tracking the money how recovery act recipients account for the use of stimulus dollars on a thank all of you for being here this morning today the committee continues its oversight of the largest spending bill and our nation's history the american recovery and reinvestment act of two thousand and nine nine months ago it appeared that our national economy was spiraling out of control with nothing to slow the freefall now with the help of the recovery act our economy may be on the brink of recovery this is the fourth and a series of hearings that examines the unprecedented rescue plan to jumpstart our economy heal the hemorrhaging labor market prevent drastic cuts in state budgets and provide much needed assistance to our nation working families with nearly seven hundred ninety billion dollars in taxpayers money on the lies the recovery act mandated extraordinary accountability and transparency provisions among these requirements section fifteen twelve of the obligates recipients to report on the use of certain recovery funds on october thirtieth the recovery accountability and transparency board recovery board released the first recipient reports and today the g a o will release its first report analyzing the reporting process and the results the recipients report indicates that the recovery act has directly created or saved approximately six hundred and forty thousand jobs and about four hundred thousand of those jobs are in education or construction in my home state of new york forty thousand jobs reportedly have been created i say by recovery act funding and in new york city job placement in the third quarter were up sixty percent from last year with three thousand and forty three jobs placement in brooklyn along and downtown brooklyn the long stall revitalization project city point has been resurrected and will generate more than three hundred construction jobs and hundred permanent jobs additionally recovery act funds are being used to bill nearly seven hundred forty affordable homes in harlem and brooklyn generate in two thousand and eight hundred new jobs while stories higher for african americans and hispanic americans for people who have lost their jobs it is not very comfortable thing to say we are making progress nevertheless the experts tell us that employment recovery historically lags big high in economic recovery according to the federal reserve chairman ben bernanke you if the stimulus package did not exist our nation's unemployment situation would be far worse and on the positive side in the third quarter of this year we saw the first growth in g d p and over a year that being said today's hearing confronts the question how do we know the recovery act is really working the truth of the matter is that while receptionists report reports provided for an unprecedented level and president level of transparency we must be able to rely on the reported that at this point it is clear that errors found by g a o and others should be corrected immediately not months later not no matter how difficult recipient reporting should be subject to strict quality control the american taxpayers expect reporting to be done and done well and seven hundred eighty seven billion weighing in the balance is certainly far from just general pocket change taken as a whole the big picture seems to indicate that the job trend is positive overall there are some signs that jobs are finally being created both as a direct and indirect result of recovery act spending but while we are on the brink of recovery we have a long way to go the important message that i get from these reception reports is that we need to spend recovery act money on projects that actually create jobs we need to get the money out there faster and we need to make sure it is targeted on economically to economically distressed areas and we certainly need to make sure it is properly accounted for i'm looking forward today to our witnesses that there is a sense of urgency to do that in addition i think the congress working with i think the congress working with the president really needs to focus on the need for the job creation over the next several weeks the american people are really hurting and again i want to thank witnesses will appearing today and i look forward to your testimony at this time i yield five minutes to the ranking member of the committee the gentleman from california congressman isaac thank you mr chairman and i want to thank all the members of the administration for being here i want to first preface by saying that recovery dot gov is the right idea in report ability it's a new idea and there are going to be bugs i think we all recognize that we're not going to get it right the first time but we can and must continue to make transparency in government not just a goal but a reality chairman i'm pleased that we have a panel of witnesses before us today who can answer questions about why passage why after the passage of seven hundred eighty seven billion dollars stimulus substantial job creation has not occurred and why members of the administration are peddling false save jobs created you yourself used the six hundred forty thousand jobs created number a number that is still on the board even though it has been discredited by both public and private sources the american people mr chairman are suffering we learned this month that another hundred ninety thousand people joined the ranks of the unemployed bringing the total number of jobs lost since president obama took office to three point eight million jobs or ten point two percent of the workforce if you're that ten point two percent or an african american and a fifteen percent unemployment or an af in american youth and fifty percent unemployment it's one hundred percent unemployment to you we are we all remember mr president the stimulus pitch a promise that unemployment would never rise above seven point eight percent and the stimulus would save three point five to four million jobs by the president's own metrics this policy has been an abject failure vice president biden who is responsible has in fact been the chief mis read reader of the economy by his own statements if he had ever met with the chairman and myself on this issue we certainly would have told him that in fact we needed to work more closely together and we needed not to predict these numbers without science misread the economy are creating a policy policy of miscalculation of what to do next and steps in the recovery will clearly be in the wrong direction the administration continues to misread the economy and misunderstand the nature of economic growth they also continue to mislead the american people with the faulty jobs claims that missed the steps that the country needed for an economic recovery the attic the administration continues to rely on the discredited economic theory that puts misplaced belief in government spending on pet projects and in this case taking credit for jobs saved  substantially government jobs school teachers are important federal workers are important but that's really where this is gone rather than to the economic growth that this country is is famous for unfortunately the main thing about the stimulation  policy is in fact the size of government reports indicate that over half the jobs claims so far have been in the public sector the federal government stands to grow by one hundred forty thousand in it jobs by two thousand and ten clearly the federal government is not feeling pain unemployment here in the nation's capital is four percent and we have to keep in mind that taxpayers money is in fact by definition always being wasted in government programs we try to keep it to a minimum clearly it happens if our stimulus had been one in which we allowed the american people to make their own determinations and simply supported them in that through investment tax credits and other systems that have historically work we would be only having the i r s making sure they truly made the investments we wouldn't be trying to figure out whether where the california ninety ninth congressional district is which by the way i hope it's a republican district perhaps perhaps most relevant today's hearing is the fact that the administration's continued to try to cover up its mistakes with misleading job claims recovery dot gov currently proclaim six hundred forty thousand to three hundred twenty nine jobs have been created or saved by the stimulus well the administration's continued to grab bag about brag about this number as a fact reports of indicated that it's wildly inaccurate the whole jobs created saves metrics is not only troubled it is entirely deceitful no government agency private sector group or research economics has any idea what the reliable calculation track for these numbers would be the chairman i'd like to put up at this time the oxford english dictionary definition a propaganda propaganda a noun information especially of a biased or misleading nature used to promote a political cause or point of view mr chairman it is very clear today not by the witnesses here not by in fact recovery dot gov directly but by how this is being treated how these jobs are being continued to be clay and how in fact we are dealing with three point eight million lost jobs and yet we are told to focus on the six hundred forty thousand saved jobs and how much worse it would be mr chairman that is propaganda plain and clear the administration has to go back to the facts as i said in my first part of my opening statement i support the work of recovery dot gov trying to bring the facts to us and recognizably mistakes but the fact is they have no idea how many jobs have been saved or created but that i yield back mr chairman thank you very much now we move to eyewitnesses which is the body created by the recovery act to ensure transparency in the use of recovery funds and prevent the waste fraud and abuse of those taxpayer dollars prior to being named as chairman of the recovery board has served as the inspector general of the department of the interior missive a knee has also served as a director of the office of criminal enforcement forensic and training for the environmental protection agency and as an officer in the secret service welcome mr devane thank you what was your testimony mr gene the death row is the acting come troll a general of the government accountability office course of the last nine years mr de darrow has held a number of key senior level positions in including chief operating officer and head of the g a o is accounting and information management division welcome paul carey is a deputy secretary of transportation and is responsible for managing the day to day operations of the department previously mr paul kerry served as secretary maryland's department of transportation and was assistant secretary of economic development policy at the maryland department our business and economic development welcome  miller was confirmed and july as a deputy secretary of education deputy secretary of education mr miller serves as the department's chief operating officer deputy secretary miller has previously worked with the los angeles unified school district the santa monica malibu unified school district and serve as an ex officio member of the board of education for the city of los angeles agree to tell the truth and nothing but the truth and this come right down the line thank you mr chairman good morning to you ranking member ice members of the committee i'm very pleased to be here today to have the opportunity to talk about g a o views and suggestions regarding the first set of recipient reports filed under the recovery act given the national scope of this activity and the relatively limited time frame to stand up the original reporting system we think it was a good first start however there are a number of significant data quality and reporting issues that must be addressed based on our initial analysis for example of  the database that was released on october thirtieth we found that there were some eroni s or questionable information in the database that merits additional scrutiny for example we found about four thousand reports that had no money expended but yet claimed over fifty thousand f t e s that had been reported there are other reports where money has been expended  but the no f t e s have been reported under those reports so this needs additional scrutiny and examination to determine the validity of that information  secondly the coverage would be estimates at about ninety percent of the recipients reported but questions remain about the remaining ten percent of the recipients that should have reported potentially did not there's also questions about the quality of the review that was done by federal departments and agencies and by prime recipients well over seventy five percent of the reports were reviewed by federal agencies  close to one in five were not and for fewer reviews were done and documented in the system by the prime recipients and so that needs further inquiry and investigation as well another  problem that we identified in this was a fairly significant one dealt with the different interpretations of full time equivalent positions that were due to be reported there was a lot of and consistent application  regarding this especially as it related to the time period in which people made the calculations this area because of the different interpretation really compromises the ability to aggregate the information  across the recipient reports and we made a series of recommendations to be to work with the recovery board and federal departments and agencies first this to clarify and standardize definition of full time equivalent positions and set a standard period of measurement so the information can be collected in the cumulated consistently and properly also to be clear in the guidance by the fact that the reporting focuses on hours worked that need to be reported in a consistent manner we also believe that given the issues that we and others have identified that on be should work with the federal agency establishment and with the prime recipients to review lessons learned under this first reporting exercise and re evaluate their quality assurance and reporting approaches  make necessary modifications to ensure that these data quality and reporting issues are addressed successfully because this is a cumulative reporting approach a is required to review each of the quarterly reports that are filed by the recipients act we will be following up on this conducting additional analysis and make being further reports to this committee and to the congress regarding the extent to which these data quality reporting issues are addressed i think it's important to address these issues both for the current set of recipients that are filing reports but also there'll be new recipients that areas need to be addressed as well to prevent future problems from emerging in this area so i thank you very much mr chairman for the opportunity to summarize our findings i'd be happy to respond to questions at the appropriate point in time mr chairman ranking member members of the committee thank for the opportunity to appear before you today to discuss the activities of the recovery board in particular the recipient reporting period that just ended october thirtieth after i made my opening close ok thank you the inbound reporting website federal reporting dot gov in the public facing portal recovery dot gov work together as intended during this first reporting period and october first recipients recovery funds began reporting on the use of the funds and between october first not tobe a thirtieth over one hundred thirty thousand prime and sub prime recipient award reports were filed since this was the first time that recipients were submitting data reports and some states had been encountering technical challenges in filing bulk reports for the recipients the board decided to have a ten day grace period where late filers were permitted to submit their required quarterly reports after the due date however they also we were required to explain their reasons for the delayed reporting beginning october eleventh o m b and the awarding agencies begin their review of the recipient reports providing comments and posing questions to recipients following this data quality review several recipients work to make corrections identified by the awarding agencies as a result about twenty one percent of the recipient reports were modified these changes are chronicled on a separate web page for all  users to see and downloadable for more experienced users while there were very few technical difficulties with the reporting prior process that is not to say that recipients did not encounter problems either in reporting or their ability to digest the guidance as you undoubtedly know and be created a large amount of guidance on reporting however there were apparently still some reporting questions the recipients were unable to solve as g a o chronicled in their most recent report accordingly we will continue to play an active role with the m b in crafting solutions to help resolve those reporting problems mr chairman i believe these reporting problems can be divided into two categories inactive inaccurate data and noncompliance first the data reported was riddled with inaccuracies and contradictions for example a misplaced decimal made it look as though a company had awarded a ten billion dollars was awarded a ten billion dollars contract when it had really been awarded a ten million dollars contract way they are not unequivocally bad in reality this data should serve in the long run as evidence of what transparent so you can achieve in the past this data would have been scrubbed top to bottom before its release and the agencies would never have released the information until it was near perfect you and the american public are now seeing what agencies have seen internally for years and what we are all saying at least following this first reporting period is not particularly pretty this raw form unsanitized data may cause embarrassment for some agencies and recipients but my expectation is that any embarrassments offered will encourage self correcting behavior and lead to better reporting in the future in addition to incorrect data the second major reporting problem was a considerable amount of non reporting the board believes that the number of non reporting recipients exceeds early o m b estimates but we have not yet received their list given my decades of law enforcement experience it should come as no surprise to anybody that i personally favor a penalty of some sort for noncompliance the recovery act prescribes no penalties for failure to report perhaps an amendment to that effect would be something for congress to consider even if criminal corrupt criminal criminal penalties are not practical the fact that some would willfully not file is distressing and must be addressed agencies at a minimum will need to decide what actions they are willing to take to insure the transparency and accountability aims of the recovery act are not disregarded perhaps an agency could refuse to provide any additional funds to a non compliant recipient or demand that non compliant recipients return funds not yet spent for the board's parts we intend to post those recipient names prominently on recovery dot gov although the website presents the most visible aspect of the board's work the transparency it provides is only half of the board's dual mission transparency and accountability over the past several months we have also made great strides in furthering our goal of accountability and oversight simply stated the board will now be utilizing recently the cure third software tools and analytical tools to provide i fraud analysis that interfaces with eight point five million public records with the recipient data to help identify non obvious relationships we believe these non obvious relationships went on vale facts that may have not been transparent to government officials at the time the contract or grant a rod was made today i can assure you that every recipient of a contract or grant or loan on the recovery act is being processed through this a fist akkad multifaceted system to further assist accountability mission the board has implemented a robust hotline solution where citizens can reach us by phone electronically fax or regular mail today we received more than three hundred fifty thousand citizen complaints as you might expect not all of these are concerned actual fraud waste mismanagement but those that did have been referred by our hotline staff to the appropriate i g for further inquiry meanwhile the rest of the i g community has been working diligently to manage its recovery related oversight responsibilities with approximately seventy seven investigations embarrassment and there is enough of that here to go all around all of those involved including the board i chair will need to dedicate themselves to import to improve the quality of the data in the days in the weeks ahead however if i've learned anything yet about transparency it's that it's hard to practice transparency that is to talk about transparency is definitely not something for the faint of heart this is chairman i will now be glad answering questions you might have  chairman towns ranking member and members of the committee the american recovery and embree investment provides nearly one hundred billion dollars in funding to the department of education this is to help avert layoffs of