Stimulus package requires oversight, experts say

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Stimulus package requires oversight, experts say

Saturday, February 07, 2009 By Mackenzie Carpenter, Pittsburgh Post-Gazette

The watchdogs are worried.

As Congress battles over President Barack Obama’s proposed economic stimulus package, the nation, — including Pennsylvania — appears poised to be on the receiving end of a whole bunch of money.

So, if and when such a bill is passed — as of this writing, the price tag hovers around $900 billion — what can be done to keep the con artists, the scammers, the predators and the politically well-connected but not necessarily competent contractors from getting their hands on all that cash?

“It is truly frightening to look into the near future and see trillions of dollars going hither and thither with no one watching where it’s going,” said Marthena Cowart, a spokeswoman for the Project on Government Oversight, a nonprofit based in Washington, D.C.

“When the numbers are that large, you’re going to create a system that is wide open to abuse,” added state Rep. Mike Turzai, R-Bradford Woods, who frets that the stimulus money — estimated at $1.5 billion to $3 billion for Pennsylvania — will be used to shore up misguided projects already in the pipeline. “It’s like handing candy to a baby.”

In the private sector, the scammers already have been busy: Last week, telemarketers and e-mailers posing as IRS agents were seeking personal data from the unsuspecting, claiming they needed it to process their “stimulus payments.”

Plenty of transparency and accountability provisions are in both the House and Senate versions of the stimulus package. There’s money for inspectors general in each federal agency and plans to post data online about contracts and relevant economic, financial and grant information, as well as a database of findings from audits.

The Obama administration has set up a Web site, www.recovery.gov, which tells viewers to “check back after passage of the American Recovery and Reinvestment Act” — the bill’s official name — “to see how and where your tax dollars are spent.”

Still, public interest groups note the Senate bill doesn’t contain protections for federal whistleblowers, a crucial weapon against fraud, which they’ve been advocating for years. That holdup is due to national security concerns about protection for intelligence workers, said David Colapinto, an attorney with the National Whistleblower Center.

“We’re concerned,” he added, noting that the House version protects federal, state and local employees. “It would really be a missed opportunity if the Senate drops the ball and doesn’t take up the issue of federal whistleblowers now.”

The public is fuming over the lack of accountability in the fall’s $350 billion Wall Street bailout under the taxpayer-funded Troubled Assets Relief Program. Yesterday, a report by a congressional oversight panel found that the Bush administration overpaid tens of billions of dollars for stocks and other assets.

“Congress needs to demonstrate pre-emptively that it will watch this money carefully,” Sen. Bob Casey said in an interview this week.

To that end, the Pennsylvania Democrat has introduced legislation creating a joint oversight committee that gives the Government Accounting Office the authority to analyze and review the stimulus package’s implementation.

“There’s a real crisis in confidence right now,” Mr. Casey said. “Even though the public is hopeful about the new administration, they also don’t have a lot of confidence that government will get this right. If the Congress is smart, we’ll ferret out the problems — and if there’s this sense on the part of government agencies that they’re being watched, they’ll be more wary.”

Another problem worrying Washington watchdogs: manpower. Is there enough staffing — on the national, state and local level — to monitor this massive infusion of resources?

“What they have to do is hire more green eyeshades,” said Ms. Cowart, noting that cost overruns were rampant in Iraq and after Hurricane Katrina, where in the rush to rebuild, contracts were awarded without competition and with little oversight and heavy reliance on subcontractors.

A Department of Defense worker, posting anonymously on Harvard University economics professor Greg Mankiw’s blog, noted that when the Department of Homeland Security was established, employees couldn’t keep up with the new demands.

“You cannot juice up a government agency’s budget by tens of billions (or in the case of the stimulus package, hundreds of billions) and expect them to be able to process the paperwork to contract it out, much less oversee the projects or even choose them with any kind of hope for success. It’s like trying to feed a Pomeranian a 25-lb turkey.”

Pennsylvania can handle whatever comes its way, insisted Chuck Ardo, a spokesman for Gov. Ed Rendell, in part because the money will be targeted at established programs with established procedures that protect against fraud — from Medicaid caseloads to transportation projects. Also, the state has a good track record in administering programs, he said, adding that its food stamp program has been awarded extra money over the past few years because of its efficiency.

“We’re not looking to add staff,” Mr. Ardo said, “although I will say that if we find there is a particular need, we’ll make exemptions to our current hiring freeze.”

Allegheny County Controller Mark Patrick Flaherty also sees little need to bulk up his office of 90 employees to monitor the stimulus money.

“We’d be set up to handle it,” he said. “Maybe we’d need to add a couple more staff people,” but only, he added, “because the money would have to be appropriated and encumbered within 180 days, and that might mean we’d need a little more help implementing policies and procedures.”

Pittsburgh City Controller Michael Lamb also cautioned against overreaction. By the time the stimulus package money arrives here, he said, it will be designated for infrastructure projects already in the pipeline. Plus, the city has little or no money tied up in road and bridge reconstruction anyway.

“Frankly, I don’t know that there is going to be much of an opportunity for the city to commit fraud here,” he said with a laugh. “To say that we’re going to be awash in cash isn’t correct. Any money to rehab bridges or streets would go into our capital fund, and we won’t be significantly changing our reporting requirements or how we follow spending. Of course, that’s not to say we’ll shirk our responsibilities, but the stimulus package isn’t going to add much to our workload.”

Still, whatever extra funding Pennsylvania gets may be funneled directly to the state, bypassing the state Legislature, and that concerns Jack Wagner, Pennsylvania’s auditor general.

While standing ready to perform post-audits on the stimulus money, Mr. Wagner said: “I’m surprised to find out these dollars won’t have those legislative checks and balances that are a precondition for the spending of public money.”

In the end, it will be up to the states to ensure that this historic, one-time infusion of money is spent wisely, said Mike Surrusco, an attorney with Common Cause in Washington, D.C. Part-time legislatures must be vigilant about ensuring that its members holding other jobs don’t benefit from the package.

Even Pennsylvania’s full-time legislators have to be careful, added Barry Kauffman, Common Cause’s Pennsylvania director, who noted that plenty of them hold other jobs — and that loopholes in the state’s ethics law permits them to serve on private boards for pay.

“This crisis creates opportunities for those who want to play fast and loose with the law, and with enormous amounts of money being shipped directly to us, the state has to ramp up its oversight activities,” Mr. Kauffman said.

“One of the problems with the prior administration was people didn’t do it right,” added Rich Fitzgerald, Democratic chairman of the Allegheny County Council.

“Democrats need to do this stimulus package differently, to put in policies that make sense and limit waste, and if they don’t, then shame on us — and we’ll have to answer to the voters.”

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