PLANK MAY 31, 2012
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Attacks on President Obama's "crony capitalism" are a major theme of Mitt Romney's campaign. And the stimulus typically figures prominently in these attacks. As Romney and his allies tell is, the Recovery Act was full of shady, wasteful giveaways to the administration's friends and benefactors.
This argument is probably effective. Most Americans have no problem believing government programs are a boondoggle. The argument is also untrue—as in, the very opposite of true. Federal auditors watching over the Recovery Act have documented just $7.2 million in fraud, or about .001 percent of the $800 billion the federal government has distributed through the program. That's astonishingly low. And that's not because the auditors haven't been looking.
My source for this is Time magazine's Michael Grunwald, one of the nation's leading experts on the Recovery Act. He's made this point before and he'll be making it again—among other places, in a forthcoming book on the subject called The New New Deal. What piqued Grunwald's interest today is a claim in Romney's brand new ad on the stimulus: "The Inspector General said contracts were steered to 'friends and family'":
That sounded like news. I’ve spent two years in stimulus-world, and I had no idea an inspector general had said that. I asked the Romney campaign for documentation, and it produced a Newsweek article asserting that Energy Department inspector general Gregory Friedman “has testified that contracts have been steered to ‘friends and family.’”
Except that Newsweek article was an excerpt from the book Throw Them All Out, written by Peter Schweizer, a right-winger who has served as an adviser to Sarah Palin’s PAC, edited one of Andrew Breitbart’s websites, and written a slew of books portraying liberals as pond scum. Not exactly a disinterested source. And it turns out that the inspector general never testified that stimulus contracts were steered to friends and family. He said his office was investigating whether stimulus contracts were steered to friends and family. So far, it hasn’t confirmed that any were.
As Grunwald says, reasonable people can disagree about the extent to which the Recovery Act worked. (I think the evidence suggests it worked quite well; like my colleague Noam Scheiber, author of his own book that covers this material, I just think it should have been bigger.) But when it comes to allegations that the Recovery Act was full of fraud and waste, there's no ambiguity. The allegations have no basis in fact.
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13 comments
Ah, so this is yet another instance where Romney's campaign manages to find a quote, that indicates exactly the opposite of the horrible meaning they place on it. I sure hope somebody's keeping score. Because "crony capitalism" sounds like what the Koch brothers and Fox-News practice -- for real, not by some slanted interpretation. You forgot to mention that most of the so-called "bailout" were merely loans, and loan guarantees, a lot of which has since been paid back.
- AllanL5
May 31, 2012 at 12:42pm
That Republicans, including Romney, are lying liars who do nothing but tell big, fat lies all the time, every day, every moment, and nothing else should no longer be noteworthy. The only interesting and important question is not debunking the lies but what rhetoric Obama and Democrats should be using to destroy the Republican party at the polls.
- roidubouloi
May 31, 2012 at 12:57pm
Funny, since buying votes in the Senate to maintain the carried-interest loophole, a tax break aimed at one class of already wealthy investors and repeatedly shown to be of little value to the economy as a whole, is the very definition of crony capitalism. These Rovian Republicans, always denouncing Democrats for sins they are much more guilty of in an attempt to muddle debate and secure the rationalizations of the chin-stroking "bipartisan" serious pundits. At least they let us know exactly which of their egregious tactics to decry. And when they start whining about unfairness, that's when you Dems should go for the kill.
- chaitless
May 31, 2012 at 1:39pm
If the Romney campaign was quoting Christ's "Let him who is without sin cast the first stone!" it would come out as "Cast the first stone!"
- ironyroad
May 31, 2012 at 3:02pm
How can you tell a Republican is lying? Their lips are moving!
Seriously though, I appreciate the head's up on this. Yeah, a Republicans lips moved and lies were told, and dog bites man. But I do like to actually be aware of what lies are being told on any given day. Even if it does make me want to cry.
- GSpinks
May 31, 2012 at 3:16pm
Good Reporting here. Romney just thinks we're all idiots. He's made a lot of money. The rest of us are stupid. The electorate is stupid. Like a carnival barker, he needs only say some things and the stupid people will buy tickets to see a woman that looks like a lizard and don't get disappointed if the whole thing is a fake.
- Nusholtz
May 31, 2012 at 4:30pm
Weak stuff from Romney, again. All things being equal? O'bama's a shoe-in if this is all they can come up with.