teachers school personnel and other public employees while advancing critical education reforms we've distributed more than sixty seven billion dollars of these funds and recipients have reported saving or creating almost four hundred thousand jobs including jobs for more than three hundred thousand teachers and others in public schools and in our colleges the first recovery act funds released were supplements to existing formula grant programs such as title one and the individual with disabilities education act these programs have well developed minoring systems and regulatory requirements that control expenditures thus minimizing the risk of misuse the next round of awards were made on the state fiscal stabilization fund this fund was used to support grants to help stabilize state and local government budgets in order to minimize reductions in education and other essential public services this was done in exchange for a commitment to advance essential education reforms we were able to obligate the funds quickly by taking advantage of the department's existing granite ministration systems and working closely with the one b to ensure compliance with the statutory requirements a percentage of the stabilization fund was withheld for phase two application which requires states to be transparent about their education reform efforts governors will need to provide data on four key areas of school reform as outlined by congress in the recovery act those are achieving equity and teacher distribution and proving the collection and use of data implementing high standards and high quality assessments and turning around our most troubling schools the phase two requirements were published in the federal register on november twelfth and applications are due on january eleventh the remaining recovery act funding which is yet to be released is fo discretionary grants including the race to the top fund and the investing in innovation fund the requirements for race to the top were posted on the department's web site on november twelfth and applications are due on january nineteenth the department is continuing to work hard to provide guidance and technical assistance to grant recipients on the reporting requirements we publish detailed official guidance and are holding bi weekly webinars and conducting significant outreach with state and local leaders to ensure  recipients are well aware of the recovery act unique reporting requirements we are keeping the lines of communications open with grantees and when clarification is needed we are responding quickly and publicly to ensure adequate financial systems and control of these funds the department utilizes centralizes grants administration and payment system a system known as gaps internally at any time we know exactly how much funding has been awarded to any grantee and how much funding has been drawn down with  we not only screen any grant to requests for funds to be drawn down but we also require grantees to certify that they will use the funds within three business days as required by the cash management and proven act gaps also has an excessive payments monitoring feature that requires recovery act payments over a set amount to be approved by the program office before those funds can be drawn down as opposed to being drawn down automatically we are expanding this process to apply all department funds not just recovery act funds and our ongoing effort to prevent waste fraud and abuse of recovery act funds our office of inspector general is a significant asset arace has held more than one hundred sixty meetings with state and local officials on issues related to the recovery act they've conducted audits in seven states and puerto rico to assess their internal control systems for administering the recovery act funds to ensure that their findings inform program implementation the oh i just after in regular contact with staff offices across the department to alert them to potential issues in the field or why g m tends to initiate additional audits in the coming months increasing its focus on the use of funds and data quality in the recovery actually separate reporting provides a new tool in our efforts to ensure transparency for the first time grantees are required to provide quarterly reports as you know that account for their use of these funds were making considerable efforts to ensure recipients compliance with reporting requirements and help maximize the accuracy of their data due in large part to our extensive guidance and outreach effort the department of cheever actually one hundred percent compliance with reporting requirements among state agencies a relatively small number of local level recipients and counter technical challenges in the reporting efforts and the department is working closely with them and the other recipients experiencing difficulties to ensure full compliance in the next round of reporting the department has forwarded to the recovery board any significant errors and material missions that have been corrected such as discrepancies in award size or funding agency and instances where job data was flagged as being outside of the anticipated range the department has notified the recipient of the concern provided a link to the relevant guidance and maintained a record of how the guidance was being interpreted so that it could be clarified in the coming months we will also develop a lesson learned document and begin another round of outreach in advance of the next period of reporting and summary as we work to refine the data reporting process it's important to recognize the impressive level of transparency that has already been achieved every parent can go to recovery dot gov and see how much the recovery funding their school district every see if any vendor receives more than twenty five thousand dollars in payments that information is available as well this transparency provides an important tool for taxpayers to see how public funds are being used in their community and is a significant deterrent against fraud and closing i believe that the department has been highly effective in implementing and overseeing its recovery act funds received considerable feedback from our grantees in the guidance we provided we will continue to work to improve data quality and further the unprecedented level of transparency moreover we are confident that the recovery act has succeeded in keeping hundreds of thousands of teachers and other staff often schools helping to ensure that despite the significant budget crisis that states face our children can continue to get the education they need and deserve to prepare them for the future thank you again and i'll be happy to answer any questions they very much secretary milla deputy secretary chairman towns ranking member eissa and members of the committee thank you for having me here today let me begin by sharing information about our progress in implementing this historic legislation the department transportation received forty eight point one billion dollars in resources to support infrastructure improvements and create and sustain jobs throughout the transportation sector in the thirty eight weeks following the enactment we've obligated a total of thirty point three billion dollars on more than ten thousand projects nationwide more than five point five billion of these resources have been expended in more than sixty five hundred projects are underway or completed in addition work is underway to prepare for the award of the eight billion dollars the recovery act provided for high speed passenger rail track were internally reviewing the applications for the one point five billion provided to the department in discretionary grants we expect to award these grants in january two thousand and ten ahead of the february seventeenth deadline overall the department has made substantial progress implementing the recovery act and the secretary and i are very proud of these accomplishments we cover react funds are improving our transportation infrastructure while putting people back to work in cities and counties throughout the nation as i travel around the country i've talked with construction workers who shared with me how difficult it was to provide for their families until they were employed or re employed after being laid off on a recovery act project this program has been an economic lifeline for people like brandon nestler a construction site foreman from wisconsin who was laid off last year after eighteen years of service in tiller recovery funded projects put him back to work full time overseeing grading work on i ninety four elson barber a new college graduate with a degree in construction management had few job prospects in tell construction company hired her as a full time foreman on a major road project in colorado these workers and many thousands like them can look forward to a paycheck and ensure that their families have the resources they need there's no question the recovery act is working as intended putting america's americans to work while making the long term investments in our infrastructure equally important is deity's commitment to ensuring that all these funds are spent wisely that the program meets all federal reporting requirements and that we're able to share accurate information with the american people about our progress the recovery act requires among other things that funding recipients provide independent reports of the numbers of direct jobs created and other project related information section fifteen twelve of the recovery act requires recipients to report this information as of september thirtieth two thousand and nine and then again at the each at the end of each subsequent quarter through fiscal year two thousand  given that this reporting process was new for the recipient community the department transportation staff reached out to their state the ots affected transit and airport authorities and amtrak to assist them in understanding the reporting guidelines provided by the office of management and budget we also conducted a series of webinars and other training sessions to provide we cypriots with information needed to comply with the section fifteen twelve requirements d o t staff continue to provide support to these receptionists and till the reporting database was closed on october twentieth as a result of these efforts the recipient community for d o t reported forty five thousand two hundred fifty direct jobs created d o t contractors reported more than one thousand additional jobs more than ninety six percent of our recipient community successfully reported their data in the reporting system overall we're pleased with the fifteen twelve reporting and anticipate even more success in the future quarterly reporting we're in the process of contacting the recipient community to identify any errors that could be corrected in the next reporting cycle in addition we're asking for their help in identifying recommended process improvements and lessons learned to simplify future reporting as we begin planning for the next section fifteen twelve reporting cycle and january of two thousand and ten will build upon our initial training and outreach efforts to help ensure success with the future recipient reporting requirements this concludes my testimony and i'll be pleased to answer your questions thank you very much we all know in terms of how important this is but is it really creating jobs and jobs being created out of the stimulus package i think it's clear that the  all of the amount the seven hundred eighty seven billion dollars that is estimated to be spent as of the reporting period here only twenty two percent of that amount of money had been spent as of september thirtieth one hundred  seventy three billion dollars point number two is that that was spent both in the tax cuts in entitlement programs unemployment insurance medicaid and others and then in grants contracts and other things that the recipient reports only deal with the grants and contracts so all of the hundred seventy three billion that's been spent under the recovery act only forty seven billion on the is subject to the requirements under the act so even if you get an accurate count of the recipient reports it's still a subset and it only focuses on job creation and we think and we believe we make good recommendations to improve the accuracy so that there's a better basis for making informed judgments about how many jobs were created or saved missive any i think i would agree totally with that i think there's probably no doubt jobs are being created or saved it's just the number and the accuracy of the number we have a number it's based on what the recipients told us their interpretation of the guidance was and  as the acting controller suggests that guidance needs to be clarified in a big way in a big hurry to help recipients be a lot clearer the next time they report i have no doubt that there's a lot of jobs being created i think it could be above or below six forty i think missing reports might drive the job numbers up and i think there's enough inaccuracy it's a question the six forty number it might go down so it's somewhere in the middle there is a balancing act and as their quarters go on and as the accuracy gets better and recipients get better at reporting accurately i think we'll get a much better picture  this was the first time and there were a lot of challenges for both recipients and agencies and quite frankly from my board so my hope is that as we go for this is all going to get better but you know  number of reasons why reporters why recipients didn't report it could be as simple as i didn't want to to they were confused and they had to there are no penalties and that kind of a situation just my background leads to be to believe that penalties are a deterrent effect and if there were some i think we would have gotten better compliance but the fact is i'm still trying s we also had municipalities like high point north carolina where you had one person who was planning designing building the project and doing all the reporting requirements and we believe that is one of the reasons that  said we know for a fact that recovery act investment have created or saved more than six hundred forty thousand direct jobs so far these are real identifiable jobs directly funded by the act can you support that i think i think sir it may be a fact that that's one of those on my website but that may not be correct number to characterize he may have been a little overzealous in saying real identifiable direct and in fact it's just a damn estimate isn't that it's what the recipients reported ok i was reminded by the way that when a fish it hits a wall he says damn it that's what we're talking about here ok so going through a couple of slides the white house press secretary robert gibbs on october thirtieth two thousand says the direct jobs in that in that is is again six hundred forty thousand three hundred twenty nine referring to recovery dot gov same day vice president  economic advisor those jobs accurate accumulate to six hundred fifty thousand jobs saved or created so far same day vice president joe biden when the data is posted later today it will show that we have created or saved six hundred forty thousand two hundred thirty nine jobs directly from the contracting authority with the federal government last slide c n n headline stimulus create six hundred forty thousand jobs pull up the propaganda again is there any reason when you don't know what the number really is that it's just an estimate that in fact there's about sixty thousand jobs you pulled off and you didn't even pull off the twenty six thousand jobs the university of california says it claims which would be half of its employees were saved by this act and they don't have a net new hiring so you had to save existing employees half of them isn't that just propaganda isn't that either misleading or  designed to serve a political agenda when in fact it can't be substantiated it is not in it is not true and it is either misleading or designed to say we're doing a great job when in fact we don't know it's  divinity of the most honest man i know without without a whole lot of in between shouldn't we be more conservative and say look this is what the reports are we're scrubbing it this is a new system it has its problems we hope that at least they're reporting the dollars right and we have no idea where whether those people have the ability to calculate accurately the full time time jobs equivalence but we're going to get to the bottom of it wouldn't that be a fairer way to put it like that statement thank you mr chairman if any now i said to begin with that i commend you for what you're doing and i'm going to concentrate really on the fact that we know this is that the output is propaganda we know we lost three point eight million jobs we know for example secretary miller when he says he saved three hundred thousand jobs these are simply transfers to pay for teachers so it's not created it's simply they were they they're alleged not to we laid off the money was moved to other parts of the budget so those teachers kept the job in the state spent the same money they would have spent on teachers somewhere else that's a reality of those three hundred thousand jobs so now let's get down to the real question which is can you with the money you have m improve your site to have back engine capability so that when somebody puts an iranian number in when somebody puts in a number that doesn't jive with what they were given when somebody puts in a congressional district that doesn't exist and i know you've scrubbed that now but can you have the engine fact check it so that it comes back and says hold it you have these corrections when i try to put the wrong credit card number in i get a i get a bounce back when i when i try to buy online can you do that with the money you have today or should congress be giving you more dollars so that your prototype for online reporting and government can become robust enough to be everyone's prototype i think we can do that sir and i i don't think we need any more money to do it to be quite honest  i think we needed this first quarter to totally understand which pieces of the data were going to cause the most problems so now that we know we're doing that analysis we certainly intend to build what we call internal logic checks into the system so for instance if a congressional district is selected this does not correspond with the zip code that also put in there there's a bong that goes off somewhere and and the recipient is as to spend some more time and come up with the right congressional district one quick last follow up will you also be producing the kind of software that would allow a single recipient trying to do their job and report properly to be able to do it at little or no cost will you create that so that the downstream because i know the department of transportation most of those people reported because they used to reporting it's it's pretty similar to what they've been doing can you create the ability to enable more and more people would be rabble to report accurate by delivering additional capability to them downstream is that part of your plan well we certainly work literally constantly with the states and bear in mind on this first  thirty one states chose to do bulk reporting and literally report for everybody in their state all the recipients and that actually labeled us to work with the people that were doing the reporting and i think it worked well i think there were problems encountered that that we resolved rather quickly so yes it's a constant ongoing dialogue we're having with states and recipients how can we make it better for you and and to the extent we can we will critical and i suspect that american people are grateful for the recovery act funds are going to amount apparently about ten percent of our deficit over the next ten years i wish that we had given scrutiny to the other ninety percent which of course comes from one of three trillion dollars  spent on the iraq war which obviously wasn't very well accounted for the notes will probably amount to of the four to five trillion dollars for the two thousand one two thousand three tax cuts which weren't paid for and we go on and on with what brought us to this point but i think it's very important we have this transparency and accountability i thank all of you for doing that but let me ask you mr deveny recovery and reinvestment act contains certain buy america requirements that it was intended to ensure that stimulus money was spent on s companies will also allow for agency heads to waive those requirements if it met certain criteria and i want to know whether or not you are aware that five agencies have granted more than two dozen actions that by american rule i'm aware that agencies are giving waivers is it concerning to you at all that the information about those waivers is not really available in the recovery dot gov i think that's something we should probably get put on reviews on the use of the money there have been some concerns that we've reported on our earlier reports about the need to have better reporting or to ensure reporting on sub recipients of work continuing to look at that issue as part of our bi monthly reports on the uses of the money by selected states and localities our next scheduled report there is due this in early december and so we'll be talking about that then but this report we focused on analyzing the database of the recipient