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Or consider Palladian Partners, a communications firm in Silver Spring that has received $98 million in government contracts during the last 12 years. The National Institutes of Health (NIH), Palladian’s biggest client, tacked $363,760 in stimulus dollars onto an existing contract, then followed that up with two more awards totaling $431,333. Palladian was to spend the money collecting and disseminating information about…how the NIH was spending stimulus money.
With the nearly $800,000 project now 80 percent complete, Palladian has built a website and published 29 original articles on it. The stimulus grant went to hire two new employees, neither of whom was unemployed before coming to Palladian. That’s no way to jump-start the economy.
The stimulus bill set aside $500 million for a program to train and recruit people for the new green economy. The program promised to place 80,000 people in so-called green jobs. The grant period is more than half over, and the program has placed only 8,000 people in jobs, according to a report by the Department of Labor’s inspector general.
In downtown Silver Spring, a union-backed organization called the International Transportation Learning Center received $5 million in stimulus dollars, partly to recruit thousands of new workers and train them in “green job” skills. But because transit workers already enjoy low unemployment and the new green jobs weren’t materializing, the group instead received permission to use the entire grant to teach new skills to workers who already have jobs.
“The spirit of the stimulus shouldn’t be to get people who already have jobs to get more money to do the same thing, just bigger,” says De Rugy. Under stimulus theory, she says, “government spending should be going to places where unemployment is very high, going to people who are poached from unemployment lines.”
“We’re going to weatherize homes,” Obama said in an interview with CBS on February 4, 2009. “That immediately puts people back to work.…What would be a more effective stimulus package than that?”
According to Keynesian theory, stimulus funds must be spent quickly to be effective. By the president’s own account, one of the most “shovel-ready” programs in the package was supposed to be a $5 billion initiative to weatherize 590,000 homes around the country. But according to a February 2010 report by the Department of Energy’s inspector general, only 8 percent of the weatherization money was tapped in the program’s first year.
In Silver Spring, Gov. O’Malley held a press conference at the house of Sonja and Richard Lowery in June 2009. Theirs was the first home in Maryland to be weatherized with stimulus money. The program then nearly ground to a halt.
In the first year, Maryland weatherized just 279 homes, 4 percent of its goal. The main holdup was a concession to organized labor that “prevailing wage” rules apply to programs funded by stimulus dollars. That meant weatherization workers had to earn at least the average wage in their area for the work they were hired to do. Before workers could be paid, Maryland (and every other state) spent months conducting surveys to determine the average wages and benefits for workers weatherizing homes in every county. Today Maryland is racing to spend the remainder of its weatherization money before it has to forfeit what’s left in early 2012.
“The main lesson of the stimulus is that creating jobs is a very complex process,” says De Rugy. “And certainly it can’t be directed by a top-down institution that pretty much fails at everything it does.”
Jim Epstein is a producer at reason.tv.