Recovery News

How the Stimulus Revived the Electric Car

by Michael Grabell


This story was adapted from "Money Well Spent?: The Truth Behind the Trillion-Dollar Stimulus, the Biggest Economic Recovery Plan in History," which will be published Tuesday by PublicAffairs.

 

A common criticism of President Obama's $800 billion stimulus package has been that it failed to produce anything – that while the New Deal built bridges and dams, all the stimulus did was fill some potholes and create temporary jobs.

Don't tell that to Annette Herrera. She was 50 when the auto supplier she worked for in Westland, Mich., closed its factory and moved the work to Mexico. Then, after being unemployed for 2½ years, she got a job in October 2010 with A123 Systems, which had received $250 million in stimulus money to help open a new lithium-ion battery plant in nearby Romulus, Mich.

"The first thing I did was call my husband and tell him, 'You're never going to guess! I got a job!'" Herrera recalled. "And then it was like celebration time."

One success the Obama administration can duly claim is the rebirth of the electric-car industry in the United States. Automakers have unveiled a number of mass-market electric cars, which have seen small but rising sales. Battery and parts manufacturers are building 30 factories, creating thousands of new jobs. A123 has hired 700 workers at Herrera's plant and a second one in nearby Livonia, and plans to hire a couple thousand more people over the next few years.

If it wasn't for the stimulus, the companies say, they would have built these plants overseas.

It was all part of an effort to promote "green" manufacturing and put a million electric cars on the road by 2015.

The question is: Will it last?

Elkhart, Ind., once believed it would. It saw electric vehicles as its salvation after watching its unemployment rate hit 20 percent. Eager to seed a new industry, the county witnessed electric-vehicle ventures sprout out of nowhere as the stimulus took off in 2009.

But by late summer 2011, what had sprouted were weeds. The parking lot of the Think electric-car plant was full of them, some more than a foot high growing from the cracks. Out front were two pickups and a motorcycle.

Hundreds of laid-off factory workers were supposed to have found jobs churning out the Norwegian company's bug-like, plastic-bodied cars, which ran solely on electricity.

Today the Elkhart factory employs two. Its parent company filed for bankruptcy in June. Its largest shareholder and battery maker, Ener1, which received $118 million in stimulus money, did the same last week.


A second life

Electric cars began appearing on California roads in the mid-1990s after state regulators mandated that a certain percentage of automakers' fleets include zero-emissions vehicles.

But within a few years, they were deemed a failure by car companies, which stopped making them and took back those they had leased.

Much had changed in the eight years leading up the stimulus package. The lead-acid and nickel-metal hydride batteries that weighed as much as 1,200 pounds were replaced with lithium-ion batteries that weighed as little as 400 pounds.

In the early 2000s, gas hadn't even passed $2 a gallon. Less than a decade later, it was twice that. Toyota had proven the demand with its long waiting list for the Prius hybrid.

Government policy had changed, too, with a 2007 energy bill that increased fuel-efficiency standards and provided $25 billion in loans for automakers to upgrade their plants.

But until the economic stimulus package was passed in 2009, the manufacture of electric cars and their batteries in the United States was nearly nonexistent.

The United States had only two factories manufacturing less than 2 percent of the world's advanced batteries. Most were made in Korea and Japan. In America, only Tesla manufactured an electric car — which sold for a cool $100,000. Across the entire country, there were a mere 500 electric charging stations.

But as the stimulus kicked in, there was suddenly no better environment for the electric car to thrive.

With more than $2 billion in federal grants, matched by another $2 billion in private investment, the Obama administration was supporting electric cars from the mine to the garage.

Chemetall Foote Corp., which operates the only U.S. lithium mine, received $28 million to boost production at its plants in Nevada and North Carolina. Honeywell received $27 million to become the first domestic supplier of a conductive salt for lithium batteries. More than $1 billion was spent to open and expand battery factories, many of them in hard-luck towns across Michigan. Through a separate federal program, automakers received loans to retool their assembly lines.

Customers could receive a $7,500 tax credit for buying an electric car. The stimulus provided funding for 20,000 electric charging stations by 2013. In many cities, drivers could get a home charger for free.

Although electric cars would not make up for the generation-long loss of manufacturing jobs, at least not yet, it was novel to see companies creating jobs in the Rust Belt instead of outsourcing them.