reports but we're very much attuned to that issue it's very important particularly where there are known reporting issues or known problems with some sub recipients for example hud has identified high risk sub recipients in the public housing authorities there are some concerns in the local education agencies so we're looking to see what the federal agencies are doing what state auditor's are doing and state program officials to monitor the use of the money at some recipients  the final guidance we even in this period we had twenty five staff working during the review process reaching out to all fifty states all fifty states to understand how one can be the guide and understanding the issues so we'll continue to build on that effort to the agree that resources for the state has impacted their ability to report on the sub recipients their inability to have the spectre's generals or other auditing facilities sarah i think it creates an enormous challenge for the state and i'll give you the example i went out to colorado when they were reporting and i walked by the football size field of empty cubicles they had literally laid off a good part of their staff they were facing a furlough the next week and they had to report in three days so and they had regular state work as well so there are challenges out there states are hurting and there's no doubt that they made a herculean effort to try and  report on time and that's why i felt a courageous period for a late report as was was was appropriate in this first reporting cycle and maybe another because i think they're doing their best  t there's enormous money monetary challenges out there thank you this is doris carson attorney we've been very concerned about the ability of the state and the auditor's to oversee the funding we've raised that issue in our earlier reports on the bi monthly reviews and use of the money numbers states are under fiscal stress they've been cutting back in some of these administrative areas we've recommended that the congress allow certain percentage of the money to be used for administrative oversight and auditing of those funds we think it would be a per investment given the size of this whole endeavor and i know this committee had passed legislation it's passed the chairman president obama brushed off criticism over his administration's inaccurate reporting on job creation wednesday telling fox news the accounting is an inexact science and that any errors are a side issue when compared with the goal of turning the economy around he said job growth is his number one responsibility i think he said something like that back in january and let's just look at what happened since january when i put that slide up jobs that they claim to have been saved or created six hundred forty thousand three hundred twenty nine and there are fifteen point seven million americans unemployed he said he would create three and a half million jobs and instead we've lost three point eight million jobs that's a difference of seven point three million jobs and yet this is a side issue that's not a big deal we have spent we have authorized seven hundred eighty seven billion dollars and you say you spent one hundred seventy three billion i don't know what you've done with the rest of that money but if it's available and it's supposed to stimulate job creation why in the heck haven't you been doing it make no sense to me i mean we are suffering one of the biggest recessions in the history of this country and you're telling me out of the seven out of the seven hundred eighty seven billion you only spent a hundred seventy three billion i just don't understand that and now the administration's talking about and other stimulus now if you take the seven hundred eighty seven billion and you've only spent a hundred seventy three billion why do you need another stimulus i this it just doesn't make any sense and then you read that let me get my glasses here because my eyes aren't strong as  used to be now you have peter or zog at the white house saying that the federal government made ninety eight billion dollars in improper payments including fraud abuse and everything else and they can't the document where that money went t administration has been an absolute disaster as far as the economy is concerned and now they're coming up with some more minor things that they want to do like change the health care system and add another one to three trillion dollars to the deficit the deficit this year is one point four trillion and we're still in the current fiscal year that's over three times what it was last year when my democrat colleagues were raising cain about it was five hundred billion they've really they really outdone themselves the white house has not gotten to one point  one point four trillion this year and we still have ten point two percent unemployed and it's probably going to go up and you can't document the six hundred forty thousand three hundred twenty nine jobs you're talking about  i feel like i'm listening to a baloney factory here because people come down from the white house and they give us these figures and they can't document the figures and it just goes on and on and on and then the president has the unmitigated gall to say job growth is his number one responsibility warsi been the last eleven months he said that was the first thing he wanted to do was create jobs in this country and he said he was going to create three and a half million new jobs instead we lost three point eight million and we've got over fifteen million people out of work unemployment ten point two percent all said that before but i'll say it again this this whole issue is just propaganda it's political hyperbole he's one of the most eloquent presidents i've ever seen in my life i've ever heard in my life but the fact of the matter is all he does is campaign and as far as getting results to help this economy he's doing almost zero pretty doggone close to it and i think it's it's just disgusting to me that the american people are being told you know that these jobs are being saved or created and that we're good jobs is number one it's just it's just unemployment is now ten point two percent anybody i think in the case of education since that represents a significant portion of the total jobs reported i think we are confident there are many many stories that well preceded the reporting period of layoff notices that were recently i've been out talking again outside of this reporting contest miss show fourth grade teacher in los angeles so many teachers who i've met with director who said thank god for the stimulus package because it is a fact allow you know let me interrupt mr do they need to can you audit these jobs that have been created or saved we're not in a position not of them so you can't audit the jobs that we're reporting came directly from the recipients of the recovery monies because that's the what the act said had to happen but as far as autism be able to document them is not really the it is how in the marilyn you know five minutes thank you mr chairman that people are entitled to their own opinions but they're not entitled to their own facts so i think it's important to put this in a little bit of context when president in back in january this economy was in total freefall it was in collapse we were in a rate of loose g d p six point five negative growth in that first quarter in january we saw seven hundred thousand americans a month losing their job this past quarter g d p g d p growth three point five percent plus and while it's unacceptable that people are continue to lose their  jobs dropped from around seven hundred thousand a month to under two hundred thousand a month so let's keep this in context the fact of the matter is that the economic recovery plan is working now mr darawshe let me just ask you a couple questions with respect to the expenditures as my colleague has said the recovery plan had seven hundred seven billion dollars but as of today a hundred seventy three billion dollars has actually been expended is that correct as of september thirtieth as of september that is correct and we picked that date because that was the reporting period for the and i know my colleagues apparently from their testimony would like to rush all seven hundred eighty billion dollars into the economic bloodstream immediately but i think you would agree would you not that that would likely cause a lot of waste in the process that definitely was a concern in the early stages and i might say in terms of the c b o estimates of the stimulus bill before it was passed by the congress it was clear that the amount of money would be spent out over several years that was planned was it not yes thanks greg and as you pointed out of the hundred seventy three that's been spent so far the part that is the subject of your review and the reporting represented just forty seven billion of that is that correct that's correct ok are you do you have an economics background no but i have plenty economic so let's put this in context there was also six point three in what's called entitlement spending for example for unemployment compensation is that correct that's correct and would you agree that most economists say that by making sure people who are unemployed through no fault of their own have a little money to spend that that also helps them go out and spend money economy it helps job creation i think most economists would say that all three parts of the stimulus composition would create a director induced or indirect jobs correct so when we're talking about six hundred eighty thousand jobs with that forty seven billion we're actually under counting the number of jobs that are created as a result of this expenditures and bacharach where there's no question that the recipient reports only entail a subset of the employment of of the end based on what you said it would mean that since about two thirds are expended elsewhere based on your experience expertise you would agree that there's been more jobs or say saved or created as a result of those expenditures isn't that the case well what we have said in our report is that you need to look at the macroeconomic estimates that have been made as a result of the expenditures in those areas along with the recipient reports to have a more complete picture right well ok let me just read from your report because i think it's important keep that in perspective you said that this reporting mechanism which is unprecedented is transparency and accountability represents a quote solid first step in moving toward more transparency and accountability isn't that right that's correct have you seen ever seen any kind of transparency data collection effort of this magnitude not it not on a national scale like this one and that's why we said what we did because it's national in scope and it was in a relatively limited timeframe given the size of its charge right and in addition to the direct jobs and these are only supposed to be can direct jobs is a top of what's direct is that not the case that is greg mr parker a before you took your position as deputy secretary at the department transfer you were the secretary of transportation the state of maryland isn't that right that's correct ok so you have seen the direct impact the stimulus money in the state of maryland is that correct that's absolutely true i have unique perspective on this from the front lines and i can tell you from firsthand experience congressman that before the recovery act while it was being considered and immediately after it you could actually see the impact we had contractors that were laying people off we met with members of the contracting community associations laid out the time frame for what we expected in the bill and ask them at the at the time not to lay off people because the work was common which would you characterize a job in the ability to pay the rent as propaganda no i just job is a job and in this industry right now those jobs are very precious thanking us jim and i think it's  characterizing a real job in the ability to provide your family as propaganda is a disservice to the american people thank you follow up hearings and oversight on transportation spending just about monthly and we are trying to track the money where trying to get the money out appears to to be some serious problems with the whole dollar figures or eighty four million is is the budget for the board for two and a half years so that that also i mean the board is one thing but you have software that's been developed in a reporting system and people is that the whole cost or and i've heard there's maybe ten million dollars that you've paid to sort of clean up the soft some of the software problems the the the board has built two websites one problems inaccurate that our non compliance s are the major problems it's sort of like garbage in garbage out mr dunne there you said that there are reporting there are four thousand reports right now money  spent and accounting for fifty thousand jobs that was one of the first things you led with that's correct mr daney so if it's garbage in it's basically garbage reported out is that the way it's reported in arizona's fifteenth congressional district thirty jobs have been saved or created with just seven hundred sixty one thousand dollar expenditure in federal stimulus money the problem is there's no fifteenth district i've got a multimillion dollar system to put the information in and this is kind of data that we're getting in and we're not getting correct information out is that's how could inaccurate data and what was the other one non compliance ok the other one is it was reported noncompliance ten percent of the recipients did not even report is that correct we're trying to find that out but it's now probably pretty close i didn't make that up i heard one of the all say ten percent the recipients did not report i think that if i'm not wrong i was in somebodies testimony i  was a reason that you had to have congressional districts was that for propaganda purposes well i'm not going to go into that right now but let me take some other sources here chicago tribune garbage in garbage out more than four point seven this is the story of more than four point seven million in federal stimulus so far as been funneled into schools mr miller in north chicago and state federal officials said that the money has saved four hundred seventy three teacher jobs somebody had to report that the problem is the district only employs two hundred ninety teachers did you report that no these would have been reports made by sub recipients to the states who didn't have access to that information  you didn't have that so that would have been a local district reporting reporting to the state i think similarly you had the large open he did everything in illinois being chicago who reported zero jobs and we would also question that and so part of our follow up is to understand this this radical rag the sacramento bee up to one fourth of the one hundred ten thousand jobs reported as saved by the federal stimulus money in california probably never were in danger of the review has thank you mr chairman all i have to say is i'm glad we have a congress and a administration that's focused on creating jobs and your data is helpful in assisting us in doing the best job we can possibly do for the american people i wanted to ask you in the transportation area with the eight billion dollars that was dedicated to the high speed rail corridor or it's my understanding that it's been difficult for the federal railroad administration to assume these new duties and  concerns within the department about your ability to move the dollars into the development of this important new infrastructure activity that could could truly help transform certainly the great lakes region and i'm sure other areas of the country it's an excellent question we are very focused on the eight billion dollars of high speed rail money we're currently reviewing the applications we have multi disciplinary teams that come from throughout the department not just the federal railroad administration and we are straining a little bit on this but we are confident that this grant program and the high speed rail program in general that we can accomplish those  january of two thousand and ten all right let me also and i don't know mr deveny or mr de dar if you can answer this question i come from if you look around the country some areas census tracks have unemployment of over fifty five percent  some districts have unemployment has desires of eleven point one to eighteen percent does your data lend itself to be able to see whether the targeting is accurate of the funds because so much of this went through the states in the states or in the state capital and things happen with the money is there a way for us to interactively work with the data to assure that the areas that are hurting the most are getting some of the benefit is there any way to do that with the datasets being prepared we do we do in fact have a what we call a map on the website that shows unemployment and it also shows with the recipients of reported contracts grants and loans on that map so we lay that on top of the unemployment areas across the country by state by county and you can go in there and see if if areas of high unemployment have been getting their fair share of the grants contracts are right maybe your staff could contact members who are on the committee or other interested members i would certainly be interested in seeing how that really later in northern ohio which is extraordinarily hard hit and that leads me to my next question secretary  curry i understand that g a o september twenty third by monthly report indicated a significant number of bids under the recovery act that were funded have come in under estimate and that the secretar considering redirecting some of those dollars for economically to stress communities my whole district is an economically distressed community to your knowledge have states redirected sniff of confronting to these distressed communities yet despite the secretary la hood's letter  yes the short answer is yes we have been working directly with states asking them to redirect funds wherever possible to economically distressed areas these e d a s make up about thirty three percent of the population i would point out that fifty seven percent of our highway funds and sixty percent of all of our projects overall are in those economically distressed areas we have some states that have devoted ninety percent of their highway funds to economically distressed areas that's in part because we have been asking them from the beginning to really focus on that and where the bids have come in lower than engineers estimate which is a number of states we have asked them to redirect the funding wherever possible to economically distressed areas at what  what is the next threshold for your saying twenty two percent or so the dollars a quarter the dollars have been committed to date when do we expect fifty percent of the dollars to be committed from the recovery bill in any of you know across the government is the threshold for february for store first we were going to reimbursable basis so we've obligated thirty one billion of our forty eight point one billion dollars but the way the transportation projects work it's like buying a car you don't pay ford when they're building it you pay it when you buy it and so we are reimbursing the states when the projects are completed as a way to be good stewards of federal tax dollars the so the obligations best measure for us and we're at thirty one forty eight billion right now i know the gentleman limited in general what we'll do we'll go back and look at c b s estimated schedule but i think by the end of chairman i want to thank each of our panelists for their efforts at assisting us in the issue of transparency for this seven hundred and eighty seven billion dollars stimulus package i voted against this package and i voted against it because i thought that there were no achievable standards in the in the bill there were no achievable goals that it was ill defined that the spending was going to be misdirected and that the deficits that were going to be generated would have a negative impact on our ability to create jobs lo and behold the president is now saying that he's concerned that our deficit created in part by this almost trillion dollar stimulus package might impact our ability to create jobs in the future i appreciate the transparency that you're providing because we're able to take a look at whether or not this was ill defined with no achievable goals no achievable standards we're actually able to look at how the money is spent and make a decision as to whether or not this should have been done and hopefully be able make a decision whether or not in the future we should do something like this which i think would be be very unfortunate if we continued to try to spend in this manner where there's no accountability on the spending it's not directed in targeted toward job creation and just generates additional deficits mr miller you had said about the jobs created on the education side and i have two things i want to comment on that one we were reminded by the other side of the aisle that we should deal with facts so let's let's talk about some of those facts the corner the wall street journal and jonathan karl of a b c news they looked at the job creation figures on the side of education and they found for example