The good news is that money is flowing from the Federal Government to the states at a faster rate than the Congressional Budget Office predicted at the beginning of this year. I am also pleased that the Recovery Act has helped states and localities reduce the severity of the budget cuts to the programs that unemployed people need most. In New York, for example, GAO found that the New York City School District anticipates saving 14,000 jobs as a result of Recovery Act funding.
But there’s also bad news. GAO found significant shortcomings in the targeting and tracking of Recovery Act spending. The Recovery Act places a priority on directing funds toward projects in economically distressed areas. However, there is substantial variation among states as to what constitutes an economically distressed area. For this reason, it is unclear whether Recovery Act funds are going where they are needed most.
But for California Republican Darrell Issa, the ranking minority member of the Oversight panel, recent reports that the nation’s jobless rate in June shot up to 9 and a half percent call into question one of the main reasons for the stimulus measure.
“These job losses,” he said in his opening statement to the committee, “come on the heels of other declining economic indicators that bring total American job loss to 2.6 million since President Obama took office. ”
It fell to Rob Nabors, deputy director at the Office of Management and Budget, to maintain the Administration’s stance that the stimulus is a work in progress – one which is beginning to yield a steady stream of results. He offered some examples.
Just this month, eight days into July, the Department of Education is helping states with their increasing budgetary pressures by accelerating more than $2.7 billion in Recovery Act Funds well ahead of schedule. The Administration opened competition on more than $15 billion in high-speed rail, smart grid, and broadband programs. All 50 states obligated at least half of their highway funds before the July 1 deadline. As a result, right now, there are more than 1,900 highway projects underway across the country.
Nabors argues that the stimulus has slowed the rate of the unemployment rise, and that spending now in the pipeline through the end of this summer will put even more people back to work, mainly through infrastructure spending. That did little to satisfy committee Republicans like Jason Chaffetz of Utah, who questioned Nabors’ claim that stimulus spending was slowing the climb in unemployment.
But its useful to remember that the states ultimately set priorities for what projects get funded by the stimulus — projects that put people to work. And that’s the point made by Pennsylvania Governor Ed Rendell, in response to Chaffetz.
I can bring you to every infrastructure project we’ve got working, and you’ll see people working who weren’t working before. You’ll see Pennsylvania factories getting orders that didn’t have orders before. And that’s what its all about.
Chairman Towns pressed OMB’s Nabors to work harder to give states clearer guidance on reporting the progress on stimulus spending, and also to provide his committee with better reporting on the topic of “jobs saved” versus “jobs created”.
The results are expected in September after Congress returns to work after the August recess.