In July, Johnson Controls opened the first U.S. factory to produce complete lithium-ion battery cells for electric vehicles. Compact Power is building a $300 million factory in Holland, Mich., to produce batteries for the Chevy Volt and the electric Ford Focus. A123 now supplies the luxury electric carmaker Fisker Automotive and the manufacturers of electric delivery trucks used by FedEx and Frito-Lay.
"Quite simply, if we didn't get that grant, we wouldn't have built [the factory] in the U.S.," A123 spokesman Dan Borgasano said.

The battery grants have created and saved more than 1,800 jobs for assembly workers, toolmakers and engineers, according to a ProPublica analysis of stimulus project reports filed by the companies. That number doesn't include the workers who constructed the plants or those hired by the matching private investment the companies had to make to get the grants.


Killed again?

The problem: Consumers have been slow to embrace the electric car.

The price of the battery is still too high, and the price of gas is still too low, the Government Accountability Office warned in June 2009 before the grants were awarded. The starting price for the all-electric Nissan Leaf is $33,000, while the hybrid Volt sells for about $40,000 before tax credits — far more than many middle-class families can afford.

About 40 percent of drivers didn't have access to an outlet where they park their vehicles, the GAO noted.

"Although a mile driven on electricity is cheaper than one driven on gasoline," the National Research Council reported, "it will likely take several decades before the upfront costs decline enough to be offset by lifetime fuel savings."

Perhaps the biggest obstacle, though, was what the automobile represents in the American psyche: the freedom of the open road. While most people drive less than 40 miles per day, consumers want cars that they can also take on summer vacations — and they don't want to have to constantly worry about looking for a charging station.

The Leaf's range is just 73 miles, according to the official government rating, well below the much-advertised 100 miles.

By the end of 2011, fewer than 18,000 Leafs and Volts had been sold in the United States.

A report by congressional researchers last year concluded that the cost of batteries, anxiety over mileage range and more efficient internal combustion engines could make it difficult to achieve Obama's goal of a million electric vehicles by 2015. Even many in the industry say the target is unreachable.

While the $2.4 billion in stimulus money has increased battery manufacturing, the congressional report noted that United States might not be able to keep up in the long run. South Korea and China have announced plans to invest more than five times that amount over the next decade. Even A123 had to lay off 125 workers in November — though Borgasano says the company plans to rehire them all by June — because Fisker reduced orders.

Dick Moore, the mayor of Elkhart, had hoped the area known for its recreational-vehicle factories would one day be not just the "RV Capital of the World" but the "EV Capital of the World" as well.

Navistar International had received $39 million in stimulus money to build 400 electric delivery trucks in the first year. But by early 2011, it had hired about 40 employees and assembled only 78 vehicles.

Think had rallied into 2011 with plans to start production in Elkhart earlier than expected. But in April, assembly work suddenly stopped as the plant awaited parts from Europe.

In June, Think's parent company filed for bankruptcy. The decision left the Elkhart plant slouching toward extinction until the American subsidiary was purchased by a Russian entrepreneur who promised to restart production in early 2012.

But on Thursday, its battery maker, Ener1, also filed for Chapter 11 bankruptcy, reporting that the demand for electric vehicles "did not develop as quickly as anticipated."

Elkhart's dream of becoming the EV capital?

Moore put it this way: "The fact that this hasn't moved very quickly, that doesn't bode well for that idea."


The future

The fate of the electric car depends greatly on whether sales take off soon.

There are other factors, such as the price of gas and whether Congress approves proposed standards requiring automakers to raise the average fuel economy of their vehicles to 55 miles per gallon by 2025.

The electric car has always struggled with a chicken-and-egg dilemma: Automakers have been reluctant to build electric cars without consumer demand. But consumers won't buy them until automakers develop cheaper, longer-range batteries.

One of the goals of the ongoing stimulus spending is to solve this problem. By 2015, the 30 battery and component factories will be able to produce 40 percent of the world's batteries, according to the administration.

The investments would help manufacturers increase the batteries' life from four years to 14 and cut their cost from $33,000 to $10,000, the administration said in a report on innovation. That would make the electric car more competitive.

Herrera noted that many people at the A123 factory believe they will never be able to afford the cars powered by the batteries they make. But, she says, "you never know."

