Testifying before the House Committee on Oversight and Government Reform yesterday, Recovery Accountability and Transparency Board (RAT board) inspector general Earl Devaney noted: “Logic would suggest there’s going to be a loss of money to fraud and waste with this amount of money going around.” Devaney even put a number to that logic, noting that if just 7 percent of the stimulus money went to waste, that would be $55 billion. “The first time I took a pencil and figured that out, I was horrified to see it was $55 billion,” Devaney said.
Rep. Elijah Cummings (D-MD) was confident the government would do better this time: “[W]e’re in front of the distribution of the funds, so therefore we’re in a position to hopefully prevent a lot of the fraud and abuse that might normally come.” But how far out in front is the government really?
True, the stimulus bill does provide $350 million for oversight, but only $84 million of that goes to the RAT board. And RAT’s biggest oversight tool is Recovery.gov, which “promises an extensive database of stimulus spending and contracts.” But as Mercatus Center fellow and StimulusWatch.org creator Jerry Brito testified later in the hearing those “transparency” efforts are completely useless:
While the Recovery Act requires that recipients of federal stimulus funds report, to awarding agencies, how the funds are spent, there is no clear instruction that every level of subcontract or subgrant must be disclosed. The OMB Guidance interpreting the Act for agencies states that,
Reporting requirements only apply to the prime non-Federal recipients of Federal funding, and the subawards (i.e., subgrants, subcontracts, etc.) made by these prime recipients. They do not require each subsequent subrecipient to also report. For instance, a grant could be given from the Federal government to State A, which then gives a subgrant to City B (within State A), which hires a contractor to construct a bridge, which then hires a subcontractor to supply the concrete. In this case, State A is the prime recipient, and would be required to report the subgrant to City B. However, City B does not have any specific reporting obligations, nor does the contractor or subcontractor for the purposes of reporting for the Recovery.gov website.
This is very troubling. If we want to ensure meaningful accountability, then we must have transparency at every level of transaction. It is not enough for citizens to know that EPA made a grant to New Jersey, which in turn made a sub-grant to Newark. We also need to know that Newark made a payment to “Acme Sanitation,” which a citizen with local knowledge could recognize as a firm owned by a councilmember’s son-in-law.
In other words, Recovery.org doesn’t offer any real transparency at all. All the Obama Administration allows citizens to do is find out which government agency awarded money to which other government entity. Citizens still have no ability to find out how government actually spent their money.
We’re sure Devaney will do the best with the tools the Obama Administration will allow him. But so far those tools are completely inadequate for the size and scope of the task involved.