that head start in augusta georgia claimed three hundred seventeen jobs were created by a seven hundred ninety thousand dollars grant realit mr carro reports that the money went toward a one off pay hike for three hundred seventeen employees not creating three hundred seventeen jobs and that would be in your numbers you report to us today actually head starts out of the health and human services out of h s it's not a department of education program it's certainly out of the aggregate number of jobs that are created and it's an example of the claim of a job created where there isn't a job created there were in fact pay hikes that were provided the cording to mr carro my concern is in the education sector and in the government sector is that as these monies are used in this manner which obviously the bill in the act permits that we're creating a cliff then for these government agencies as we're providing a a one time subsidy for increased costs for their operation when they go to that next year with the stimulus is not there the gap is going to be greater between their revenue and their operational costs creating perhaps a more difficult problem and one where they're going to turn to the federal government for additional assistance and in my community in dayton ohio stimulus dollars were used for the paving of main street and my concern is that although in the transportation sector we created jobs or jobs  assisted in and that project moving forward by the time that the project began to a ended there were probably less jobs along main street that were there before this is not the type of spending that's going to create the type of sustainable jobs that we a certainly a state like ohio that is struggling so much and needing job production now looking at this issue of the phantom congressional districts according to the recovery dot org site in my congressional district one hundred eighty six million three hundred seventy one thousand five hundred sixty two dollars were spent creating three hundred eighty five point four jobs in my congressional district translates out to roughly about slightly slightly less than five hundred thousand dollars being being spent in trying to create a job and then on the phantom districts than the number is the same claims that there were eleven jobs that were saved over five million million dollars that were spent in phantom congressional districts commercial districts that do not exist translating to about four hundred eighty two thousand dollars per job not the type of investment that we want to to continue now what strikes me about the phantom congressional districts is that ed pound the director of communications for the a bomb in a stray sions recover mint dot org said about this whole mess who knows man who really knows that's his quote in the wall street journal today mr devine a i want to know if you disagree with mr pound i certainly would have said it that way and i'll speak to him when i get back to the office the fact is that the the information may in fact be true about the jobs and the money spent and the simple error has been the wrong gresham all district and we think we can fix that next time out but the accuracy of the data other than the congr would that include the jobs and augusta georgia for the three hundred seventeen jobs created where apparently everyone just got a raise and so the real jobs being created i don't know why the recipient reported it that way and it may have been the state of georgia they reported it because as you've said to us and i appreciate your honesty your merely reporting what these people have told you there really is no transparency we don't really know how they spent this money and apparently that accountability didn't occur in the beginning of the the approval of the receiving this money either i appreciate what you're doing but it doesn't give us the type information to ever believe that jobs have been created or saved having said that sir and i don't disagree with having but is at this point in time the fact that we have transparency allows us to see see these anomalies and to understand if they occurred or didn't the ole nontransparent way which is the way the government is act in the past you never would have seen it i agree with you and i thank you for your efforts and thank you and the gentleman's time is expired we have a vote on the floor and that we will return at twelve thirty we have th yes i recognize the gentleman from ohio j s thank you mr chairman i appreciate very much the opportunity and i appreciate all the witnesses being here and providing the testimony with regard to how difficult actually is dip in point the numbers of jobs created in the jobs being retained through the efforts of the stimulus package but certainly we have heard a lot of propaganda we've heard propaganda you know suggesting that this isn't having any effect and that we are not impacting the economy it seems crystal clear to me that not only is this having a significant effect and we can argue as to whether or not it's six hundred thousand jobs six hundred forty thousand jobs seven hundred thousand jobs in terms of direct benefit but i'd like to get to a minute talking about exactly what it is those jobs are in terms of direct spending but then also talk about the multiplier effect that we see through this investment so so the jobs that you're referring to are only looking at a small portion a relatively small portion of the spending itself you know sixty three point seven billion dollars went into entitlements tax relief was another almost third of this and so this is only looking at a portion of the contracts grants and loans correct mr that did arrows i correct that's correct so when we look at just that portion and we say we believe that there are jobs upward of six hundred thousand have been created take for instance a construction job and i just brought with me you know the spending that we've seen in greater cincinnati which is now upward of almost seven hundred million dollars and they describe here a project that will directly employ seventy five people on a construction project now i assume that seventy five is reported but the individuals that might be supplying the hardware for that job the the individuals that might be supplying the lumber for that job the individuals and the companies that are supplying the roofing materials for that job that the transportation workers that bring the materials to the site the uniform manufacturers that make the uniforms that help these people on the job none of those are being included in this direct number correct that's correct that's correct the indirect  is in direct benefits rather as you're talking about all the materials in the supplies and all those things as well as how much additional spending is an induced is not covered it's just focused on the direct jobs that are created and  assume we can use the same line of reasoning if we're talking about a construction project a road that's being built and the cement manufacturers of the asphalt manufacturers the designers the architects the engineers all of the professional employees whose work goes into those jobs that are being created so that the multiplier effect here is that we are paying partial salaries through these through these contracts to hundreds of thousands of individuals who are participating and supporting these direct jobs that are being created there definitely and the right yes i assume mr miller that the same goes for education that when we talk about retaining a hundreds of thousands of jobs of teachers that those teachers go out to the grocery store and buy groceries i assume that those same teachers also buy clothing for their children and for their families i assume that those teachers also drive automobiles and buy gas for those automobiles i assume they also use electricity and use energy i assume that the salaries that are going into those teachers and supporting the families of those teachers through that spending is going to create and support jobs across the economy is that correct that's absolutely correct and i would also say that we've seen other uses of funds for example in rural communities where the districts have bought laptops for students have put smart boards electronic devices to help accelerate and improve learning in allow them develop skills that the jobs associated with the producers of those smart boards the training that's been provided to teachers is also not reflected in the over three hundred thousand job numbers that we've report so then well you're reporting that several hundred thousand jobs have been retained in terms of teachers is it fair to say that that that same direct creation of jobs we would see the inverse where that investment not made so that we wouldn't  see the three hundred thousand jobs or so that have been created for teachers but we also would not see the ripple effect in the economy of that investment going into those teachers yes i think looking at notices that were literally picked up that were announced and then later rescinded because the receipt of stimulus money were confident that hundreds of thousands of teachers and educated related jobs would have been not saved to be not for this money moreover the impact that would have had on education and students in their learning and the frankly the compromise that would have been to the long term growth because we need to have a student population that is prepared to compete we think would also be at risk so we actually see the impact outside of the direct contracts that you're reporting on  do you also believe mr darrow that the medicaid transfer payments for example are critically important to supporting the health care industry and long term care there i assume nursing homes i assume assisted living  providers medical device manufacturers doctors nurses physician aides all of these individuals who work in the health care field do you believe that that their jobs are being supported or retained due to the direct investment made by the medicaid transfer payments as we've reported in the past on the use of the monies by selective states and localities the medicaid additional federal matching share is at least two to affects one it's help support the increase number of people on the medicaid rolls as a result of unemployment and allow the states to maintain eligibility requirements for medicaid so it's helped the chief one of the other objectives of the act in addition to jobs create and retain was to help those affected by the recession it's also helped the chief another one of the goals of the act which is to stabilize state local government budgets and increase federal share meant that some of the state share could be reduced particularly in those states with high unemployment because they got additional medicaid funding based upon the unemployment rate so that allowed them to then use that money for other purposes  is it accurate earlier you also said that the data the the information the numbers you get comes directly from the recipient but isn't it true of first goes to the state and then to o m b and then to you guys i mean there is that is that th in other states that we got information directly from the recipients but it comes to something called federal reporting dot gov which we built and owned and maintained the integrity does in some cases it comes directly to you not through in the that's true the the recipients are for the most part reporting directly to federal reporting thirty one states though there's at least some intermediate steps so there's a couple bites at the apple before this information goes public is that right in thirty one states and the states did this differently all states d differently but in some of those thirty one states who made the quality review the of that data well it was twelve projects twelve programs that were left off that were not reported because someone made a determination that there was so much ridiculous information there that there shouldn't be public who made that decision you guys or someone else o m b asked us to look at it and we concurred so in that case it went on before it went to you now it is no sir it was in the database and o m b had access to the database along with the who makes the call this that so we're now we're back to though and be doing it who's who's actually making the call and when the stuff goes public well at the end how it how it's displayed how it's reported at the end of the day the board makes the call as to whether or not there was significant er assessment that there was a lot going on with those twelve including sixty thousand jobs that absolutely did not look right ok is there any change will direction is there any penalty for people who provide you with false misleading or ridiculous information any pelly like in other words if if we're getting ridiculous information these folks should be the money that was spent if we can get some of back is there some kind of penalty for that no there's no penalty no the fine that strikes me is think about this to put it in context but in the way the way the american people it we've got a health care bill moving through the house moving through the congress which says if you don't buy health care you can go to jail and now people are getting taxpayer dollars giving ridiculous information twelve packages that are s even list it and there's no penalty for that how we're going to correct that matter well as i said earlier my testimony this morning i'm i'm a big advocate for having penalties but the congress didn't put any penalties in we would be in favor of strong have i wake taxpayer dollars and report crazy information no i'd be you be i'd be interested in certainly penalties for people who didn't report and i would be equally interested in in looking at the issue what happens when people knowingly false report and i think that could be a part of criminal penalty mr did are you you've had several years how many years have you had the experience with the general accounting office thirty six years thirty six years and thirty six years of service in that that part of our government do you ever recall a time where we had this term created or saved another or just the first time this past year where we've used this kind of sort of measurement if you can even use that term with it is this the first time in thirty six years you've been looking at what the government does an accounting for how it's been taxed that is the first time we've ever had that term well it definitely the whole issue of tracking the creation of jobs  always been a difficult month the logical question is real estate i understand we created or saved is it the first time in thirty six years your experience in government that you know of that we've ever had that term used as some at least what some would call some kind of measurement  baseball my immediate recollection i can't recall you think that's a little strange this that we have this new term well the family is something that given the context of what the act was trying to achieve with the small the bill jack there's i don't think is is unreasonable anyone if anyone else on earth called the measure thank you anyone else on the panel recall any time prior prior to this year we've ever had this this quote measurement responsibility was to make sure we got this this information an accurate way do you have it do you have weekly meetings or what kind of contact do you normally have we have a number of contacts and virtually daily interactions twice weekly calls  regular meetings and the common theme is making sure that we're getting these projects out there making sure that what you have here what kind of kind of my question is what kind of contact do you have with with the vice president with with the the office of the white house or the vice president the vice president leads periodic meetings to include all the departments on this topic if i could mr chairman one last question for mr devane you do you have any contact at all with the administration on a on a regular basis or with the or with the white house or is a strictly with  gentleman from uh yeah mr welch i think i want to thank you gentlemen for being here you have you have an incredibly important job it's about  accounting for the enormous amount of taxpayer money that has been invested in the stimulus program and you're doing a good job and the reason you doing a good job is all we want are the facts we're not it's congress that authorize program the only thing you're being asked to do is report on how it's working you're being asked to report whether the money has gone missing in you're doing it and i know that on our side of the aisle and i expect on the other side of the aisle the goal here is for us to get information as opposed to make political speeches but we we've heard quite a few political speeches and frankly that's distressing to me and i'll tell you why we've got to rebuild america and we know how we got to where we are at we had a private sector financial system led by our big banks and wall street that completely disregarded th trust that they have and nearly destroyed our economy and it was so bad that one of the most conservative presidents in my lifetime came to congress with a form with the secretary of treasury the former chair of one of our major investment banking houses and said that if congress did not approve a seven hundred fifty billion dollars bailout over the weekend then the economy as we knew it would be destroyed i'm just reciting that because it gives us some perspective of why we find ourselves in the situation that we're in the private sector financial system put a gun to the head of the american economy and they pulled the trigger step one to stabilize the financial system i was one of the members of congress who had no desire whatsoever to vote for that legislation to take seven hundred fifty billion dollars of taxpayer dollars and stabilize a financial system that had inflicted self inflicted wo but it did its damage and when the economy went off the cliff about a year ago we started seeing the unemployment rate skyrocket and we saw hardworking americans lose their jobs through no fault of their own and that on employment rate it continues to rise as we speak and president obama came forward with a proposal on a stimulus package and that by the way was indorsed as you know by republican and democratic economists there was no dispute except on the extreme edges as to whether or not in this dire situation the federal government had to be the spender of last resort again not anything any of us wanted to do but something that was a broad consensus position had to be done had to be done so we could fight another day not so that we not because we wanted to do it in the doing of it the stimulus there was a commitment that was made by congress and i think shared republicans and democrats were the voted for it or not that the money should go to jobs that it should be accounted for it shouldn't be distributed on the basis of political party or affiliation that should be broadly beneficial to america now taking a look at how it works that's a fairness character fair and square question there was a lot of debate in congress about how much of the stimulus should be allocated to tax cuts how much for infrastructure in the house and i was among those who believe the more infrastructure the better because it would create more jobs in the tax cuts there was a big debate about whether we should use stimulus money to go back to the states to help maintain our teachers our firefighters and our police and maintain a preserve those jobs and i haven't heard any acknowledgment in the speeches here that this has been a lifeline the stimulus has been a lifeline for our states and i can speak for vermont we would have had a catastrophe in vermont  if we had not had the stimulus funds even with the stimulus funds for a month with a democratic budget a republican governor had to work together very hard to to to bow to to pass a budget and we are continuing to experience lot of pain so it's not my custom generally to make speeches but apparently today's hearing is much about that and the point i want to make is to number one i believe that the challenge for this congress is to do things that are going to help build up america find ways where we can work together and this stimulus is a necessary step that we took in order to maintain credibility we've got to make sure that it's transparent in that we can account for what has been spent and how effectively it's been spent those are just factual questions just the facts ma'am mr devane if you have suggestions about penalties you know that's given to us and we can vote on it but i hope it's specific i encourage you to continue doing the great work that you're doing now encourage our members mr chairman to focus on getting america back on its feet thank you thank you very much as it is time has expired and now you five minutes who the gentleman from utah thank you mr chairman and thank you all for your work and your being here mr devane when following up on mr jordan's question when is the last time you personally spoke with the vice president vice president biden i believe it was made in last week is there a master list of who was supposed to get the stimulus money do you have like a master list here's who's supposed to get the money i don't have that that's just mind boggling to me that we don't have a list of who is supposed to get the money i think is going to