"When the flat-screen TVs first came out, they were way expensive, and now they're reasonably priced," she said. "I think that's going to be the same thing with electric automobiles. This is a new product. It's going to take time."

Farewell to an Outstanding Public Servant

On Dec. 31, 2011, Recovery Accountability and Transparency Board Chairman Earl Devaney stepped down after leading the Board for almost three years. Devaney did more than anyone else to ensure Recovery Act spending was as transparent as it was, and his presence will be sorely missed.

On Dec. 31, 2011, Recovery Accountability and Transparency Board Chairman Earl Devaney stepped down after leading the Board for almost three years. Devaney did more than anyone else to ensure Recovery Act spending was as transparent as it was, and his presence will be sorely missed.
While he didn't create the transparency provisions in the Recovery Act (those were written into the law or created by the Office of Management and Budget (OMB)), Devaney implemented the law's requirements. He and his team created the Recovery.gov website from scratch in remarkably little time and did a great deal to ensure that recipients understood their reporting responsibilities under the law. As a former inspector general (for the Department of the Interior), Devaney placed a strong emphasis on finding and preventing fraudulent contracting and wasteful spending, creating the Recovery Operations Center. He also insisted on making maps of Recovery Act spending the focal point of Recovery.gov, arguing that the government needed to do more to display information in useful ways.
Devaney understood the importance of providing information to the public and talked of empowering an army of citizen inspectors general. We appreciated the fact that he frequently reached out to the transparency community to get feedback and guidance. When we raised concerns about the quality of the data from the first rounds of recipient reporting, the Board moved quickly to fix the problems it could, such as automatically filling in some data fields for recipients (for example, pulling in company information from existing contracting databases) and creating algorithms to spot potential red flags (such as recipients reporting that they had spent more money than they had received).
Devaney also championed transparency beyond the Recovery Act. He has been a vocal supporter of unique identifiers for recipients of federal funds, a thorny problem that has long plagued federal spending transparency. For the past six months or so, he has also been the head of the Government Accountability and Transparency (GAT) Board, created by President Obama last year to "provide strategic direction for enhancing the transparency of Federal spending and advance efforts to detect and remediate fraud, waste, and abuse." The GAT Board's recent report advocated for many reforms, most importantly centralizing spending databases and streamlining reporting obligations, in addition to calling for a universal system of unique identifiers for contracts and grants throughout the federal government.
Devaney will be replaced by current Education Department Inspector General Kathleen Tighe. Tighe has been on the Recovery Board since March 2010, serving as the chair of the Board's Accountability Committee since March 2011. Interestingly, Tighe will not be stepping down from her inspector general role, which possibly indicates a diminution of the position of Recovery Board chair. The chair was a full-time job for Devaney, who stepped away from his Department of the Interior position to lead the Board, and Devaney clearly had Vice President Biden's ear, meeting frequently with him to discuss various issues related to the Board's work.
The chair's reduced prominence is likely a reflection of the administration's desire to move on from the Recovery Act. With most of the Recovery Act money already spent, Tighe's job will largely be overseeing the dissolution of the Board and the application of lessons learned from the Recovery Act to the entire federal government, a process Devaney has already started with the GAT Board. There's still much to be done to improve federal spending transparency, but hopefully, even in a part-time role, Tighe will bring to her new position just as much passion and success as Devaney.
 

