OMB Watch is back from the holiday break! I'm personally happy about that, because I have the sense that the new Congress, like the old Congress, is going to provide us lots and lots of good blogging material. Today, I get to put up tortured claims from incoming House Oversight Committee Chair Darrell Issa (R-CA) that teachers and police officers don't have real jobs and that if your private-sector job was ever cut, it never actually really existed as a real job.

Now, you can say those are jobs created or saved. Really, they're simply dollars spent for one year of kicking the can down the road. It didn't create -- there's not a lot of ripple effect in that kind of spending.

Real creation of jobs, permanent jobs is what we didn't get out of this. Of course, you get your money spent. If I hire you and give you a quarter million dollars or $174,000, you have a job for that year. That's not creating a job. That's hiring or continuing to pay for a government worker.

Creating a job is about something you do that becomes permanent. Stimulus should have been about private-sector creation.

Issa tries to argue that 1) government workers, like teachers, aren't actually employed in real jobs; 2) only permanent jobs are real jobs; 3) the Recovery Act did create real, permanent jobs in the private sector; 4) but the Recovery Act didn't create net growth because it wasn't spent "right."

Issa backpedals from his initial claim that the Recovery Act didn't create jobs, because, well, that's a completely incorrect statement. If you think the Obama administration's information is slanted, you can bypass the multiple Council of Economic Advisors reports that indicate the Recovery Act created millions of jobs, and go straight to private economists. They say that it "boosted growth and mitigated job losses" and that "the unemployment rate would probably be closer to 11 percent [without the Recovery Act]."

So, when Issa says the Recovery Act was a "trillion-dollar stimulus that did not create jobs," he actually means it was a trillion-dollar stimulus that did create jobs.

