Was the stimulus (A) a job creation bill or, (B) a liberal spending wish list? A new Government Accountability Office (GAO) study suggests that option B is closer to the truth. Small wonder it did not bring unemployment down.
Obama publicly argued that America needed the $862 billion bill to create jobs and singled out “green job” spending as the key to an economic recovery. The stimulus itself, however, looked a lot like not letting “a good crisis go to waste” and pouring public money at liberal special interests.
Remember all the green jobs weatherizing homes that Obama said the stimulus would fund? Because Obama would not waive regulations that benefit unions the Department of Energy has weatherized just 1 out of every 65 homes they planned to.
The Davis-Bacon Act (DBA) requires contractors on all federal construction projects to pay “prevailing wages.” In theory, those prevailing wages are supposed to be market wages. In practice, the Department of Labor uses slow, error-ridden, and unscientific methods to estimate them. As a result Davis-Bacon rates typically echo union wage scales: an average of 22 percent above market wages. By law the government hires four construction workers for the price of five.
Unions love this. No one can charge taxpayers less than they do. Jobs that would otherwise go to nonunion workers instead go to them at wages no one else would pay.
Obama’s stimulus spent billions on home weatherizing and then required contractors to pay Davis-Bacon wages. That meant that the Department of Labor first had to estimate Davis-Bacon rates for home weatherizing. It took them until September to do it. Then state and local governments had to train their staff to comply with the Act’s paperwork, which meant more delays. The GAO found that these delays caused the Department of Energy to weatherize just 9,100 of the 593,000 homes it intended to last year.
President Obama could have cut through this red tape with the stroke of a pen. The law allows the President suspend the Davis-Bacon Act. Doing so would have allowed his “green jobs” programs to go forward immediately. The savings from paying market wages would have also funded more infrastructure projects and an additional 160,000 construction jobs.
But those jobs would not go primarily to union members, as they will under Davis-Bacon restrictions. So Obama kept Davis-Bacon restrictions in place. He chose to wait and to create fewer jobs in order to ensure that the stimulus spending benefited primarily union members. Which sort of answers the question of whether the stimulus was about economic recovery or spending on liberal interest groups.
A $5 billion stimulus program to weatherize homes is off to a shaky start. ABC News reports that at the end of 2009, only 9,100 have been weatherized to save energy through the American Reinvestment and Recovery Act. $522 million of the $5 billion has been spent thus far, which equates to over $57,000 per home. That’s quite a slow for a stimulus bill that was supposed to be timely and effective; the goal of the plan was to cover 593,000 homes from the passage of the stimulus bill through 2012. That means they’re 1.5% of the way there towards meeting the goal. Only 98.5% to go!
The Department of Energy contests that 22,000 homes have been weatherized, but that still only equates to 3.7% of the targeted goal. What’s the problem? Everything, to start, but in this instance it is the government’s red tape:
[T]he Recovery Act included so-called Davis-Bacon requirements for all weatherization grants. Davis-Bacon is a Depression-era law meant to ensure equitable pay for workers on federally funded projects. Under that law, the grants may only go to projects that pay a “prevailing wage” on par with private-sector employers.
The Department of Labor spent most of the past year trying to determine the prevailing wage for weatherization work, a determination that had to be made for each of the more than 3,000 counties in the United States, according to the GAO report.
Secondly, many homes have to go through a National Historic Preservation Trust review before work can begin. The report quoted Michigan state officials as saying that 90 percent of the homes to be weatherized must go through that review process, but the state only has two employees in its historic preservation office.”
Texas Watchdog detailed their state’s problem with the weatherization program two weeks ago noting that $3.7 million in taxpayer money had been spent to weatherize 47 homes. That’s $78,000 per home, which beats out the per home nationwide average by $21,000.
The other lesson from this is that one way to actually create jobs and make projects driven by the private sector more efficient is to streamline regulatory barriers that unnecessarily prohibit the shovel from hitting the ground.
The stimulus was supposed to save or create jobs. Was it also supposed to be timely or effective? Which one does this fall under?