Farewell to an Outstanding Public Servant

On Dec. 31, 2011, Recovery Accountability and Transparency Board Chairman Earl Devaney stepped down after leading the Board for almost three years. Devaney did more than anyone else to ensure Recovery Act spending was as transparent as it was, and his presence will be sorely missed.
While he didn't create the transparency provisions in the Recovery Act (those were written into the law or created by the Office of Management and Budget (OMB)), Devaney implemented the law's requirements. He and his team created the Recovery.gov website from scratch in remarkably little time and did a great deal to ensure that recipients understood their reporting responsibilities under the law. As a former inspector general (for the Department of the Interior), Devaney placed a strong emphasis on finding and preventing fraudulent contracting and wasteful spending, creating the Recovery Operations Center. He also insisted on making maps of Recovery Act spending the focal point of Recovery.gov, arguing that the government needed to do more to display information in useful ways.
Devaney understood the importance of providing information to the public and talked of empowering an army of citizen inspectors general. We appreciated the fact that he frequently reached out to the transparency community to get feedback and guidance. When we raised concerns about the quality of the data from the first rounds of recipient reporting, the Board moved quickly to fix the problems it could, such as automatically filling in some data fields for recipients (for example, pulling in company information from existing contracting databases) and creating algorithms to spot potential red flags (such as recipients reporting that they had spent more money than they had received).
Devaney also championed transparency beyond the Recovery Act. He has been a vocal supporter of unique identifiers for recipients of federal funds, a thorny problem that has long plagued federal spending transparency. For the past six months or so, he has also been the head of the Government Accountability and Transparency (GAT) Board, created by President Obama last year to "provide strategic direction for enhancing the transparency of Federal spending and advance efforts to detect and remediate fraud, waste, and abuse." The GAT Board's recent report advocated for many reforms, most importantly centralizing spending databases and streamlining reporting obligations, in addition to calling for a universal system of unique identifiers for contracts and grants throughout the federal government.
Devaney will be replaced by current Education Department Inspector General Kathleen Tighe. Tighe has been on the Recovery Board since March 2010, serving as the chair of the Board's Accountability Committee since March 2011. Interestingly, Tighe will not be stepping down from her inspector general role, which possibly indicates a diminution of the position of Recovery Board chair. The chair was a full-time job for Devaney, who stepped away from his Department of the Interior position to lead the Board, and Devaney clearly had Vice President Biden's ear, meeting frequently with him to discuss various issues related to the Board's work.
The chair's reduced prominence is likely a reflection of the administration's desire to move on from the Recovery Act. With most of the Recovery Act money already spent, Tighe's job will largely be overseeing the dissolution of the Board and the application of lessons learned from the Recovery Act to the entire federal government, a process Devaney has already started with the GAT Board. There's still much to be done to improve federal spending transparency, but hopefully, even in a part-time role, Tighe will bring to her new position just as much passion and success as Devaney.
Image by Flickr user OversightandReform.

Farewell to an Outstanding Public Servant

On Dec. 31, 2011, Recovery Accountability and Transparency Board Chairman Earl Devaney stepped down after leading the Board for almost three years. Devaney did more than anyone else to ensure Recovery Act spending was as transparent as it was, and his presence will be sorely missed.
While he didn't create the transparency provisions in the Recovery Act (those were written into the law or created by the Office of Management and Budget (OMB)), Devaney implemented the law's requirements. He and his team created the Recovery.gov website from scratch in remarkably little time and did a great deal to ensure that recipients understood their reporting responsibilities under the law. As a former inspector general (for the Department of the Interior), Devaney placed a strong emphasis on finding and preventing fraudulent contracting and wasteful spending, creating the Recovery Operations Center. He also insisted on making maps of Recovery Act spending the focal point of Recovery.gov, arguing that the government needed to do more to display information in useful ways.
Devaney understood the importance of providing information to the public and talked of empowering an army of citizen inspectors general. We appreciated the fact that he frequently reached out to the transparency community to get feedback and guidance. When we raised concerns about the quality of the data from the first rounds of recipient reporting, the Board moved quickly to fix the problems it could, such as automatically filling in some data fields for recipients (for example, pulling in company information from existing contracting databases) and creating algorithms to spot potential red flags (such as recipients reporting that they had spent more money than they had received).
Devaney also championed transparency beyond the Recovery Act. He has been a vocal supporter of unique identifiers for recipients of federal funds, a thorny problem that has long plagued federal spending transparency. For the past six months or so, he has also been the head of the Government Accountability and Transparency (GAT) Board, created by President Obama last year to "provide strategic direction for enhancing the transparency of Federal spending and advance efforts to detect and remediate fraud, waste, and abuse." The GAT Board's recent report advocated for many reforms, most importantly centralizing spending databases and streamlining reporting obligations, in addition to calling for a universal system of unique identifiers for contracts and grants throughout the federal government.
Devaney will be replaced by current Education Department Inspector General Kathleen Tighe. Tighe has been on the Recovery Board since March 2010, serving as the chair of the Board's Accountability Committee since March 2011. Interestingly, Tighe will not be stepping down from her inspector general role, which possibly indicates a diminution of the position of Recovery Board chair. The chair was a full-time job for Devaney, who stepped away from his Department of the Interior position to lead the Board, and Devaney clearly had Vice President Biden's ear, meeting frequently with him to discuss various issues related to the Board's work.
The chair's reduced prominence is likely a reflection of the administration's desire to move on from the Recovery Act. With most of the Recovery Act money already spent, Tighe's job will largely be overseeing the dissolution of the Board and the application of lessons learned from the Recovery Act to the entire federal government, a process Devaney has already started with the GAT Board. There's still much to be done to improve federal spending transparency, but hopefully, even in a part-time role, Tighe will bring to her new position just as much passion and success as Devaney.
Image by Flickr user OversightandReform.