by Rob Farley, Politifact, and Michael Grabell, ProPublica
This story was co-published with PolitiFact.
"One of the interesting things about the Recovery Act was most of the projects came in under budget, faster than expected, because there's just not a lot of work there."
-- Barack Obama on Sunday, Nov. 7, 2010 in a "60 Minutes" interview
Obama claims most stimulus projects have come in under budget, faster than expected
President Barack Obama says the time is ripe for immediate investment in infrastructure projects such as highways and bridges. With the nation recovering from a recession, interest rates are low, competition among contractors for work is intense and the cost of building materials are low.
As evidence, Obama pointed to the government's experience with the economic stimulus package, saying that taxpayers have gotten pretty good bang for their buck.
"One of the interesting things about the Recovery Act was most of the projects came in under budget, faster than expected, because there's just not a lot of work there," Obama said in an interview on "60 Minutes" on Nov. 7, 2010. "I mean, there are construction crews all across the country that are dying for work. And companies that are willing to take a very small profit in order to get work done. And so for us to say now's the time for us to rebuild this country and equip ourselves for the 21st Century. That's something that could make a real difference."
In the fall campaign, Republicans assailed the stimulus as wasteful spending, but now Obama is citing it as a example of efficiency. And so Politifact decided to collaborate with ProPublica to see if Obama was right that "most" of the projects funded by the stimulus came in "under budget" and "faster than expected."
We'll break this into two parts: whether most stimulus projects came in under budget, and whether they were faster than expected.
Under Budget?
There is no comprehensive federal database that tracks whether stimulus projects have come in under budget. But the White House pointed us toward Vice President Joe Biden's latest stimulus report, issued in early October, which found that "Contract bids, in some cases, have come in anywhere from 6 to 20 percent below expected costs, allowing agencies to do more work within their original appropriations."
But that was based on a limited sample -- an administration survey of eight agencies with a large number of infrastructure projects. The survey found that project bids came in about $8.5 billion less than anticipated, allowing the stimulus to fund more than 3,000 additional projects.
The bulk of the "bid savings" in the survey came from the Department of Transportation, where low bids for projects came in $7.5 billion less than expected, allowing the department to fund an additional 2,500 projects. But DOT wasn't alone. All of the agencies surveyed reported projects coming in under budget. In the Veterans Administration, for example, project bids came in 8 to 12 percent below estimates, allowing the VA to stretch its number of funded projects from 942 to 1521.
Those figures come as little surprise to industry experts who said that projects in the last couple of years have often been below estimates. The recession decimated the construction industry, which led to intense competition for public projects like those funded by the stimulus.
Whereas most projects would typically get five or six bidders, they now get 20 to 25 -- heightening pressure for lower bids, said Brian Turmail, a spokesman for the Associated General Contractors of America. In a survey of its membership near the beginning of 2010, 90 percent said they had lowered their bids that year; and 10 percent said they were even bidding below the cost of the project, "buying work," just to keep employees busy until things pick up, Turmail said.
Another factor: Construction estimates were unusually high in 2006 and 2007, when many estimates were first made. They were inflated by strong demand for construction and high materials costs.
As a result, officials began revising their estimating formulas to account for higher costs, at the very time when costs for construction goods and services actually were coming down. As a result, many projects in 2008 and 2009 -- prime time for the stimulus -- came in well under budget.
The U.S. Government Accountability Office confirmed the trend in a March report.
"Many highway contracts were awarded for less than the original cost estimates," the report states. "These 'bid savings' allowed states to fund more projects with the Recovery Act funding than were initially anticipated."
For example, an Interstate 59 pavement project in Gadsden, Ala., came in 31 percent below the original estimate of $53.9 million. The 8-mile Old Glenn Highway resurfacing project in Anchorage, Alaska, was nearly 50 percent below the original estimate of $25 million.
So there is some truth to Obama's point. But without definitive data telling us what percentage of all stimulus projects have come in under budget, we think it's a stretch for Obama to claim that most stimulus projects have come in under budget. After all, that's based on a survey of just eight agencies that found "contract bids, in some cases" were coming in well below budget.
Faster Than Expected?
This is a statistic that depends somewhat on who is doing the expecting.
Asked for backup, the White House again pointed to its October report, which noted the administration met its target of "outlaying," or spending, 70 percent of the stimulus funds by the end of September 2010. The administration also provided data on various deadlines met, or exceeded, to "obligate" money to various agencies. But "obligated" simply means the money has been committed to a project. It could take months before it's spent.
So back to the money "outlaid." Shortly after the law passed, the administration set a goal of having 70 percent of the funds outlaid and delivered in tax relief by Sept. 30, 2010. In the report, the administration boasted that as of that deadline, the government had outlaid $308 billion and paid out $243 billion in tax relief -- a total of $551 billion, or almost exactly 70 percent of the Act's $787 billion cost estimate at the time of enactment.
Liz Oxhorn, a White House spokeswoman for the stimulus program, defended Obama's "faster than expected" claim based on outlays, saying, "Because most projects pay out on the back end, money out the door is one of the best indicators that projects are being completed ahead of schedule."
But if outlays are the measuring stick, the projects have not come in "faster than expected," they have come in exactly as expected.
And a couple caveats are in order here. The stimulus bill contained $288 billion in tax cuts and $499 billion in spending. As of Sept. 30, 85 percent of the tax cuts had been issued, along with 62 percent of the spending. In other words, the 70 percent threshold is inflated a bit by tax breaks.
An analysis by ProPublica also found that a number of agencies were lagging behind spending estimates.
The Department of Energy, for example, has been the slowest agency to spend its stimulus funds, as many of the agency's programs have been tied up by an onslaught of applications and regulations regarding prevailing wages, American-made materials, increasing electricity rates and environmental clearances. As of Sept. 17, it has spent only $7.6 billion of its $32.7 billion allocation. The slowest energy programs include the $3 billion "clean coal" carbon capture program, the $4.5 billion smart grid program and the $2.5 billion loan guarantee program to support clean energy projects.
The Department of Homeland Security spent less than $500 million of its $2.8 billion allocation. When the stimulus bill was passed, the CBO estimated that Homeland Security would spend more than $1 billion by now. The slow spending comes from nearly every part of the agency. For example, Customs and Border Protection has paid out less than $50 million, even though it was authorized to spend $680 million to modernize ports of entry and deploy other border technology. That program was halted briefly last fall as news media and members of Congress questioned the plan to modernize little-used border stations in Montana and North Dakota instead of busy crossings along the southwest border.
While outlays may be a good measure of the progress of stimulus spending, we also think most people would interpret Obama's comment to mean that projects were actually being done faster than expected. Again, there is no comprehensive federal database tracking that statistic.
But ProPublica analyzed a piece of the stimulus, the money awarded to the Federal Highway Administration. Of the 12,932 projects listed in a database provided by the agency, 5,752 are marked as completed, about 45 percent. Of the completed projects, 51 percent were completed earlier than the estimated date. About 30 percent came in late and 12 percent on the same day. Several hundred projects had no estimated date.
In the case of the Federal Highway Administration, Obama could rightly claim that "most" projects have come in faster than expected (though barely, at 51 percent). But this is just one agency.
As with the claim about projects coming in under budget, Obama would have been on firm ground had he said "many" projects have come in faster than expected. Many have. But many have not. And if the claim is based on meeting a deadline to outlay funds, the overall target of 70 percent was reached -- barely -- by the end of September. That's only faster than expected if you expected the government to fail.
Obama makes a valid point about this being a good time to get deals on infrastructure projects. The recession has created desperate workers willing to work cheaper, and the cost of materials is still relatively low. Obama's point that this was borne out by the stimulus projects is on target. But he stretched the facts -- at least what is actually known -- when he claimed most projects have come in under budget and faster than expected. And so we rate his claim Half True.
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In this week's Watcher, we ponder the fate of fiscal policy in the lame duck session of Congress set to commence on Nov. 15. Our article and indeed most of the punditry, analysis, news, and campaign rhetoric has all but completely ignored the fate of some $80 billion in tax breaks for the middle class.