but i think it's fair to say that each of the twenty eight agencies that oversee the recovery money have such a list and they're in the yes right now trying to determine whether or not each and every one of the people the recipients on that list actually reported and i hope to get that result soon it seems like a simple basic accounting process to understand what it highlights is we don't know what we don't know and that to me is a very scary proposition and in moving forward in my own state of utah representative bishop one of my colleagues as pointed out there were some one point two million dollars that went to the fourth congressional district of utah we only have three congressional districts there was a five hundred twenty nine thousand eight hundred thirty four dollars that went to the zero zero district congressional district of of utah i simply do not understand how those very basic things can happen and puts to me the entire reporting into question now suddenly go to the web site and it says well they're not accounted for there you know it's unattributed how are we going to resolve this well we don't know we don't even know who's supposed to get the money then we say where it went to it's going to congressional districts don't even exist congressman i think first and foremost the recipients in utah put the wrong zip put the wrong congressional district and they're the ones that enter that data now  going forward i think we can put technology in the system that says something like if you're in a state with only one district you can't put anything other than that district in there if you're honest if you're if you enter a nine  zipcode it has to correspond and match the congressional district and i think going forward we can eliminate that our time is so short if we could follow up with the additional procedures i would sincerely appreciate it  understanding from your testimony is that there have been some three hundred forty complaints there are seventy seven investigations open and more than three hundred ninety that's can you help explain that those numbers to me please of course  and how many people do you have dedicated to perform those functions the actual board has has a limited number maybe perhaps a dozen people that work in that area but we we leverage the resources of the twenty nine inspector generals that oversee the monies so some of those complaints are coming in on our on our hotline since the data has been released some three hundred fifty plus and some of them came in before the data was released and directly to inspector generals so out of all the complaints we've had come in seventy seven investigations have been opened and three hundred or so and we'll follow the some additional details but that does help clarify it mr miller i've read through your testimony and heard what you had to say at the top of at least the printed out portion here of page five it says we had accounted for ninety seven percent of our recovery act obligations to date what does that mean for the other three percent that you just there's no what does that mean  means the bulk of our money is formula money and our large state fiscal stabilization that flows through states in particular there's two programs impact aid in federal work study which goes directly in work study being goes to individual students on i think it's a small but it represents two billion dollars what i just want to make sure we understand is how we're going to account for what is unaccounted now two billion dollars worth of dollars and and i'd just like to follow up with the i see my time is is  ending here let me ask one more question of you mr miller it says eight in your testimony a total of seven hundred forty two reports out of two thousand two hundred twenty nine were changed during this recent agency review period there are concerns on many fr that literally about a third of these reports had to be changed either the information that they're getting in the system of the process they have to go to is terribly flawed or there is fraud going i mean it's just such a staggering high number to have to go back and change literally a third of the reports that are coming in with the impressive transparency which you find is a change would be we did have the incorrect treasury code we had the incorrect dumbs number if these were technical think this is a very crucial hearing the timing of it is great and i'm so glad to see secretary miller from my district l a unified as our deputy secretary of education so and he knows the condition of our state and our tremendous shortfall so given the economic crisis in the state of california especially glad to see that my school district the los angeles unified school district was the third largest recipient of recovery act funds in the state and can you explain the impact these funds are having on the quality of education we're able to provide for our youth and i do know that we have a serious shortfall in our budget in l a unified and i think l a unified being the second largest school district in the country  a great story in terms of the impact i know from the press that there were thousands of jobs that were at risk that the superintendent was desperately trying to to address given the state's budget shortfall and th receipt of the stimulus money allowed in this case particularly thousands of pink slips to be picked up and so that the school year for the zero nine ten school year in fact could be preserved and have more integrity and i think in a large urban school district which has substantial student achievement issues in terms of the gap between those with high poverty and low power that the the need to maintain class sizes and not have them skyrocket the need to ensure that your the latest equipment is paramount if we are ever going to close the achievement gap and i think the stimulus money is very much of have helped us make progress and prevent us from from falling back we could use another chance couldn't we because even with the money set have been received there is not enough there's the close that gap and i've heard the superintendent just the beginning of this week talking about delaying this shortened school weeks time off at no pay and so on because i believe we're almost up to a million students i understand before i got to the committee meeting that there was some challenges to the data and talking about propaganda but i wish we would remind ourselves the mistaken war we fought in iraq costs us fifteen billion dollars a month and now they're asking for more troops in afghanistan which will cost us five billion dollars a month and if we could get just a portion of that to improve our education system to improve our transportation system we could do wonders in strengthening the education of our youth i just attended a high tech meeting early this morning and i mention to them around the table that we're going to do the best we can in educating our children in sciences and mass that we can be competitive and i take india you know with their large one point one billion dollars a test their kids and they since the most talented ones to a certain school so i am hoping that we can stimulate particularly in the educational field and i want to get  to comment on this but i hope that we can sin monies out to our educational institutions our school boards directly so that we can support their curriculum and particularly in higher education you know we're turning away students from our community colleges and so those who are saying that the figures are propaganda i can say come to my district our unemployment has always been over two digits and if we have a national unemployment at ten point two percent ours would be close to eleven mr daro in your overseen are you satisfied with the information you're getting about how we have use that stimulus money and are receiving jobs created can we look to the future with th stimulus and if we have a second one if we can indeed create jobs so that we can enhance school boards throughout this nation not just in mine but throughout the nation can you respond yes on your first point about the national data collection system that was set up was a good first step but there are a number of data quality reporting issues that are significant and they need to be addressed to improve the quality of the information and the accuracy and completeness of it so that's a challenge we've made some recommendations when these agreed to implement those recommendations the extent to which they're implemented won't crease the quality of the information now with regard to future stimulus one of the other mandates we have under the current bill recovery act is to look at the impact of economic downturns on state governments and what what effects it has on them on health care and other important areas like education so i think you know we will be examining that it asks us to go back to the one nine hundred seventy four seventy five recession and locust or equally including the latest economic downturn one of the areas i think is very important is the future targeting of assistance whether it's based on unemployment levels or other factors there were some targeting in this stimulus bill in the medicaid area but in other areas i think that's something that could be looked to that's right or wrong what i'm interested in is just plain number crunching numbers to milla based on your testimony use that that sixty seven billion dollars have been spent to the department to casey and from the sixty seven billion dollars approximately four hundred thousand jobs have been created or saved my question to you is up to three hundred thousand educators what is the average salary  context of awards today we triangulate and say four hundred thousand dollars if typically seventy percent is personnel cost i'm sorry members seems to be the one hundred thousand dollars one hundred thousand jobs that are remaining what kind of jobs are they would be safe to say fifty thousand dollars per job again i wouldn't i wouldn't speculate now based on my own number crunching if you take sixty seven billion dollars and divide it by four hundred thousand jobs the number comes out to be about one hundred sixty seven thousand dollars per job now if if if a if an average educator makes about seventy thousand dollars my question to you here is where did the other go where the other hundred thousand drops no where did the other one hundred thousand dollars go if if if an average educator makes seventy thousand dollars per year based on your numbers my calculation comes out to be about one hundred  seven thousand dollars per job so my family if we win every dollar for every dollar invested seventy percent of it goes to personnel so your take is you would only expect seven cents on the right seven seventy cents on the dollar to be personal cost you have the whole so that if it's seven percent goes to personnel costs the other third percent goes to capital computers all the things that you would need to support to the notion you need office you need on a fully loaded basis beyond  fit your personal so basic basically based on your own testimony the numbers don't come out correctly now if the opposite you have been trying to relate it we were confident that they actually coming top down that it actually matched so if you have seventy seven cents of every dollar goes into person now in other words go into the actual job save or create is that correct which according to so based on based on your calculation that seventy percent one hundred fifty seven thousand dollars would be a pos matley one hundred forty thousand dollars now we talk about the education related jobs part of this is understanding which math we're talking about if you take the three hundred twenty five thousand educator related jobs if you actually looked at the average education job for salary and you would say it's roughly just over one hundred thousand dollars if you said seventy percent of that typically if you look at the allocation of education budgets seventy percent of educators of of of the educational spend is personnel on a fully loaded basis you would say roughly the math is out in this miller i've taught middle school i've taught at the culture level also when i taught middle school you know what my salary was twenty thousand per year when i taught at the college level you know what my salary was twenty eight thousand dollars per year now my question i am a little confused with respect to how you arrive at this one hundred thousand dollars per educational job because i know for a fact that teachers don't make one hundred thousand dollars a year all of the teachers in my district if they're lucky if they have a twenty or thirty year experience they'll be lucky to make sixty or seventy thousand dollars per year so my question to you here is based on your numbers if it cost one hundred and sixty seven thousand dollars per job if an average educator makes sixty seven thousand dollars per year where that where did that one hundred thousand remaining go where did that one hundred thousand dollars go again if i could try to clarify a bill even i can follow the details the average salary based on the national scene of educational sciences is roughly fifty thousand dollars if you actually look at so w hundred twenty seven thousand dollars then when you load for benefits is roughly twenty four percent when you then that that's how you get to that just under seventy percent of personnel related cost for an education and that's again based my national see here that if my if my consistent with what you asked me how do you spend this money i tell them that well one hundred thirty seven thousand dollars that went into an educational job fifty thousand went to an educator and i don't really know where the one hundred twenty other one hundred twenty thousand dollars again if you can appreciate i've spent the bulk of my professional career both in private equity and as in operating exactly like you very familiar with finance i think one of the first things we did as we tried to scrub the numbers was to ensure that the as time is expired and that means you need to learn the way to recognize a mystically you should have been teaching in new york or california would have made some money requirements including disadvantaged business enterprise goals were waved as part of the recovery act so we started with the premise that in all the transportation projects highway transit aviation that th project congress and i'm reluctant to project into the future on job numbers because first of all it's not linear it's partly dependent on season in many parts of the country the weather weather dependency is a big part of that we we  it's not linear but we know that we have many additional created and saved jobs to come we also have portions of our transportation dollars including the high speed  rail program at eight billion dollars and the tiger grants it one point five billion that have not yet been awarded so those will come as well we were trying to get projects out the door quickly i think we were large successful in that and we're trying to make sure that there's a steady flow of projects around the country throughout the entire time period of the recovery act and we will be successful at that as well thank you for that response and i will not bring  in school districts by saving or creating three hundred twenty five thousand and occasions for teachers and personnel in my state of missouri an estimated eighty five hundred teachers have been saved from dismissal can you discuss what shawn is a long term impact on our children and their schools would have would have been without the recovery act education  yeah i think as we've traveled around the country and talked firsthand to superintend to principals and to teachers whose jobs literally were saved by the recovery act what they tell us and what parents tell us if is we could not afford to have those teachers not in the classroom at this critical time and that without those jobs our children's ability to continue learning and to be more college career ready at a time when it is so important that our high school graduates are prepared to go on to college and they go on to careers in an increasingly competitive world where more jobs are being competed in india and china and as they make investments in their education system that this is a critical time that we must sustain and enhanced our investment in education and so they're very thankful and they feel that if this money hadn't been there those jobs would not have been there and their children will suffer you for your response a real quickly  mr divine aid given your experiences in government are you aware of any other efforts to collect data and publicly provide information on programs that are similar in scope to recovery  no sir are you aware of any similar website or tracking mechanism in the history of the federal government aimed at providing this level of transparency all governments no sir ok very good and  in the world would a congressional seat be included in a report of this type i actually believe sir if my memory serves me right that's embedded in the act in the law itself that the recipients were supposed to report that so on be put out the guidance that they had to so the act was actually engineer to specifically identify political subdivisions within the federal government rather than using the traditional what we have used for thirty forty years and that using the zip code is a poser included as well but the it is in the act the congressional districts will be reported so they act we passed literally had this political element mandated into it did i guess it sort of indicates author intent when you see that kind of thing i does in your experience do you remember any identifications like this before rather than just using the zip codes in a strap elating that item out off the top of my head i don't yeah i mean this problem could have been avoided if the pl if the act itself had included this political element and just stuck to the traditional zip code reporting company let's say it was a contractor that was building that that contractor as a vendor would report to the state if you think that they were building a highway and they would count the jobs that matter what state or what district they were in situation as worse at throwing this money or sending this money out to build projects has there been any discussion at all saying that we took an extraordinary effort and did an emergency push to get that money out there has there been any backup push on the regulatory issues that your face and good example is i was on the board that built the light rail system for the environmental obstructionism of trying to use an existing rail technically as they are but you and i know logically it's absurd you know if you're going to improve rail on a site that's been used for two hundred years there's not the issues environmentally out there hasn't been any discussion at all in your department at coming back and getting us to fast track the regulatory process to allow projects like the high speed rail in california to be able to move forward and spend the money on construction rather than litigation congressman there's been a lot of discussion about various ways to streamline the process whether it's our internal working group on the new start transit streamlining process or in more general terms what you'll find with many of the transportation recovery projects is states  and authorities aviation in transit put an emphasis on ready to go off the shelf projects that have been through those approval processes so that they could get underway quickly and the jobs would be the savior created quickly  that's the bulk of what you see around the nation in the projects that are underway the transportation projects that are imminent tend to be the larger more complex ones that needed either some final approval or were finishing design well i now i can go through the issue of what we see around to is all the advertising signs that were mandated and then the mandate was withdrawn in the flexibility of cost the going from three thousand and one state to five hundred the other but this whole process being engineered from beginning with a political statement engineered into the accounting process i mean this kind of accounting where you exaggerate the benefits you underestimate bilbray secretary miller your department announced the three hundred fifty thousand to three hundred twenty five thousand i'm told education jobs a few weeks ago how invested heavily in was really meant to get at the core issue of not just money is allocated but specifically just to quote the guidance a job retained is an existing position that would not have been continued to be filled were not for recovery act funding so the intent and the guidance that we invested in was in fact to get at this core issue not some clever accounting for money is allocated but really the core issue of did this money so our investment in the guidance would  while it may have been confusing we actually looked at state budgets the portion of states but is that in fact were addressed by the stimulus money so it's reported by the states within did the calculations of the jobs that were reported by the states and aggregate looked at what that would have translated to on a per per per job basis understood what how did that compare with historical trends and that was another way that we could trying to lay down third we actually