Farewell to an Outstanding Public Servant

On Dec. 31, 2011, Recovery Accountability and Transparency Board Chairman Earl Devaney stepped down after leading the Board for almost three years. Devaney did more than anyone else to ensure Recovery Act spending was as transparent as it was, and his presence will be sorely missed.

On Dec. 31, 2011, Recovery Accountability and Transparency Board Chairman Earl Devaney stepped down after leading the Board for almost three years. Devaney did more than anyone else to ensure Recovery Act spending was as transparent as it was, and his presence will be sorely missed.
While he didn't create the transparency provisions in the Recovery Act (those were written into the law or created by the Office of Management and Budget (OMB)), Devaney implemented the law's requirements. He and his team created the Recovery.gov website from scratch in remarkably little time and did a great deal to ensure that recipients understood their reporting responsibilities under the law. As a former inspector general (for the Department of the Interior), Devaney placed a strong emphasis on finding and preventing fraudulent contracting and wasteful spending, creating the Recovery Operations Center. He also insisted on making maps of Recovery Act spending the focal point of Recovery.gov, arguing that the government needed to do more to display information in useful ways.
Devaney understood the importance of providing information to the public and talked of empowering an army of citizen inspectors general. We appreciated the fact that he frequently reached out to the transparency community to get feedback and guidance. When we raised concerns about the quality of the data from the first rounds of recipient reporting, the Board moved quickly to fix the problems it could, such as automatically filling in some data fields for recipients (for example, pulling in company information from existing contracting databases) and creating algorithms to spot potential red flags (such as recipients reporting that they had spent more money than they had received).
Devaney also championed transparency beyond the Recovery Act. He has been a vocal supporter of unique identifiers for recipients of federal funds, a thorny problem that has long plagued federal spending transparency. For the past six months or so, he has also been the head of the Government Accountability and Transparency (GAT) Board, created by President Obama last year to "provide strategic direction for enhancing the transparency of Federal spending and advance efforts to detect and remediate fraud, waste, and abuse." The GAT Board's recent report advocated for many reforms, most importantly centralizing spending databases and streamlining reporting obligations, in addition to calling for a universal system of unique identifiers for contracts and grants throughout the federal government.
Devaney will be replaced by current Education Department Inspector General Kathleen Tighe. Tighe has been on the Recovery Board since March 2010, serving as the chair of the Board's Accountability Committee since March 2011. Interestingly, Tighe will not be stepping down from her inspector general role, which possibly indicates a diminution of the position of Recovery Board chair. The chair was a full-time job for Devaney, who stepped away from his Department of the Interior position to lead the Board, and Devaney clearly had Vice President Biden's ear, meeting frequently with him to discuss various issues related to the Board's work.
The chair's reduced prominence is likely a reflection of the administration's desire to move on from the Recovery Act. With most of the Recovery Act money already spent, Tighe's job will largely be overseeing the dissolution of the Board and the application of lessons learned from the Recovery Act to the entire federal government, a process Devaney has already started with the GAT Board. There's still much to be done to improve federal spending transparency, but hopefully, even in a part-time role, Tighe will bring to her new position just as much passion and success as Devaney.
 

Could Unspent Stimulus Money Be Used to Fend Off a New Recession?

