Did Obama delay stimulus spending to aid his reelection?

at 06:02 AM ET, 03/21/2012


(Carolyn Kaster/AP)

“Stimulus was supposed to be quick. In fact, they never intended to spend it and will not completely have effectively spent it until after the president’s re-elect. Always looking at how do you get the maximum hit when the president was up for re-elect.”

— Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, March 19, 2012

This is a pretty serious charge by a senior member of the House of Representatives, made on “Fox and Friends” earlier this week. The president’s opponents usually say the stimulus was a failure and a waste of money, not that money was purposely held back. We immediately thought he must have some damning evidence that his investigators had turned up.

But when we asked for more information, we only got a statement blasting President Obama (more on that below). That wasn’t very illuminating, but as we will see, perhaps there is a reason his staff could not provide much information.

The Facts

The American Recovery and Reinvestment Act, better known as the stimulus, was passed into law just weeks after Obama became president. It was valued at about $800 billion — the precise number varies depending on when the estimate was done — and contained new spending, tax cuts and grants to municipalities and states.

Leave aside the contentious question of whether or not it was effective, since that’s not the issue here. Did the law purposely hold back funds so there could be a “maximum hit” during the president’s re-election campaign?

We could not find any evidence to support this claim. Logically, it doesn’t make sense, because one would think the president would want to get the unemployment rate down as quickly as possible.

Indeed, that is what the administration claimed it was trying to do. “Now, what makes this recovery plan so important is not just that it will create or save 3.5 million jobs over the next two years,” Obama said when he signed the bill. (That particular claim is still the subject of much debate.)

When the Congressional Budget Office analyzed the plan, it also predicted much of the money would be spent in the first two years, with virtually no impact in the years after that. (Look at Table 1, which shows little effect on the unemployment rate or gross domestic product in 2012.)

While those were predictions when the bill became law, let’s look at what happened afterward. Perhaps it is instructive that ProPublica, which closely tracked the spending of the stimulus, stopped updating its stimulus tracker on its Web site.(Update: We were looking at the wrong link. The ProPublica Recovery Tracker is still being updated. Apologies to ProPublica.) In August 2011, ProPublica reported that the “vast majority of stimulus money is gone” but $100 to $150 billion was unspent. But there’s less to that than meets the eye. ProPublica explained:

More than half of the remaining money is tied up in tax credits for things like renewable energy production and business equipment purchases, as well as increases in safety-net programs such as Medicaid and food stamps, which are distributed to states every three months.

Minus that, federal agencies had about $56 billion left in project funding at the end of July. All but a few billion dollars of that is already committed to specific projects.

Meanwhile, the Obama administration’s recovery.gov Web site also reports that much of the stimulus money has been allocated — $840 billion, to be exact.

We mentioned that we asked Issa’s staff for evidence to back up his claim. This is the response we received from Frederick Hill, Issa’s communications director:

“The Fact Checker’s own recent work recounts how President Obama and his campaign have been willing to politicize a misleading narrative of his own mother’s death to aid his prospect for re-election. Given that you wrote this, it’s hard to understand why you’d be skeptical about a claim that a pattern of evidence suggests the stimulus has been used to reward political allies and further the President’s prospect for re-election.”

Two wrongs don’t make a right, much as we appreciate the reference to our previous work. Also, Hill did not really address the substance of Issa’s statement, unless he is suggesting Obama is holding back funds in order to win political contributions for his re-election campaign. We’d still be curious to see the evidence.

We also find it interesting that Issa did not repeat his claim on Tuesday, when he had Energy Secretary Steven Chu before the committee as a witness for a hearing examining how the Energy Department had handled its share of the stimulus money. Instead, he accused Chu of using the money to expand the department’s activities.

“We’re three years past its passage and you haven’t spent it all,” Issa said. “Would you say that, in fact, much of the money that you have left to spend legitimately is, in fact, not stimulus per se, but, in fact, simply a plussing up of what you got to do for your entire four years as secretary?” (Chu “respectively” disagreed.)

The Pinocchio Test

By all accounts, much of the stimulus money has been spent. Given that Issa cannot provide any evidence to the contrary, we can only assume he’s making a reckless charges on national television without much basis in fact.

Four Pinocchios




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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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