When President Obama signed the Recovery Act into law last year, he approved $288 billion of tax cuts, focused mostly on the middle class (and went largely unnoticed by its beneficiaries). Those cuts, including the Making Work Pay tax credit, a boost in the child tax credit, and assorted other credits and deductions totalling about $80 billion are set to expire at the end of the year. Yet the most ink has been spilled over the $68 billion in tax cuts that the riches 2 percent of Americans may see expire at the same time.

Bob Williams ponders this issue in a post on the Tax Policy Center's blog, Tax Vox.

Taxes will jump for more than 95 percent of Americans when those cuts evaporate come January.

Why does a $68 billion tax increase on wealthy taxpayers throw Congress into total gridlock but no one mentions a tax hike almost 20 percent bigger? ...a triumph of politics over economics: stimulus is a dirty word in Washington these days, even though most economists agree that the economy still needs a strong boost. And maybe "economist" is a dirty word too.

Arguably taking $80 billion away from all but the richest Americans would hurt spending more than pulling $68 billion out of fat wallets. Low- and moderate-income households save less of their income than do wealthier people, so raising their taxes causes a bigger drop in consumer demand.

It's almost as if Congress, despite its members' protestations, is more interested in sculpting tax policy for its donor-patrons than actually trying to improve the economy.

Image by Flickr user Ciudadano Poeta used under a Creative Commons license.

In this week's Watcher, we ponder the fate of fiscal policy in the lame duck session of Congress set to commence on Nov. 15. Our article and indeed most of the punditry, analysis, news, and campaign rhetoric has all but completely ignored the fate of some $80 billion in tax breaks for the middle class.

When President Obama signed the Recovery Act into law last year, he approved $288 billion of tax cuts, focused mostly on the middle class (and went largely unnoticed by its beneficiaries). Those cuts, including the Making Work Pay tax credit, a boost in the child tax credit, and assorted other credits and deductions totalling about $80 billion are set to expire at the end of the year. Yet the most ink has been spilled over the $68 billion in tax cuts that the riches 2 percent of Americans may see expire at the same time.

Bob Williams ponders this issue in a post on the Tax Policy Center's blog, Tax Vox.

Taxes will jump for more than 95 percent of Americans when those cuts evaporate come January.

Why does a $68 billion tax increase on wealthy taxpayers throw Congress into total gridlock but no one mentions a tax hike almost 20 percent bigger? ...a triumph of politics over economics: stimulus is a dirty word in Washington these days, even though most economists agree that the economy still needs a strong boost. And maybe "economist" is a dirty word too.

Arguably taking $80 billion away from all but the richest Americans would hurt spending more than pulling $68 billion out of fat wallets. Low- and moderate-income households save less of their income than do wealthier people, so raising their taxes causes a bigger drop in consumer demand.

It's almost as if Congress, despite its members' protestations, is more interested in sculpting tax policy for its donor-patrons than actually trying to improve the economy.

Image by Flickr user Ciudadano Poeta used under a Creative Commons license.