by Michael Grabell

The nation's top economists are already giving odds on a double-dip recession. The Federal Reserve has only a few bullets left in its gun. And Congress seems politically paralyzed to come up with any new infrastructure or tax-cut plan that would fire up the economy.
So, it seems all the more surprising that the federal government still has $100 billion to $150 billion in stimulus money left to spend. That's about as much as the Making Work Pay tax credit that gave $800 apiece to middle-class families in 2009 and 2010. And it's twice as much as Congress gave to states to stabilize budgets and save education jobs.
So, could the money be better used to counteract the fallout from the European debt crisis and Standard & Poor's downgrade of the U.S. credit rating?
Taking back money from slow-moving infrastructure projects like high-speed rail and spending it on sooner-starting projects or on short-term stimuli like food stamps is easier said than done and might create more problems than it fixes, according to economists and current and former White House budget officials.
"It's meaningful, but it's not a game-changer," said Mark Zandi, an economist at Moody's Analytics who has followed the stimulus. "From an economic and political perspective, I'm not sure that would make a lot of sense to do. A lot of this spending has generated a lot of planning, a lot of environmental designs. They're counting on the money. If you're going to divert it, you're going to create all kinds of problems for them."
More than half of the remaining money is tied up in tax credits for things like renewable energy production and business equipment purchases, as well as increases in safety-net programs such as Medicaid and food stamps, which are distributed to states every three months.
Minus that, federal agencies had about $56 billion left in project funding at of the end of July. All but a few billion dollars of that is already committed to specific projects.
Although the vast majority of stimulus money is gone, dozens of solar, wind, high-speed rail and broadband Internet projects have yet to break ground. It wasn't until this year, for instance, that doctors could begin claiming billions of dollars in incentives to adopt electronic health records.
In addition, many highway projects

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—such as the rehabilitation of Interstate 295 in southern New Jersey—are reimbursed as they go. Work has begun, and construction workers are receiving paychecks, but the money technically isn't "paid out" until a certain phase is complete.
"Rescinding the remaining funds which have already been obligated would mean halting projects before they are complete, putting workers out of jobs and leaving contractors without payments owed to them," said Moira Mack, a spokeswoman for the White House Office of Management and Budget.
Centuries of federal law dating back to the Constitution tie the president's hands when it comes to spending money even in an economic emergency. Congress has full authority to set the government's budget, and federal agencies are required to use the money for a specific purpose. Many programs are further restricted with labyrinthine rules and formulas that dictate how much each state will get.
While federal and state officials do have some discretion to pick grand public works or minor repairs—a new bridge versus a paved road, for example—once they have signed a contract or a grant agreement, it would require an act of Congress to undo and could subject the federal government to liability.
"By and large, an obligation is a commitment that, absent violation of the terms and conditions, can't be pulled back and redone unless both parties agree," said Jonathan D. Breul, executive director of the IBM Center for the Business of Government.
Such an act has precedent, though, under the Recovery Act. The White House shifted funds when recipients didn't file progress reports and after newly elected Republican governors, concerned about additional costs, turned down high-speed rail projects.
Congress cut funding for food stamps, renewable energy loans and broadband to pay for the Cash for Clunkers car rebate program in 2009 and a program to save teachers' jobs in 2010.
Linda Morrison Combs, who was OMB controller during the George W. Bush administration, said a similar situation occurred when she was chief financial officer at the Environmental Protection Agency. Some toxic-waste cleanups were facing long delays, so the agency worked with contractors and Congress to free up funds for other waste sites that had work ready to go.
Essentially, the administration could go to states and other recipients and say, "Are you going to spend your money or not?" But that option is complicated by some of the long deadlines set by Congress in the Recovery Act.
Although many programs had deadlines to spend or commit funds within the first two years, others such as energy-efficiency programs have until 2012 to spend their money. A California lawmaker recently tore into the state energy commission after an audit revealed it still had $183 million left to spend. Broadband expansion projects don't have to be completed until 2013, and California's high-speed rail funding doesn't have to be spent until 2017.
Still, if a project has multiple phases, the promise of future funding gives the federal government significant leverage to influence projects already under contract, Breul said.
So, while the Obama administration might not have a bullwhip, it does have bully pulpit, which Vice President Joe Biden was known to use during his weekly calls with mayors and governors before stepping down as "sheriff" of the Recovery Act.
For example, the administration has urged school districts that have held onto education money to spend it faster. Similarly, the Commerce Department earlier this year moved to streamline environmental reviews for broadband projects.
ProPublica intern Braden Goyette contributed to this report.

