Stimulus Fraud from Investors Business Daily
Posted 07:49 PM ET
The Economy: We knew something was funny when the White House claimed that 640,000 to 1 million jobs had been created from this year’s stimulus. What we didn’t know was that it would turn into a massive fraud.
Not only have 640,000 new jobs not been created from the stimulus — an absurd claim, given the economy’s loss of nearly 4 million payroll positions this year — but it now seems that even the jobs themselves are fictional.
Thanks to the digging of a number of data sleuths, it turns out that many of the jobs reported by states come from made-up congressional districts.
This would be funny if it weren’t a criminal waste of public funds. And yet, G. Edward DeSeve, who runs the government’s economic recovery program, says the errors are “relatively few” and “don’t change the fundamental conclusions one can draw from the data.”
Excuse us? The “relatively few” errors are in fact thousands in number. But that’s the pernicious place we find ourselves today — a public official defending shoddy accounting that looks an awful lot like fraud to the tune of billions of dollars.
One example: the 15th Congressional District of Arizona, where 30 jobs were salvaged with $761,420 in spending, according to Recovery.gov, the official government Web site. As ABC News reports: “There is no 15th Congressional District in Arizona; the state has only eight districts.”
States as diverse as Kansas, New Mexico, New Hampshire, Ohio, Minnesota and West Virginia also reported phony jobs.
Stimulus jobs were also reported in 35 congressional districts in Washington, D.C., and four U.S. territories. The problem: None of those jurisdictions even has congressional districts.
All told, according to the useful Web site Watchdog.org, some $6.4 billion was spent to “create or save” 30,000 jobs in phantom districts. That comes out to about $225,000 per nonexistent job. And that’s only what’s been found so far.
The Washington Examiner’s bogus-job count is even higher — at 75,343, a figure likely to climb as more are discovered.
Some cases were egregious. California’s state university system took in $268.5 million in stimulus funds, claiming it “saved” 26,000 jobs. It has since admitted that few, if any, jobs were really at risk.
The government’s response to all this? “Human beings make mistakes,” shrugged Recovery Board spokesman Ed Pound on Monday. But by Tuesday, as the furor grew, the board’s DeSeve was vowing to go through reports with a “fine-tooth comb.”
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STIMULUS WATCH: Salary raise counted as saved job
By BRETT J. BLACKLEDGE and MATT APUZZO – 4 hours ago
WASHINGTON — President Barack Obama’s economic recovery program saved 935 jobs at the Southwest Georgia Community Action Council, an impressive success story for the stimulus plan. Trouble is, only 508 people work there.
The Georgia nonprofit’s inflated job count is among persisting errors in the government’s latest effort to measure the effect of the $787 billion stimulus plan despite White House promises last week that the new data would undergo an “extensive review” to root out errors discovered in an earlier report.
About two-thirds of the 14,506 jobs claimed to be saved under one federal office, the Administration for Children and Families at Health and Human Services, actually weren’t saved at all, according to a review of the latest data by The Associated Press. Instead, that figure includes more than 9,300 existing employees in hundreds of local agencies who received pay raises and benefits and whose jobs weren’t saved.
That type of accounting was found in an earlier AP review of stimulus jobs, which the Obama administration said was misleading because most of the government’s job-counting errors were being fixed in the new data.
The administration now acknowledges overcounting in the new numbers for the HHS program. Elizabeth Oxhorn, a spokeswoman for the White House recovery office, said the Obama administration was reviewing the Head Start data “to determine how and if it will be counted.”
But officials defended the practice of counting raises as saved jobs.
“If I give you a raise, it is going to save a portion of your job,” HHS spokesman Luis Rosero said.
The latest stimulus report, released Friday, significantly overstates the number of jobs spared with money from programs serving families and children, mostly the Head Start preschool program. The report shows hundreds of the programs used nearly $323 million to provide pay raises and other benefits to their existing employees.
The raises themselves were appropriate — the stimulus law set aside money for Head Start salary increases — but converting that number into jobs proved difficult. The Obama administration told Head Start officials to consider a fraction of each employee as a job saved.
“That’s more than ridiculous,” said Antonia Ferrier, a spokeswoman for Republican House Minority Leader John Boehner.
Many Head Start programs around the country went further, counting everyone who received a raise as a job saved.
“It’s a glitch in the system,” said Ben Allen, the research director at the National Head Start Association. “There was some misunderstanding among some in the Head Start community about completing the reporting requirements.”
Allen said a cost-of-living adjustment “may not be viewed traditionally as a job saved, but one could interpret it that, by providing COLA, you’re retaining staff.”
The Bergen County Community Action Program in Hackensack, N.J., noted the nearly $213,000 it received went to cover raises for existing staff only, but it also reported saving 85 jobs.
At Southwest Georgia Community Action Council in Moultrie, Ga., director Myrtis Mulkey-Ndawula said she followed the guidelines the Obama administration provided. She said she multiplied the 508 employees by 1.84 — the percentage pay raise they received — and came up with 935 jobs saved.
“I would say it’s confusing at best,” she said. “But we followed the instructions we were given.”
Ed DeSeve, who oversees the stimulus at the White House, said the Head Start numbers “represent a few percent of all jobs reported” and said the problems would probably be balanced out by other errors that underreported jobs.
“So we don’t expect any corrections to this data to meaningfully impact the total 640,000 direct jobs,” DeSeve said.
More than 250 other community agencies in the U.S. similarly reported saving jobs when using the money to give pay raises, to pay for training and continuing education, to extend employee work hours or to buy equipment, according to their spending reports.
Other agencies didn’t count the raises as jobs saved, reporting zero jobs.
Last week’s stimulus report claimed 640,000 jobs saved or created by the economic recovery plan so far. Those jobs came from 156,614 federal contracts, grants and loans awarded to more than 62,000 recipients, worth a total of $215 billion.
Obama has promised the stimulus would save or create 3.5 million jobs by the end of next year, and the data released Friday represented the first head count toward that goal.
The Associated Press.
