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Stimulus Makes a Perfect, Wasteful, Bureaucratic Circle

8:05 AM, Dec 3, 2009 • By MARY KATHARINE HAM
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You can't get much more Washington than this:

Reports from stimulus recipients show that a sizable sum has gone to federal contractors in the Washington area who are helping implement the initiative -- in effect, they are being paid a hefty slice of the money to help spend the rest of it.

The contractors' work hardly differs from the basic operations of the federal departments hiring them. The Energy Department is paying Technology & Management Services, a Gaithersburg firm, $6.9 million to review applications for renewable energy loan guarantees. The Department of Homeland Security awarded Deloitte Consulting's Arlington branch $8.6 million to provide "program management and support" for the stimulus plan's $1 billion airport security initiative, and gave McKing Consulting, a Fairfax firm, a $1.5 million contract to review applications for fire department construction funding.

Held against the total stimulus package, the contracts represent a relatively small portion of spending. But they help explain why the Washington area is weathering the recession so well. And, as President Obama convenes a jobs summit Thursday to discuss lagging employment, the contracts raise questions about whether enough funding is getting to areas suffering the most.

Meanwhile, a private-sector tracker of government funds that voluntarily created Recovery.org-like Recovery.gov, but useful and accurate- to track stimulus money is finding more flaws in the government's reports. Onvia reports 407,000 private-sector jobs created by the stimulus, not 1.6 million, as the White House has claimed.

Onvia Senior Vice President and Chief Information Officer Eric Gillespie explained to The Washington Times, "What the federal government is recording is largely dollars that have left the Beltway. They aren't tracking the projects and contracts on the ground."

"They don't know if those dollars landed on the ground because their reporting requirements say they only have to track two layers beyond the federal level," he said. "So if it goes from the state to a county, they will know that. But if it goes from a county to a city or from a county to a contractor there is no legal requirement for them to track that, which is why the federal views are latent and they get it three, six, or 12 months late."

But more disturbing than the inaccuracies in reporting, is what they've found about how the stimulus is affecting the very nature of business:

"We've seen businesses go from viewing the government as the last client standing, and now we are hearing government spending is a key part of their business strategies. There is almost a philosophical shift in the industry where more and more businesses, large, medium and small as a result of the stimulus and their realizing there is a large, untapped revenue stream where they haven't been focused before."

I do not have English words to express my profound disappointment with this finding. At least the public-sector unions will be all right. Andy Stern knows where the smart money goes:

The continued growth of the public sector while all other sectors of the economy contract is no accident. Government employee unions were a driving force in making sure large chunks of President Obama's stimulus package went to states and cities to preserve jobs. In fact, when you talk about the entire labor movement today, you are really talking about government employees. Less than 8% of the private sector workforce belongs to a union. Contrast that with 37% of all government employees carrying union cards and 42% of all local government employees.