independent of the reporting period since since the recovery act monies were first started being a well the last april there have been well over a thousand new stories independent news stories talking and citing specific job say give us confidence that the numbers that are being reported are accurate as we scrub them we have the process that terms of data quality we had automatic programs that actually looked at recipient reporting where their outliers flagged outliers contacted all fifty because you know that's going to be those who are going to be quoted back to you so that's an opportunity if you think there that they had any pull back they should go on the record you need to do it because that's a very specific number in a very vital and i think honestly i think the question becomes with fourteen thousand school districts with one hundred thousand schools as you then get to the precision of school a versus school  right and we don't have access in that level of transparency so i do i do like if you do i expect at that level that that will these numbers be fine tuned from school a to school b from district a to district the i actually think we will see adjustments made over the course of the next quarter but again i think in aggregate as this gets rebalanced and fine tune it we think we will still be coming right back to job save numbers order of magnitude in the three hundred twenty five thousand i think the answer is yes well actually i prefer a what what we're trying to do for the first time ever here we probably need to be operating in the plus or minus is or and some kind of range  given the many levels of government with which we are dealing with and have even tried to do this kind of thing before i think the problem may have much to do with the expectation that here's a number and nothing is more specific and finite as a number so if i got a number i got the goods on you as far as we're concerned or least speaking for myself the most important thing is the transparency here tracking these numbers correcting these errors let me ask you a question in that regard given human fallibility even if all of this data were at one level there there is there has been established by whim be a a way to do quality reviews so that here you've got something very specific between the twenty second day and the twenty ninth t during the following the end of each quarter there are supposed to be a review and this review is apparently intended to resolve just such material omissions and reporting errors as has been under discussion at these hearings at the at this hearing today if these reviews were conducted and if a material or mission or significant reporting error was discovered was there an immediate process for correcting it were people just so quick to just get on to the next step to report the data if you had a quality review period why didn't that period work better back and i can ask  the very first time that so much data had been asked to be reported by recipients it's also the very first time that agencies had to oversee that kind of an activity they had to report by the way it was ten don't think it is i think that are you considering what time period given the experience you now have my device perience we've had now i think we are we are seriously considering trying to think of a way to or extend the period of in which corrections can be made well at this point i think the sense since even the smallest arrow will be held against you know last how many jobs you provide it probably would be better quite the log rhythm you have how much were created how much would have been created anyway you know always come back saying they would have been created anyway but you can't not in this recession we believe the economists may need to get to work on their models by the way about how many jobs do you create on your own in a recession ok ok ality you're in the deepest recession ever knew about the word depression the deepest recession ever there must be a model somewhere that tells me in the in the midst  of localities laying off everybody they can find even after they get stimulus money there must be a model that as jobs get created and the kinds of jobs a good trade and we see people for example the district of columbia dismissed after school starts school has started and teachers dismissed then we know for sure this is not a very exact science and whatever models we're using have now had to confront this situation before but frankly i've been very impressed by all the overlapping accountability and  overlapping accountability wide net did not work i'm looking at the recovery board then we have the i d s and we have the state orders and we have the prime recipients and then all this gets publicized through recovery dot gov of between zero and be and the recovery board now the first thing that occurred to me is of all these actors are involved surely they are not stumbling all over one another forgive me if if it seems to me that maybe this ground of dealing with appeals if one doubts sequentially so that one finds errors in the prior prior level for example i can understand that but what i need to understand here how these layers either get coordinated whether they have specific roles the i g the the recovery board see the people responsible within the states the recipients them selves have they been given any guidance that would sort the them out so that they might be a check one on another or are they all trying to go at the data at one time and b has a small staff we're trying to be as helpful as we can be so who does that really leave with the responsibility it leaves the recipients themselves are responsible for not only what they put in but for also checking later to make sure they didn't make any mistakes and it also leaves the agencies in a position where they have to make darn sure those recipients are reporting as accurately as possible that all level or at the state level at both levels quite frankly i think the federal agencies can only see so much so as they look down they're going to have to depend on their state counterparts as well to talk to the recipients and as it cascades down hopefully at the end of the day the recipient will get a notification that something's wrong and you need to look at that the way the o m b guidance is only reset the ins can actually change the data federal agencies the bordeaux and be can't change the data so the recipients have to be notified that we think there's a mistake and then they have to change the data and that that of course goes to how long it takes and ensure that all of that and it occurs yes i recognize that the  administration in fact on high self was very pleased to have some data to use when the first was it thirty thousand jobs came out to end a kate that this was this money was was certainly producing  something and i and you put on a lot of pressure to show that it's producing something now of course as is always the case with congress when they do oversight and you will continue to be under that pressure and under the same pressure to correct the errors at least you have the understanding for me that you're doing what is never been done before let me ask you about analyzing what's occurred i think this is pretty organic that this is one of those things kind of like common law you learn by doing it and you build on it and you you build a better mousetrap each time or you perfect the most  in addition to o m b agencies had to provide guidance to recipients to explain the the requirements now we've got the next quarterly reporting period and that's going to be sometime in january and each quarter thereafter the fans are going to continue to be spent i guess that's the last year new stimulus funding is there a way in which as you are reviewing the first quarter reporting to analyze the problems then to stream last and or improve upon the process in some way that everybody so that everybody will be doing the same thing could you tell us how what back process looks like that was due process based on hard data now before you where you've sorted out what kinds of mistakes were made i think some with an inevitability made so that you would then give i take it new or revised instructions to whom and how is that being communicated across the government well certain everybody involved in this is engaged in the lessons learned exercise we're all looking and i would include i'm sure the agencies are as well but o m b and the board are engaged in this lessons learned activity right now and we will we will we have learned a lot from this first reporting period we've learned a lot from the final report the g a o put out today as well and i know that o m b is responded that they are going to implement those recommendations i suspect the will be involved in making some recommendations as well and what we hope to do is make each and every reporting period run more smoothly than the last and there are certainly some technical fixes but the board can do on this next reporting period to make it easier for reporters to report and additional guidance or clarification of guidance by o m b is going to be very helpful as well and if i may add madam chair in practical terms even during this first reporting period across agencies we've been trying to make these corrections in real time we have these twice weekly conference calls that include all the agencies where we're talking about recipient reporting what we've seen  leading those but we're finding common issues on recipient reporting for example across agencies we see where we should focus our assistance efforts the kind of common errors so i know  that that the recipient reporting will be better in the next quarter but even getting through this first reporting cycle some of the things that people seen we've been able to do that feedback loop very quickly a know best from your own feedback and from your own lessons learned how this should be done my own i must tell you my own sense is that in reporting hard numbers one should should be very careful i myself would would not use single numbers on the hated tell you how to do it but people who engage in uncertainty every day have learned how to develop ranges so that people do not have raised expectations and so that people do not play a game of gotcha and let me tell you some bad gotcha we have never had before this committee is anything approaching quarterly reports the way in which the congress has operated certainly in the years i was in the minority is wait until  something is all over then the easy thing to do is to call in people and we count the arrows that occurred what this hearing is doing is working with the administration to track what has never been tracked before so that we can get something out of a hearing that is corrective and helpful so that while we are disappointed that the numbers we're yes we we believe that the importance of this hearing is the process you just described that may be the most important thing that could possibly happen because the kind of era  my agency found may be entirely different from that of another agency and then in the next quarter i get that kind of a aura but nobody forewarned me that that kind of error comes up so  the what i'm going to do is to recess this hearing for fifteen minutes let us say until what is that two o'clock  here we'll recess for until two o'clock ok with you in the days and months ahead thank you very very much for your testimony and now we move to our second panel on a bill dick armey is the chairman of the advocacy group freedom works dr armey is the former majority leader and served in the united states house of representatives for eighteen years and dr armey holds a ph d in economics from the university of oklahoma and is a former chairman of the university of north texas economic the parliament welcome good to see happen notice life after this place and now we also introduce dr irons he is a research and policy director at the economic policy institute his areas of expertise include the united states economy and economic policy with an emphasis on federal tax and budget policy dr arne's earned his ph d in economics from the massachusetts institute of technology mit and  author of numerous publication dr nine formally was economics professor at m hurst college and worked at the center of american progress oh and b watch and of course brookings institute and federal reserve board keynes general theory and the notion was that in times of economic distress downturn governments could put a spur to the economy by i think they called it pump priming and texas recall that put in a spurt of the economy  by either temporarily running deficits or by either increasing spending or cutting taxes there is a mixed review of the history of the keynesian policy prescriptions and their success i would be one that would suggest that on the stimulate the economy through increasing spending side there's a pretty pretty dim enormous record of success in the history of the application of these theories while on the other side of the coin stimulating the economy through reduction in taxes has been a fairly rich history of some success with emma to most notable cases being the kennedy tax cuts of hundred sixty two and the reagan tax cuts about nine hundred eighty two i course lived as an economist through both of these times very exciting times for us in my profession but one of the sweet iron reflect back on in the academic community when president kennedy proposed stimulating the economy through cutting taxes so you could also increase revenues it was considered an act of genius he was celebrated in the academic community of being a president who was teaching us economics when ronald reagan came back with exactly the same idea twenty years later he was considered a moron in the academic community despite the fact that his great success has to be considered even greater than that temporary success of the kennedy tax cuts i would argue that the larger problem that beleaguered the american economy today is we have an economy that is institutionally structurally out of balance and by that i think you should look back and say the strength of every economy is the private sector every nation state in the history of the world has tried to regrow a strong economy through the public sector has had abject failures serious resource misallocation that must be struck between public and private activity and there are various subscriptions you go back to adam smith's wealth of nations he had a very good outline but the general principle was the public sector should be dem and focused on such things as public capital assisted ministry in a system of justice especially in such things is a system of contracts which is course if you have private enterprise contracts are important and you must of course be confident that your government will protect your contracts all rights and and of course security needs but the basic notion here is that the the government must has a limited list of things that it must do and it must do well with the fish and see the primary product of their successful efforts of course increase productivity on the private side such roads things as roads and transportation i believe that is what has happened in the united states is we've crossed beyond the point of diminishing returns as government has grown out of control we've gotten to the point of negative returns is this discussion is being is a discussion as a lively discussion internationally what is the appropriate size of the government relative to the economy there i'm proud to tell you that this international discussion is being carried out by a large in terms of something called the army curve and the army curve says there's a point that is optimal way you have the necessary and sufficient rational devotion and resources to government enterprise in support of private sector initiatives and new maximize the performance of your economy beyond that it becomes a burden i think we've long since gone beyond that matter that optimal point and we are now at a point where the biggest single problem that belabors the american economy is the fact that the federal government is such a burden and i my analogy is this in the competition between world economies united states has the fastest most beautiful horse in the race there's no doubt about it there are record of accomplishment in the providing a center living for our citizens really is unparalleled unchallenged even but the horse is carrying a five hundred pound lightness jockey and this whole theory that you can in fact prove your performance in this race of international economic competition by feeding the jockey and starving no horses asinine i don't know any other way to put it but it's certainly counterproductive and so what i would suggest to you is that the difficulties that the that have belabored the american economy in the past  dramatically in the past year year and a half have first been borne out of misguided public policy most importantly two decades of too easy money i ask myself when i looked at the the bubble burst on housing how could so many people make so many bad decisions irresponsible and counterproductive decisions it's hard to imagine that my response was well when was the last time i did something foolish was money was last time i had too much easy money and so what we had was a period where the government created this enormous husband housing bubble maybe for the best of misguided intentions but still nevertheless it was a product of  bad public policy market could have corrected that is it did the dot com crisis just a few years earlier if left alone the government said look we have too much of a bad too much of a good thing the but west best way to improve on it is that more of a too much of a good thing is all we had first the bush stimulus package which is a failure then the high drama of the bush bailout which was not only a failure but very offensive failure to  the constituency voting citizenry at large and then that was followed on this enormous package that is the current stimulus package now there was one innovation in this region effort that i find interesting and that is the idea that we can track this money and make a direct tractability recording of the jobs my own view is this effort is by and large becoming clearly seen imperatively a bogus effort that is from its conception in its administration only politically defined and finally to observation on that one politics is morally and intellectually inferior to virtually everything with the possible exception of sociology and so if you're in fact are making decisions out of a politically defined motive and you're letting your politics divide your economics you're probably going to come up with a bad notion and just to be sure fair because  exercise that is frankly comical comic trouble that's very sad be where politicians manufactured numbers for the sake of testimony i think you've got a perfect example of what it is that you want us manufactured numbers for the purpose of this testimony hopefully my manufacturing numbers are not made up but actually good estimates but let me let me start off by saying that there can be no accountability without transparency and i applaud the efforts of this committee in the congress the administration to take to take transparency seriously my testimony today will focus primarily on jobs on make four main points these points are labrat in my written testimony let me cover the basics here first as you've heard through cypriot ports displayed on recovery dot gov are not perfect this should not be a surprise given the short time frame in which the system was implemented given the sheer number of reports and given the problems inherent in this kind of endeavor to err is indeed human nevertheless errors and inconsistencies are unacceptable and should be addressed whenever the they are found a second well meaning the media have highlighted cases in which jobs have been overstated by recipients the under reporting appears to be at least as significant of a problem as over reporting my rent testimony has more detail on the kinds of problems but let me highlight a couple examples first there are number of cases in which the prime recipients do not appear to have correctly estimated saved jobs one gram percipient stated and i quote there were a number of jobs held by construction workers that were lengthened because of the funding and they reported zero jobs this is a case where clearly they had jobs that were retained because the recovery act if they reported zero in many cases sub contractors and sub awardees are not required to report on job creation it is often unclear if these jobs are included by prime recipients one recipient of a two point five million dollars contract of which ninety percent was awarded the subcontractors stated and again i quote one full time jobs created with the prime contractors organization as result of this award the job is titled project manager clearly this is the person who's in charge of managing the sub contractors so for two point five million dollars they reported just one job created they likely did not include the subcontractors to give you a sense the size of this potential problem by my count there are two thousand one hundred eighty one reports in which projects have been started and recipients receive more than fifty thousand dollars yet they reported zero jobs in their report there are five hundred twenty eight reports in which projects have been started