported little job creation received a multi-million dollar contract to help the government overcome a poorly managed transition to digital television, only to report three jobs created.

With little more than a month to go before the nation switched over from analog to digital television (DTV), the Federal Communications Commission (FCC) awarded a nearly $6 million stimulus contract to the New York advertising firm Young & Rubicam to manage outreach for ―hard to reach‖ populations unready for DTV.21 Leaving little time to help prepare, the multi-million dollar media relations contract was awarded on May 5, 2009, preceding the DTV switch on June 12, 2009, by only 39 days.22 For some time, Americans had been told by both government and television networks that the DTV switch would occur on February 18, 2009, only to see it pushed back to June, just one week before the deadline.23 Concerns were raised that up to 20 million people were not quite ready for the transition, while large telecommunications firms such as Comcast Corp.

and Time Warner Cable saw a delay as an opportunity to generate new ―pay-TV‖ subscribers.24 At least one previous attempt to advertise the DTV transition went badly when in October 2008, then-FCC Chairman, Kevin Martin, spent $350,000 to sponsor NASCAR driver David Gilliland, only to see the car crash into a wall with just 15 laps to go.25 Young and Rubicam surely hoped for a better outcome. As an economic stimulus, some may have their doubts.

The advertising agency reported creating only three jobs.26 Recovery.gov, Contracts – Award Summary, ―Young & Rubicam Inc.,‖ Award Number CON09000005, http://www.recovery.gov/Transparency/Pages/RecipientProjectSummary.aspx?AwardIDSUR=30424&PopId=16603.

22 Official Website of the Digital Television Transition, ―Frequently Asked Questions,‖ http://www.dtv.gov/consumercorner.html#faq5, accessed December 6, 2009.

23 Public Law 111-4, the DTV Delay Act, was signed into law on February 11, 2009, http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=111_cong_public_laws&docid=f:publ004.111.pdf.

24 Dixon, Kim, ―Congress approves digital TV delay,‖ Reuters, February 5, 2009, http://www.reuters.com/article/industryNews/idUSTRE5136YP20090205.

25 Schatz, Amy, ―FCC‘s Race Car to Promote Digital DV Hits the Wall,‖ Wall Street Journal Blog “Washington Wire,” October 20, 2008, http://blogs.wsj.com/washwire/2008/10/20/fccs-race-car-to-promote-digital-tv-hits-the-wall/.

26 Recovery.gov, Contracts – Award Summary, ―Young & Rubicam Inc.,‖ Award Number CON09000005,

–  –  –

4. Research to Develop Supersonic Corporate Jets ($4.7 Million) Lockheed Martin will receive a total of more than $21 million in federal money—with $4.7 million funded through the American Recovery and Reinvestment Act—from the National Aeronautics and Space Administration (NASA) to advance research for supersonic jet travel.27 High ticket costs, fuel-guzzling and the infamous sonic ―boom‖ helped doom commercial supersonic travel in the past; the last Concorde jet flew in 2003.



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