New GAO Report Shows the Benefits of Spending Transparency

Often, when talking about why Recovery Act transparency provisions are important, we have to talk vaguely about the unseen. With more than one level of recipient reporting (prime recipients, and their sub-recipients and vendors), which is true under the Recovery Act, we can see who is lurking behind the initial recipients of federal contracts and grants. For instance, maybe the mayor’s brother is getting all of the road-building contracts in some theoretical small town, which we wouldn’t otherwise know because he isn’t directly contracting with the federal Department of Transportation. But there were few actual instances we could use.
Now, thanks to a new Government Accountability Office (GAO) report, we have a more concrete example. According to the report, $24 billion in Recovery Act contract and grant spending went to about 3,700 recipients who owed some $750 million in taxes to the US government. Clearly, this isn’t good. Government contracts shouldn’t be benefiting organizations that don’t play by the rules. But the important point is that we only know this because of the recipient reporting feature built into the Recovery Act. (You can read our past coverage of the Recovery Act here.) Indeed, about half of the tax-delinquent recipients were sub-recipients, meaning without the sub-recipient reporting in the Recovery Act, it wouldn’t be immediately apparent that they were receiving federal funds.
This new information in the GAO report is a clear indication that more levels of reporting are better. Without the Recovery Act sub-recipient reporting, it would have taken the GAO years to do the same kind of research, assuming the GAO would even bother to spend all that time on it.
Reports like this are why we’re ecstatic that sub-award reporting has finally come to USAspending.gov, the government’s website for all federal contracts, grants and loan information. In the coming months, as more the site collects more sub-award data, it’ll be easy to do the same tax analysis with all federal spending, not just Recovery Act data.
But why stop there? Why not compare the sub-award data with, say, Project on Government Oversight’s Federal Contractor Misconduct Database? Or workplace safety citations? Or the list of companies forbidden from receiving federal contracts? The possibilities are endless.
Of course, the next step is to enact full, multi-tier reporting, in which any organization that receives more than $25,000 of federal funds must report on the use of the funds, regardless of how far down the contract or grant chain they are. Hopefully reports like the GAO's will help convince lawmakers on the importance of full spending transparency.
Image by Flickr user Forest Service - Northern Region used under a Creative Commons license.

New GAO Report Shows the Benefits of Spending Transparency

Often, when talking about why Recovery Act transparency provisions are important, we have to talk vaguely about the unseen. With more than one level of recipient reporting (prime recipients, and their sub-recipients and vendors), which is true under the Recovery Act, we can see who is lurking behind the initial recipients of federal contracts and grants. For instance, maybe the mayor’s brother is getting all of the road-building contracts in some theoretical small town, which we wouldn’t otherwise know because he isn’t directly contracting with the federal Department of Transportation. But there were few actual instances we could use.
Now, thanks to a new Government Accountability Office (GAO) report, we have a more concrete example. According to the report, $24 billion in Recovery Act contract and grant spending went to about 3,700 recipients who owed some $750 million in taxes to the US government. Clearly, this isn’t good. Government contracts shouldn’t be benefiting organizations that don’t play by the rules. But the important point is that we only know this because of the recipient reporting feature built into the Recovery Act. (You can read our past coverage of the Recovery Act here.) Indeed, about half of the tax-delinquent recipients were sub-recipients, meaning without the sub-recipient reporting in the Recovery Act, it wouldn’t be immediately apparent that they were receiving federal funds.
This new information in the GAO report is a clear indication that more levels of reporting are better. Without the Recovery Act sub-recipient reporting, it would have taken the GAO years to do the same kind of research, assuming the GAO would even bother to spend all that time on it.
Reports like this are why we’re ecstatic that sub-award reporting has finally come to USAspending.gov, the government’s website for all federal contracts, grants and loan information. In the coming months, as more the site collects more sub-award data, it’ll be easy to do the same tax analysis with all federal spending, not just Recovery Act data.
But why stop there? Why not compare the sub-award data with, say, Project on Government Oversight’s Federal Contractor Misconduct Database? Or workplace safety citations? Or the list of companies forbidden from receiving federal contracts? The possibilities are endless.
Of course, the next step is to enact full, multi-tier reporting, in which any organization that receives more than $25,000 of federal funds must report on the use of the funds, regardless of how far down the contract or grant chain they are. Hopefully reports like the GAO's will help convince lawmakers on the importance of full spending transparency.
Image by Flickr user Forest Service - Northern Region used under a Creative Commons license.