receiving three c of more than one million dollars get fewer than two jobs were reported so there may be legitimate explanations for these outliers but we should not necessarily conclude that the six hundred forty thousand total as presented by recovery dot gov is an overstatement other shipping jobs and might very well be an understatement my third point i want to stress that we sippin reports while providing valuable information on projects in limit cannot and will not capture the full true impact of the recovery act in fact the true impact of the cardiac would be far greater than the sum total reports for example the data only include contracts grants loans tax benefits and title months are not included of the funds paid out so far only about fifty two billion just one fourth of the total is in the form of contracts grants and loans further and importantly these recipient points only include direct jobs for example a new construction worker hired or hired to install a new roof will be included the data does not include the jobs impact of construction workers re spending on car repairs or restaurant dining the data does not also include upstream supplier jobs at the company and manufacture transport and sell roofing supplies at the wholesale resale level my fourth and last point despite the problems with individual reports it appears that the recipient import totals are consistent with the count of economic advisors job estimates and with other macroeconomic data and estimates the economic evidence clearly shows that the recovery act is having impact before the recovery act employment was declining an average monthly pace of over five hundred thousand jobs per month in the fourth quarter of two thousand and eight in by nearly seven hundred thousand jobs a month in the first three months of this year the economy was in very much in freefall in the most recent three month period employment a clients of average fewer than two hundred thousand jobs before the recovery act g d p was declining at a rapid rate in the nine month period ending in march this year we saw the most rapid decline in g d p since quarterly data was first collected going all the way back  eighty seven so we have the most rapidly to cure deteriorating economy in over sixty years the most recent data shows a turnaround g d p grew at a three point five percent annual rate in the most recent quarter now using methodology more suited to capture the full impact of the recovery act including tax cuts aid to states and direct investments and also including re spending upstream supplier jobs the total number of jobs created or saved so far is likely between one and one and a half million jobs  initial estimate in may of one point five million in fourth quarter of two thousand nine other forecasters including goldman sachs macroeconomic advisers moody's economy dot com and others have estimated g d p and employment impacts consistent with these estimates as well these mac with the mets are also consistent with the micro micro data from recovery dot gov recipient reports in summary it does appear that the recovery act is on track evidence from macro level data to model estimates to recovery asking the question of both of you the recovery act what is your impression of it my impression of the recovery act was that it was a wholly futile effort if you take a look and in my adult life times all the years that i spent watching a study in iraq and our policy what has worked for growth and recovery in the economy is cutting taxes and leaving the taxpayers earn the money with the tax code if you go way back to adam smith seventeen seventy six wealth a nation he says the road to economic growth is abstinence savings and investment savings and investment are two economic activities that are double tax so they are given a double whammy disincentive to savers an investment every smart tax reduction we've ever made that is tax reduction and that is diminishing the load even the interest on the national debt at that time being equal to the entire budget of the defense department with the already existing current deficit some four five hundred billion dollars to double down on what is redundant is not productive when we share broad impression i'm afraid i don't have a good horse example the let me use a different analogy before the recovery act was passed the economy's in freefall the county had jumped out a plane it was declining at a very rapid rate the recovery package was essentially a parachute right it opened up it slowed the pace of decline we still have jobs that are being lost but they're being lost in much slower pace gave the economy a chance to recover it's not going to be the end and be all it's not going to get us from where we are to fantastic on me no one's claim that the company we're currently in is a great environment but at least stop the worst from happening it stopped us from going off the cliff in terms of the policy i turn to be more of a kitchen sink economist what if you try live everything you know i think in the recovery package you saw that there was a number of investments there was a to states there were tax cuts as part of the package and i think that a problem of the size that we had demanded a comprehensive broad based solution i think that's what the recovery package represented so i'm very optimistic that this you know give the economy a chance to turn around and stop the downward spiral and give us a chance to recover and the tax cut component i think there are components of recovery package which i might not be as fond of as other parts including some of the tax cuts and  i find interesting that the bush tax cuts were not listed as part of the success stories in terms of stimulus in fact we had the one of the worst recoveries on record after the bush tax cuts were passed and so i think the record in most recent times of the advocacy of tax cuts as stimulus has been at best mixed and i think we need to think about what kind of tax cuts tax cuts are not a generic thing there are tax cuts that i think for low and middle income americans which can be we spent can be very effective stimulus tax cuts for businesses who need customers not tax cuts are in many ways probably not a good idea so i don't think stuck with tax cuts in the abstract we should have a more nuanced view doctrine's i'm deeply concerned that you know an employment rate has now surpassed ten percent is this evidence that the recovery act is not working or that the projections of the council of economic advisors is that they were wrong i don't think it is i agree with you i think the ten percent employed rate is a huge problem i think the high unemployment rate is a result of a disastrous economy that was in place before the recovery act was passed and i think when you look at the projections of the count of economic advisors where they thought the economy would be they along with private forecasters were very were overly optimistic about how high the unemployment rate would rise so the fact we have atte unemployment rate is a statement not about the recovery package but is a statement about the state of the economy before the recovery package was passed and in fact if it were not for the recovery package we have much higher unemployment rate so my example of the economy in freefall in a parachute am curious i know that in the in the previous testimony we heard earlier they're talking about all the jobs that have been created and saved and one of my concerns is that two thirds of jobs happen to be with departments occasion they've created four thousand out of the six hundred forty thousand jobs and in the testimony it appears that all they did was make sure that the teachers budgets or their education budgets are funded for another year which means what we're going to next year and so it doesn't look like we've created or saved a permanent job because we haven't fixed and economic problem that will allow that job to continue unless we continue to find another stimulus that problems the pump again what's your analysis of that and my own view is that first of all there's been very little distribution of this massive amount of money that shocked the world but by and large has been distributed intra governmentally so you're getting some public jobs that are perhaps being retained that might not otherwise have been but there i'd certainly not think constitutes a recovery where the thing that gives you recovery is when the private sector investor class and gauges that's what happened in the aftermath of the reagan taxes and you're correct i did not mention the bush tax cuts we've got an anemic recovery out of them because there were so much income redistribution in that package of tax cuts as opposed to  stimulation for investment and savings it was that was a tax cut package that was too politically defined to be as effective as it might otherwise have been and i i made a point earlier you need smart tax cuts if they're just income intergovernmental awards but more than discouraging dramatic demonstration of declining employment in the private sector that gives you that ten percent overall reduction in employment or employment right thank you thank you i sit in a small business committee and it takes about sixty seven thousand jobs according to testimony we've heard a number of times to create a job for small business yet the average in this package is about two hundred forty six thousand dollars it's created so far i know that in this this package there was thirty one billion dollars roughly of small business tax credits and things like that you know off the top your head mr burns how many jobs were created or saved as a result of those tax credits no i don't let me just say there's a generic a rule of thumb i think you can apply that public sector job creation is very costly and results in virtually no enhanced productivity for the economy as a whole private sector job  coming from the investment sector where in fact you expand the application of science and engineering to new new capital investment increases productivity and in fact results in a much greater as it were bang for your buck in terms of the productivity gains that result in increased sustainability of the jobs that's why you see a greater permanence in the jobs created on the private sector also with regards to  unknowable question there's no specific number where if you're blow it you're fine if you're above it you're in trouble i mean a half a billion dollars or have trade dollars worth of interest is something we can continue sustain forever the question is what is a sustainable level i think that is the key question and i think they're yet look at how fast the economy grows and how that the deficit increases the debt and i think if you are underneath a threshold which keeps the debt from rising as a share of the economy you're in ok territory if the debt is rising faster than the economy as a whole then you're in in trouble the way i describe it is you know bill gates and carry a bigger debt than i can because it's income and so long as our g d p is rising we can continue watching high is not doing very well right now that's my there for years recently they were betting against the japanese currency correctly so now they're betting against the united states currency because we are flooding the world with dollars and there's a decreasing willingness on the part of the world to to own our debt and the fact is the government acquires money in three ways to tax it directly or they borrow it we're in a declining world willingness to do so they end up printing it if they print it you know the president has said and his administration has said they created six hundred and forty thousand three hundred and twenty nine jobs that's pretty specific you'd think they'd be able to account for those jobs since they're so specific down to the axial job i mean three hundred twenty nine how do you account for that what i think the number that's presented is i know you think that they could easily be that fourteen percent inflation twelve percent unemployment called it a misery index twenty six percent and they were throwing money at everything he put on a sweater and said we had to turn our thermostats down and world was going to hell in a handbasket and this guy comes right in from the west and he said and they said you've got to raise tax we've got to get more money in the treasury because everything's going south and you know what he said he said well i think that we want to cut taxes give people and business more disposable income to invest and spur economic growth and you know what he was right we had twenty five years of economic expansion or twenty some years of economic expansion and this philosophy that you can spin yourself out of debt and solve the economic problems by spending to me is just anathema i just i just can't get it and when i hear people say well you spent one point four trillion dollars more this year than you've taken in but we can spend more and get out of that i think you've got to be smoking something that's illegal you know this is crazy the health bill we're talking about is going to cost at least another trillion dollars over the next decade it's going to raise taxes of probably god only knows how much we're already one point four trillion dollars in the tank right now and there's going to be more spending they want to come up with more programs it's going to cost money in taxes like the cap and trade you can't spend your way out of the hole when you get so deep you've got to stop digging and that's the problem we have right now i'm putting this in very simple economic terms we need to cut spending there's a book i wish you would read mr irons it's called the forgotten man have you ever heard of that book you know having well you being an intellectual i wish you'd read it it's a book that goes from one thousand nine hundred eighty nine to one nine hundred forty one and it tracks the roosevelt administration and the things that they did to solve their economic problems and they did almost the same thing you're talking about in the mid one nine hundred thirty s and you know what happened things got worse and it wasn't until the war started that they dug themselves out of that hole because everybody had to go back to work women and everybody else because we were fighting overseas the only reason i bring all this up is you know i've been here for twenty seven years and some people say well that's too long i don't know maybe it is i don't know but i have to tell you this one thing i do know is that you can't spend more than you take in inevitably it's going to come back and bite you in the rear end and that's where we're going right now and this idea and i heard you i think i heard you say that we're in a position now where we could spend more money to get the economy moving that sort of thing i think mr irons that you're incorrect and i hope you'll read that book and maybe the next time i see you have a different perspective  and i think dr army would agree and strongly would agree that a little knowledge sometimes is a good thing and having have the facts is a good thing and i would point out that yes in world war two we pulled ourselves out the recession it was one of the greatest examples of big government investment and the u s debt was at extremely high levels during world war two and that was you know i think most economists would tell you that that had a big part  pulling us out of out of the recession and depression at that time mr armey do you do you support unemployment compensation during times like this obviously we always like to help people who are truly distress is always a question of what definition you give to that and again like almost everything i can think of even unemployment compensation which can be in fact a good and necessary thing can be carried to extreme if it becomes a fountain head for dependence let me listen so we're on the same trying to understand we're going let me let me rephrase the question do you agree that for people who are out of work through no fault of their own and are continuing to look for a job in the economy and can't find one through no fault of their own that they should receive unemployment down i don't believe that the best public policy option is to make them less miserable in their continued unemployment for a longer period of time as opposed to those that policies that can be directly pursued that will give them the job opportunity one of the things that frustrates me as i look at the past year and a half in the united states with public policy is the opportunities to expand employment opportunities for real people in the private sector that have been foregone and the problem is officeholders also always oftentimes tend to pacify their own feelings of inadequacy by saying well at least we made them more comfortable in their misery let me i don't mind going to mary right now we do have less voted for the unemployment compensation packages that were in the economic recovery bill and that had the house has ve something to engage savers and investors more of that activity which would result in job great let me i would have been someone will do this you keep saying if there were did you read the economic recovery bill no i didn't and i had no reason to read it i was cat stinking up his yard i don't know have to know how it got there to know it's a dead cat stinking up the yard well i think it's important to read things i understand there are some comments suggesting that knowing stuff is a bad thing but it seems to me that we owe it to the people that we're communicating with that we have an understanding to read the information let me let me ask you because not clear yet whether you're for the unemployment compensation components or whether your would have supported the tax care component both of those were significant components by the way of the economic recovery bill dr iris can you talked a little bit to that fact the economic recovery bill that we've been talking about today represents less than a third of what was in there for economic impact could you comment a little bit on that please yeah that's right the the specific elements that have been reported on to the recovery dot gov recipient ports represent will represent about a third of the total now that's in the package right now significant part but equal weight each so the numbers we've seen today are only a part of the overall impact could you comment a little bit on the situation that the president inherited with respect to the deficit and debt following the administration yet the deficit which is now you know well over a trillion dollars is largely the result of policies that were put in place before the president took office as well as a to rewrite economy the economic deterioration which was  as i said before the most rapid since one thousand nine hundred seven is the prime culprit in terms of the reduction in revenues and the increased and in outlays that have resulted from just the economy going down that's been the prime driver of a higher deficit and so in thinking hours between the air dropping at midnight and the vote but but afterwards no there were no non redistribution tax cuts and the tax cuts that are in there were dim in a most to the investor class in any way shape or form person that you were when you provide leadership here that you provide leadership for an organization that's totally against a bill and you haven't read it but anyway that's thank you mr chairman dr iron and one of your earlier statement said that the recovery package and i quote was kind of try a little bit of everything that right i'm not sure about the exact wording but it's yeah close i mean seems to be what what a mischaracterization the i would argue what this government has done and frankly goes back to the previous administration as well is not trial over the very thing we've tried a lot of one thing big government spending i mean think about it the bailout package last fall the stimulus package the bu process that that has moved for worse than a twelve fourteen percent increases all we've done and i've argued many times of big spending was going to get us out of this mess we should have been out of it a long time ago that's all the government's been doing so to characterize as we try to lot of everything a little bit of everything is just just totally totally wrong but here's where i want to focus with both you guys i want your response to this thinking now in a in a in a big picture sense two questions are you troubled either  i would characterize as an unprecedented involvement of the government in the private sector and let's go specifically to all the spending we know but how about this fact which just when i think about this in the united states of america we now have a federal government pays are telling private american citizens how much money they can make and i understand is done in the in the context of the tarp repayment plan but think about that what's going on in the in the framework of senator schumer saying maybe we need to look at the idea of any publicly traded company mr feinberg has jurisdiction over executives in their pay compensation so are you troubled by where this administration seems to seems to want to take this economy and i'll start quickly with mr arm and then with first of all yes i'm troubled because i'm not first bases on the basis of individual liberty those of us who believe in personal freedom as specially freedom of enterprise and we witness