- IggyPop
May 31, 2012 at 5:43pm
Unfortunately, nush, if Romney believes as you claim he does, he is for the most part correct. Hence the question, What sort of rhetoric the Democrats need to deploy, not to answer the Republican lies (that will be believed by many), but to bury the Republicans?
- roidubouloi
May 31, 2012 at 10:33pm
The only liars I've encountered who are worse than Republicans and the radical Rightists who support them are the leaders of police states. But the people who vote for Republicans don't care in the least if GOP campaigners are lying. When they talk politics in their homes or at their jobs, they lie with every breath they take, too. It's easy and requires no research. And it works. There is a huge segment of the American population that wants control of this country by any means necessary. I used to say that we Americans are not an extremist people. But now a huge number of us are Radical Rightists. Somewhere down the road we could be in for a nightmare.
- magboy47.
June 1, 2012 at 1:44am
The best measure of how well the recovery act worked is how well it followed projected expectations. We were told if the recovery act was implemented that unemployment would be under 6% right now. It's over 8%. And just went UP. The difference between 6 and 8% is about 2M jobs. In other words, the administration thought all this spending would give us 2-4M more jobs than it actually did. By their own benchmark, we have gotten a terrible ROI. Additionally, the CBO just released their recovery report and by their math the recovery act increased employment by 0.2M to 1.5M people, at a total cost of $831B. That's a few million $ we the taxpayer paid PER JOB. And many of these jobs went away as soon as the funding dried up. In other words, the government received around $2M to create a job that paid an actual person some $75K per year. And as soon as the government stopped paying, that job disappeared. This is not good. And pretending it is good releases our government from the accountability challenge they so desperately need today.
- seattleeng
June 1, 2012 at 11:48am
Hilariously, seattle is trying to reverse engineer the numbers to make the stimulus do things it didn't say it would do. The jobs created/sustained numbers aren't really in dispute. So seattle creates a new number of "imputed jobs", determined by projections on the unemployment rate that were done using out-of-date numbers in order to say that 3 million jobs are somehow missing. In spite of the fact that if you do projections knowing what we now know about the economic tailspin, there was no way a stimulus that small could immediately halt an unemployment rate that was rocketing up. Passed in February with spending taking effect in the late spring, it just doesn't compute that this particular stimulus could completely undo all of those endogenous trends that were baked into the cake. But the seattle believes what the seattle believes, regardless of facts or empirical commitments to truth and not the party line.
- chaitless
June 1, 2012 at 1:18pm
Chaitless, you can read the CBO numbers yourself The words of the CBO: --- By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of March 2012. CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. … On that basis CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise: – They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent, – They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points, – They increased the number of people employed by between 0.2 million and 1.5 million, – They increased the number of full-time-equivalent jobs by 0.3 million to 1.9 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.) --- In other words, if the stimulus hadn't been applied, there would be between 0.2M and 1.5M fewer people employed today. That is a lot of cabbage for not very many jobs. Picking the midpoint of their number, we spent $831B for 1.1M jobs. That's $800K/job in the kindest light possible. Again, this is the CBO saying this. There's not much value in disputing the source. And the conclusion is simple math. www.cbo.gov/sites/default/files/cbofiles/attachments/05-25-Impact_of_ARRA.pdf
- seattleeng
June 1, 2012 at 5:39pm
seattleeng: "The best measure of how well the recovery act worked is how well it followed projected expectations." Why is that the best measure? Wouldn't a better measure be a comparison regarding where we'd be without it? Just because it didn't meet what a few people projected doesn't mean that we're not a lot better off with it than without it. Start with a bogus premise, and one can conclude just about anything. And the "simple math" is bogus as well. The spending was only for a year or two, while some of the jobs created will last many years. And those with jobs are paying taxes back to the government. And some of the spending went to materials and factories, not just salaried positions. http://abcnews.go.com/blogs/politics/2011/07/278k-per-stimulus-job-white-house-says-no/ So the math is anything but "simple." By the way, the CBO estimate from last year gave a figure of as many as 3.6 million jobs created. I don't know why one would look at only one quarter well into implementation to judge overall effectiveness. In any case, the accusation is that the program was full of "fraud and waste." Cohn says that there was little if any fraud or so-called crony capitalism. There's been nothing presented to refute that assertion.
- dsimon
June 1, 2012 at 11:50pm