New GAO Report Shows the Benefits of Spending Transparency

Often, when talking about why Recovery Act transparency provisions are important, we have to talk vaguely about the unseen. With more than one level of recipient reporting (prime recipients, and their sub-recipients and vendors), which is true under the Recovery Act, we can see who is lurking behind the initial recipients of federal contracts and grants. For instance, maybe the mayor’s brother is getting all of the road-building contracts in some theoretical small town, which we wouldn’t otherwise know because he isn’t directly contracting with the federal Department of Transportation. But there were few actual instances we could use.
Now, thanks to a new Government Accountability Office (GAO) report, we have a more concrete example. According to the report, $24 billion in Recovery Act contract and grant spending went to about 3,700 recipients who owed some $750 million in taxes to the US government. Clearly, this isn’t good. Government contracts shouldn’t be benefiting organizations that don’t play by the rules. But the important point is that we only know this because of the recipient reporting feature built into the Recovery Act. (You can read our past coverage of the Recovery Act here.) Indeed, about half of the tax-delinquent recipients were sub-recipients, meaning without the sub-recipient reporting in the Recovery Act, it wouldn’t be immediately apparent that they were receiving federal funds.
This new information in the GAO report is a clear indication that more levels of reporting are better. Without the Recovery Act sub-recipient reporting, it would have taken the GAO years to do the same kind of research, assuming the GAO would even bother to spend all that time on it.
Reports like this are why we’re ecstatic that sub-award reporting has finally come to USAspending.gov, the government’s website for all federal contracts, grants and loan information. In the coming months, as more the site collects more sub-award data, it’ll be easy to do the same tax analysis with all federal spending, not just Recovery Act data.
But why stop there? Why not compare the sub-award data with, say, Project on Government Oversight’s Federal Contractor Misconduct Database? Or workplace safety citations? Or the list of companies forbidden from receiving federal contracts? The possibilities are endless.
Of course, the next step is to enact full, multi-tier reporting, in which any organization that receives more than $25,000 of federal funds must report on the use of the funds, regardless of how far down the contract or grant chain they are. Hopefully reports like the GAO's will help convince lawmakers on the importance of full spending transparency.
Image by Flickr user Forest Service - Northern Region used under a Creative Commons license.

New GAO Report Shows the Benefits of Spending Transparency

Often, when talking about why Recovery Act transparency provisions are important, we have to talk vaguely about the unseen. With more than one level of recipient reporting (prime recipients, and their sub-recipients and vendors), which is true under the Recovery Act, we can see who is lurking behind the initial recipients of federal contracts and grants. For instance, maybe the mayor’s brother is getting all of the road-building contracts in some theoretical small town, which we wouldn’t otherwise know because he isn’t directly contracting with the federal Department of Transportation. But there were few actual instances we could use.
Now, thanks to a new Government Accountability Office (GAO) report, we have a more concrete example. According to the report, $24 billion in Recovery Act contract and grant spending went to about 3,700 recipients who owed some $750 million in taxes to the US government. Clearly, this isn’t good. Government contracts shouldn’t be benefiting organizations that don’t play by the rules. But the important point is that we only know this because of the recipient reporting feature built into the Recovery Act. (You can read our past coverage of the Recovery Act here.) Indeed, about half of the tax-delinquent recipients were sub-recipients, meaning without the sub-recipient reporting in the Recovery Act, it wouldn’t be immediately apparent that they were receiving federal funds.
This new information in the GAO report is a clear indication that more levels of reporting are better. Without the Recovery Act sub-recipient reporting, it would have taken the GAO years to do the same kind of research, assuming the GAO would even bother to spend all that time on it.
Reports like this are why we’re ecstatic that sub-award reporting has finally come to USAspending.gov, the government’s website for all federal contracts, grants and loan information. In the coming months, as more the site collects more sub-award data, it’ll be easy to do the same tax analysis with all federal spending, not just Recovery Act data.
But why stop there? Why not compare the sub-award data with, say, Project on Government Oversight’s Federal Contractor Misconduct Database? Or workplace safety citations? Or the list of companies forbidden from receiving federal contracts? The possibilities are endless.
Of course, the next step is to enact full, multi-tier reporting, in which any organization that receives more than $25,000 of federal funds must report on the use of the funds, regardless of how far down the contract or grant chain they are. Hopefully reports like the GAO's will help convince lawmakers on the importance of full spending transparency.
Image by Flickr user Forest Service - Northern Region used under a Creative Commons license.

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