the world's great success story through private individual enterprise understand that when the government tries to manage as dave try to many other countries a wrench to get it wrong secondly i'm proud and more pragmatic clee this is an incentive effect in fact you know you can go all the way back to shakespeare you can jump forward to thomas alva edison their point was it's not worth writing it's not worth inventing us can be so over a problem there is no greater more productive motive in the history of the world that is that is contribute do human well being in greater by greater amounts and done less to negatively affect human well being than the profit motive of the government's going to back say be out of the banking business out of the car business and i think that once you are in it at the behest of banks in the case of tarp you need to do what you have to do to manage that effectively be to pay as argued oversight reasonable oversight over the business practices of assets that you own i think that is reasonable i would like to govern to be out of the making said let me let me say my question bits and pieces let me start the question slightly different would you would you i would argue that one of the things holding us back from coming out this recession with the type of job growth we'd all like to  see as business people are smart people they take educated risk they don't take crazy risks and so they're asking themselves you know i'd like to bring those people back i laid off i'd like to do that expansion that we're thinking about doing but i don't know what these yahoos in congress are going to do next i don't know if they're go pass this health care proposal which raises might i don't know if they're going to pass this cap and trade which is going to cost me more in energy cost would you argue that the uncertainty and of the policies being promoted policies being advanced is hindering the ability to create jobs whether they get done or not and let's go quickly to dr aronson and dr arm i think uncertainty is not good for the private sector whether or not these are major uncertainties in the life of the business person i don't think so i think this is on your head you can pass health care and move on uncertainty i think that we can get ready and certainly we can add a big tax if we do it well i think i think that certainty is better and the more we can forecast where we're going to do what you're going to do and i agree that that is a good way to go dr arm there's no doubt about it i'm certain he kept the investor class on the sidelines throughout all of the seventy's and they're certainly not right now specifically with what they see as the targeted industries of the to balance this we first have to get to zero then we've got to run a trillion dollar surplus to ever get to balance so how serious i mean to me this seems like the the most serious thing one of the most serious things facing our government our country how serious it is  doctrines i think it's important to maintain a level of deficit and debt that is sustainable to we need to get exactly does iraq i don't think there's any economist who's going to say there's something magic about a zero balance i think if you feel it's important to assume that you taught at a university level and if you don't mind me asking what was your salary teaching economics at the university well i left teaching nineteen eighty five or eighty four i was teaching both summer terms and i my salary was thirty five thousand dollars at that time it was rather curious case and my point i was one of the few people i knew that was qualified by way of comparable employment to actually leave my employment and go to washington in congress and double my salary with very few very very few people could do that college professors  good so their pay isn't always all that good but still you know someone is going to pay you to do nothing but what you enjoy doing it's not a bad look first of all i'd like to thank you for your answer and the reason why i  asked the question was previously i question as deputy secretary miller on the amount of jobs created in connection with the amount of money actually spent  according to the numbers that mr miller presented the department of education has spent sixty seven billion dollars in order to create approximately four hundred thousand jobs and based on the numbers that he presented i calculated that on the advert you would cost one hundred and sixty seven thousand five hundred dollars to create one educational related job my this organization improve on the efficiency of job creation was very hard to improve on the efficiency of the government because cost efficiency is no part of their incentive structure so what happens when you when you  when you devote yourself to sustaining employment in the public sector you also sustain a very high costly oftentimes not very productive  superstructure support structure it is not a college professor i know of that isn't aware that the college spends too much time and money sustaining redundant administrative positions all of which have to be supported in order to to support the faculty the private sector is much more efficient that is to say it costs less money to sustain a job and because a job more often than not is greater productivity has a return to it and there incentivized to hold down overhead costs based on your experience as an educator as well as being a majority leader in your professional opinion how money and and enhance production output growth in total output productivity governments are just frankly not very efficient in their use of people's money and so if in it rather than taxing more money either for me or my grandchildren to put my money in the hands of government agencies in bureaucrats or spend any officially now for very little gain in well being for the community leave the money in my hands i'll invest it wisely we'll have capital expansion women the there was a great theory of business cycles called the innovation cycle advantage from a joseph schumpeter and i remember  now you go to the gym and making them the california thank you mr chairman if i could have the slide put up with the majority statement here i've underlined a portion that says on october thirtieth two thousand and nine a recovery accountability and transparency board recovery board released a consolidated count of those reports showing the recovery act funds have directly created or saved six hundred forty thousand three hundred twenty nine jobs that's been disputed here today mr armey if i asked you to calculate what it's one point seven three billion dollars would would promote in the way of jobs if you gave it to the government would you be able to do it that accurately well i'd have to first of all i'd have to brush up my shakespeare a product touch with the department of labor statistics one of the really reliably honest agencies of the federal government probably rely also a little though the earlier panel said it's plus or minus a whole bunch is in accuracies and so on if we accept those figures then if we took fiscal year two thousand and ten mr obama's fiscal year where we're going to spend three point five five two billion just call it three point five trillion i'm sorry three three thousand five hundred fifty two billion three point five trillion and using the same ratio my whiz kids in the back came up with thirteen million one hundred forty five thousand two hundred fifty three jobs so if we continue with that rate that means the federal government which employs about three million people directly can spend thirteen million on medicare medicaid every social program everything we can save thirteen million jobs with our current spending and if we double the spending we could nearly nearly wipe out the fifteen million unemployed so this is dr irons and dr army but first d is it logical to simply spend three point five trillion more dollars every year in order to get unemployment down or is in fact the keynesian concept simply unsustainable that government jobs are like feeding somebody a fish for a day you spend the three point five trillion you keep people on the government payola hanging around blue rooms waiting for something to do and then at the end not eliminating any inefficiencies and then at the end of the year the three point five trillion spent and you've got to spend the next year if you want t people off unemployment isn't that true dr irons i think you're mixing apples and oranges to a great extent with ok dr armey i understand you know but i don't think what you have to first go back to my initial observation a very large portion of the existing expenditure and employment structure of the current federal government is redundant so the fact of the matter are even for that matter counterproductive so if you add to that you just add to the burden for more rocks in a knapsack of somebody who can't carry a pack is not going to get it any better let me ask you about the hangover dr armey if we were to spend the three point five trillion additional dollars that those who say more government will of unemployment don't we have an inevitable hangover where the debt burden in other words the amount of money that goes out just to pay to chinese for what we owe them in fact mortgages the future of government decisions  other is it creates a permanent overhead that you can't get past even if you reduce the size of government but we're already there if we were to meet our current obligations in medicare and social security we would pretty well consume the existing current federal budget again the problem still remains the government cannot get money unless they print it on the say directly take it away from somebody else people are not willing to to buy our notes and letters and lend heard in our children with the taxes dr i mean obviously spending one hundred sixty seven thousand for each job and it's only a job for one year it's one year full time equivalent could be compared to the private sector can you imagine your wildest dreams somebody saying if you loan give me one hundred sixty seven thousand all i can do is create one job for one year can you imagine an investor being asked to do that wouldn't it typically be that if you invest let's say one point six million of that was ten times that figure i will create ten jobs in perpetuity isn't that the normal business model something along that line of about ten jobs per million that are permanently created in the private sector well that's right because a private sector produces a product that people want and there's a productivity enhancements that generally comes from expanding your capital stock and aplan new science and engineering but there's repeat sales the fact of the matter is the government doesn't produce anything last because my time has expired the old the axiom that if you give a man a fish you lead for a day and if you teach him how to fish if you know feed his family for a lifetime isn't this stimulus simply fish for government employees for one year even if you accept the figures given to us today my own view is again we've we start with an already existing redundant sector capacity in the federal government so it is in fact it's basically spending our money on their own operation which leads to no enhancement in the overall wellbeing productivity productive capability of the economy gentleman from ohio listen thank you very much mr chairman i'm sorry i wasn't here for the entire presentation i was in another committee but it seems as if we've gone from defining propaganda to engaging in propaganda and  some of what we're doing here dr iron's could could you help us do you believe that the the estimates and we're only talking about a small portion of the stimulus in terms of job creation the estimates of six hundred forty thousand jobs even if this statistic aren't exactly specific if you believe they're close to being accurate you think they're ballpark as i said my testimony the error is that in brought up in the mistakes there are some that would underestimate the number of jobs and over estimate so per job and that job being a temporary thing when you create a bridge and you hire somebody to build a bridge does the bridge have value in and of itself when you build a bridge and hire someone to build that bridge does the bridge have value well assuming that the bridges are richer somewhere yes it would in of course i mean it's one thing to do niger variation in economic development theory is sound public capital increases the cranes coming to create the bridge are coming from the private sector i also assume that the engineering studies and the architecture studies those are private sector jobs are they not certainly so and so why you thought it might be created to build  bridge or the multiple jobs that might be used to build the bridge are actually having a ripple effect in the economy in that the private sector is benefiting truck plates tremendously just using this scenario in that the supplies for the bridge are coming from the private sector the tools being used to build the bridge are coming from the private sector the engineering studies are coming from the private sector the architecture studies are coming from the private so so is it a misrepresentation that that the gentleman has made that one job that costs one hundred sixty seven thousand knowledge that it's really only that one job and it's only temporary first of all you have to be very careful when you write a nice if in order to get the money to build the bridge you take it away from me i might have bought something and there would have been the same  you to build a bridge or a tax cut look if in fact there were any substantial documented portion of these funds that were going to real public capital expenditures i would be more encouraged by your over there absolutely are and i would point you to and it's it's it's interesting that you bring this up because the minority leader suggested he's from the state of ohio that there had been no projects that were capital in nature invested in the state of ohio and then the next day the governor's office and the department of transportation the state of ohio said and fact while we engage in this hyperbole all the time about no infrastructure dollars going in they laid out a whole series of projects that have been invested in infrastructure in the state of ohio so are those job creation efforts if in fact they built real productive public capital you can go back to adam smith the is this is good investment funds allocated to real public capital structure mostly to income redistribution all efforts like tax rebates and things of this nature so i guess in the twain i'd have to say that don't impress me much well i would like to get back to to to this notion that these are our one year jobs are you familiar with the you know in the construction sector jobs that infinitum if you're a road project if you build a house if you build a hotel if you build a building in downtown cincinnati if you build a bridge do those do those jobs go on forever or do it doesn't go project the project the project and isn't the idea in vesting in a project in fact to create that temporary employment to get them over that time when when the economy is slow well of course if you're talking about capital investment you build your plant you build your road you build your bridge and then on that you have on going pro to production and productivity and expanding in the economy if there is a real capital structure like i said there's a big difference in whether or not it's a bridge to somewhere as opposed to a bridge to nowhere if it's a bridge to nowhere there are no future employment opportunities that are pursuant to the bridge while i was in the congress when they were building bridges to nowhere and i'm just i'm just in the congress when it when we're putting money in the bridges  and bridges that matter and in cincinnati and elsewhere but this notion that these jobs you know because they employ someone for a year and that's how they're counted somehow don't count because a construction project apparently is supposed to last for years and years and years and years i just don't understand that if you can help me with that wealth creation right there's a substantial difference in spending the money to build the bridges hansika the production of the community the movement of goods and services or a plant or facility as opposed to paying for another year's salary for a redundant person on a faculty someplace and in fact if you didn't make work and this was an argument in gainesville and gauged in gains argued that you could actually improve wellbeing by just having people dig holes and fill in back but i'm curious as to your chairman i would ask unanimous consent the gentleman have more time to talk about this very small portion of the bill having very little to do about the earlier discussion  but is he want to go on about the small amount of roads even though there should've been a large of wrote i'd ask you have another one i would just i would just ask the witness one more time you mentioned a redundant faculty member is it your belief that that the teachers that are being support through this legislation are redundant faculty members i mean say very clearly about this i was a professor for twenty years and timidly familiar with what goes on in universities and educational facilities and they are extremely inefficient at internal resource allocation and yes there are many many redundant faculties members now the heartbreak of that is where you could expand the faculty members where there is a truly need you are often blocked from doing so while you maintain the employability of the redundancy so so your experience as a university professor at a university allows you to suggest that the faculty members that are retaining employment through this legislation in k through twelve education across the country are redundant let me suggest to you know i'm trying to be generous and try and hard you know but gentlemen's time has long expired and if he has any additional questions may put them in writing and had the doctor on me to buy into them i appreciate the chairman's indulgence thank you of just conclude by pointing out i believe my twenty years of experience in the university in the administration of universities is a greater degree of experience than yours and building bridges with well let me just say first of all let me think both witnesses for the testimony and i think that of course you've been very helpful and i think dr i just pointed out that even though that a few mistakes were made that when you look at the overall picture that it probably balances out because some information did not go forward so we really when you look at overall picture it will balance out in terms of x amount of jobs that was created the testimony we have heard today directly refutes the completely unsupported allegation of propaganda is not propaganda most of the witnesses agree that recovery act spending has created and saved hundreds of thousands of jobs the six hundred forty thousand jobs that were reported as directly created or saved by just a portion of initial recovery spin validate estimates by the government and private forecasters that the recovery act is responsible for more than one million overall job so far and of course that to me which includes jobs indirectly created and jobs saved and all the different categories that people talk about here the stimulus package put forward to help everyday working americans is a far cry from propaganda this is putting food on the table of many families to the real people whose jobs were saved and to those who have found work it represents food on the table and a roof over their heads the real issue is that we need to get recovery act projects underway faster and we need to target them on economically distressed areas areas that really need it most we need to make certain that we put it in the a make certain that jobs are created at the same time we need to continue our strict oversight of recovery act spending the chairman of the recovery board testified that the recovery act contains the most extensive accountability and transparency provisions that we have ever seen we intend to ensure that we make the most of them finally i understand that politics is involved in everything we do up here on capitol hill and a stand that i've been here twenty seventy years but the issue of job creation is too important to play politics with and i refuse to play politics with it we need to work together to get this economy back on a c and get them get people back to work this is serious and i think that if we work together we can do that we need to make certain that we have some penalties involved with agencies and groups that are not reporting we need to make certain that we get the legislation through that makes it possible for people to have funding i think that now is an unfunded mandate and i think that we really should make certain that they able to get accountants that they would get administrative people able to get folks in that will be in a position to get information into a reasonable period of time and making certain that i defamation is accurate and i think  that makes it very very important to do that i think to ignore it and to just talk about this is not working and that's not working and it's saying time people are suffering and we cannot afford that luxury any longer we have a job to do and we need to do it