Feds Wasted Most of $17 Bil. CA Stimulus

JULY 20, 2011

By JOHN SEILER

How did the federal government actually spend the 2009 stimulus money in California? In March 2009 the California Legislative Analyst made a study of proposed spending on the officially named American Recovery and Reinvestment Act. But it has not done anything on how the money actually was spent.

This is a preliminary look at how the ARRA funds were spent in California. So far, of $30 billion in ARRA funds awarded to California, $17 billion has been spent.

ARRA was supposed to bring about an economic recovery across America. It didn’t. The economy did increase artificially due to the Federal Reserve Board’s “Quantitative Easing” — that is, inflation — programs. The stock market rose.

But unemployment never declined from ARRA. In fact, it rose nationally and in California. ARRA passed Congress on January 28, 2009, when unemployment was 7.6 percent for the nation and 10.1 percent for California. Back in January 2009, promises were made. Reports Wikipedia:

In the primary justification for the stimulus package, the Obama administration and Democratic proponents presented a graph in January 2009 showing the projected unemployment rate with and without the ARRA.^[76] The graph showed that if ARRA was not enacted the unemployment rate would exceed 9 percent; but if ARRA was enacted it would never exceed 8 percent. After ARRA became law, the actual unemployment rate exceeded 8 percent in February 2009, exceeded 9 percent in May 2009, and exceeded 10 percent in October 2009. The actual unemployment rate was 9.2 percent in June 2011 when it was projected to be below 7 percent with the ARRA.

The latest figures in July 2011 show that unemployment rose to 9.2 percent in June for the nation, and to 11.7 percent in May for California. The California number is almost certain to rise when June figures are released Friday.

So the American Recovery and Reinvestment Act not only failed to halt the rise in unemployment, it made things worse. It mostly wasted $787 billion — money that was borrowed from China, Japan, South Korea and Europe. That borrowed money now is part of the debate over raising the $14 trillion debt limit. President Obama has backed the proposal to raise taxes $1 trillion put forward by the so-called Gang of Six senators.

That $787 billion in wasted ARRA funds just about covers the $1 trillion supposedly needed in new taxes.

Back when ARRA was advancing in Congress, President Obama promised it would fund only “shovel ready” projects. Those would be construction projects mostly completed or ready to be started, such as for schools, fire stations, roads or bridges — but which lacked funding. But, as the list of California projects below shows, what was funded instead mainly were projects with permitting delays, boondoggles, social programs and other pork.

Just last month, President Obama even joked, when his Council on Jobs and Competitiveness met in Durham, NC, “Shovel-ready was not as … uh .. shovel-ready as we expected.” (Video included at the link.)

California Waste

As America’s largest state, California’s ARRA funds were wasted more lavishly than in other states. Here are the major areas, according to federal records, with links to the actual federal-government documents:

* $2.5 billion for the California High-Speed Rail Authority. Only federal largess is keeping this massive boondoggle alive. Cost estimates have soared from $45 billion to as much as $213 billion today.  That’s more than double what even the opponents of the train estimated in their opposition statements in the ballot pamphlet for Proposition 1A, which authorized the train and which voters approved in 2008.

“This cooperative agreement covers the preparation of Preliminary Engineering (PE) and Environmental Documents for Phase 1 of the CHSTP,” the award summary reads. “The 800-mile statewide program will provide reliable, high-speed, electrified train service between the Bay Area, the Central Valley, Sacramento, and Southern California.”

But as columnist Dan Walters wrote Sunday:

It’s rare for any human endeavor to achieve perfection, but California’s High-Speed Rail Authority has done it — albeit in reverse.

Every single independent review of its project to link the northern and southern halves of the state with a bullet train has concluded that it’s not working. No exceptions. Not even one.

The only ones saying that the bullet train will work as promised are the rail authority itself, its highly paid consultants and media cheerleaders, and those on the political left who hate cars and planes and love trains.

A University of California review of the authority’s ridership estimates found them to be highly suspect.

The Legislature’s budget analyst has been highly critical of the project’s management.

Meanwhile, a “peer review” panel has been equally skeptical of the authority’s ability to deliver the project — three times.

And all of that criticism is coming from authorities nominally in favor of building the project. Opponents are even more scathing.

* $1.4 billion for the California Department of Transportation. Some of these projects are worthwhile and even “shovel ready.” The state’s dilapidated roads certainly need repair. But many are politically motivated.

For example, $18 million went for “SOL-80, Pavement Rehab East HOV overlap section I-80 HOV Lanes in Solano County.” That is, it went to the politically correct High Occupancy Vehicle lanes that have been forced on us by the feds themselves, and which disrupt traffic flows while wasting millions on elaborate “overlaps.”

* $973 million to the Los Angeles Unified School District. This included numerous programs. For example, $4.9 million for the LAUSD’s “Investing in Innovation Fund.” The description of the fund has to be read to be believed. Excuse the large dollop of educationese, but it demonstrates what goes on in the educrats’ minds:

The Investing in Innovation Fund provides competitive grants to applicants with a record of improving student achievement and attainment in order to expand the implementation of, and investment in, innovative practices that are demonstrated to have an impact on improving student achievement or student growth, closing achievement gaps, decreasing dropout rates, increasing high school graduation rates, or increasing college enrollment and completion rates.

With wording like that, the LAUSD can do whatever it wants with the money. It’s a mammoth, run-on sentence of obfuscation. I lost track counting the number of words. But I plugged it into Word, which counted 63 words — in one sentence. That’s what they teach you on the way to your Ph.D. in education.

Meanwhile, LAUSD graduates only 41 percent of its students from high school, second worst in America after Detroit. And, incredibly, LAUSD spends $30,000 a year per student (aside from the stimulus money), or $750,000 for a class of 25.

All the federal stimulus money did was feed the dysfunctional beast.

* $825 million to the Regents of the University of California. And $823 million to the California State University Systems. Given the increases in student tuition of recent years, this would seem to be a reasonable expenditure. Almost all the money went to “supporting struggling schools. With respect to postsecondary, the University of California used ARRA funds to retain the University’s state-funded workforce responsible for core operations—teaching, research and public service. The California State University used ARRA funds to retain positions in the areas of instruction, academic support, student services, institutional support, plant maintenance, skilled craftsmen and public services.”

But this only delayed the inevitable school cutbacks and tuition increases of recent months. And the federal money also allowed the university systems to continue their bloated salaries for school administrators, such as the $400,000 school trustees just voted for Elliot Hirshman, the new president of Cal State San Diego. That’s the same salary as the president of the United States gets.

The Bills Are Due

There are many more such scandalous numbers in the federal report. I only touched on the worst ones at the top of the list.

This is what happens when government, panicking during an economic downturn, borrows billions to “fix” the economy, but only makes matters worse. Distant bureaucrats in Washington, D.C., 3,000 miles from California, have no idea what’s going out here in the Golden State. Grants are made according to political and pork priorities, not real needs.

The money was borrowed, adding to the national deficit and debt that must be paid back. The federal balance sheet was put further out of whack, leading to the ongoing calls for more tax increases.

Like a person splurging on a credit card in Vegas, it felt good for a short time, but the hangover and debt collection calls followed fast and furious.