Construction Businesses Not Stimulated? – Here’s Why

The 2009 “stimulus” legislation was touted as putting over $787 billion into the American economy over its duration, mostly through “shovel ready” infrastructure construction projects. Yet, in terms of economic activity and employment both, the construction industry lags significantly behind the overall economy three years after the measure was signed into law. What happened?

Funny math of government is what happened. Almost all of the “stimulus” appropriations represented money the federal government would have spent anyway, and subsequent cuts in federal construction programs have resulted in overall reductions in the amount of money federal agencies have spent on construction in the intervening years, compared to past spending levels. Remember, it’s Congress, not the president, which holds the purse strings.

Plans for federal government agency spending on construction in 2013, stimulus included, total about $709 billion, a 7.8% reduction from 2012 levels. Add in anticipated but as yet unplanned for emergency response spending, and the fiscal 2013 level may rise to as much as $712 billion, still a 7.4% reduction from the year before. What Congress gave with the left hand in 2009 it more than took away with the right hand in subsequent years. Go figure.

Obama’s Jobs Speech

Thursday evening September 8 at 7 p.m. Washington D. C. time President Obama will speak to a joint session of Congress about initiatives he is proposing to put 25.4 million unemployed and underemployed Americans back to work in a growing economy. Outside Obama’s senior staff no one is exactly certain what his proposals will include, but we expect to hear him talk about the following, not necessarily in the order presented here:

Construction Industry

About half of the Obama Administration proposals will be aimed directly at the ultra-high unemployment among skilled construction tradespeople:

FAA Reauthorization

The current temporary reauthorization of funding for the FAA expires September 16. When Congressman John Mica forced a shutdown of FAA runway and tower construction projects, that Congressional action stopped work on $2.5 billion of infrastructure construction until Transportation Secretary LaHood pushed through emergency legislation to put tradespeople back to work on these projects. The money to pay these workers will stop flowing again on September 17 unless a clean FAA reauthorization bill is enacted and signed into law by then, or another temporary extension is passed.

Surface Transportation Reauthorization

There has not been the customary six year Highway Trust Fund reauthorization since Obama took office. Instead, highway, water and rail transportation infrastructure construction across the country has been financed by a series of three and six month temporary extensions. Some of the slack has been taken up by stimulus appropriations, but the stimulus was intended to add to, not substitute for, regular surface transportation initiatives, and as a result, the economy has not been stimulated.

House Republicans on the Transportation and Infrastructure Committee are proposing to slash the level of appropriations from past legislation by more than half. Look for Obama to seek $550 billion in appropriations over the next six years, rather than the $230 billion Republican six year proposal.

Infrastructure Bank

The idea of a federal infrastructure bank to draw private investment into toll highway, rail and port facility construction – projects in which private investors could earn a reasonable return on their investment – has succeeded in facilitating infrastructure construction in Europe and elsewhere. This is a pet project of the Obama administration, plus there are two versions of proposals already put forward by Senator John Kerry (D. Mass.) – who proposes a $10 billion federal start up appropriation – and Representative Rosa DeLauro (D. Conn.) - who proposes $25 billion in federal seed money. Both versions would include investments in highway, rail, waterway, drinking water and sewage treatment, and energy projects. DeLauro’s version would also include broadband communications construction.

Commercial Building Retrofits

Another proposal which has been the subject of Obama administration trial balloons lately is the idea of a tax incentive to promote private investment in retrofitting existing commercial buildings for greater energy efficiency. This would put thousands of skilled tradespeople back to work without any direct federal expenditure, and would bring millions of private dollars now on the sidelines back into our economy. Also, it has the additional factor of appealing to Republicans, who are more likely to support an initiative that looks like a tax cut for business. Apparently Obama’s Jobs and Competitiveness Council is behind this proposal.

School Building Renovations

This proposal will be buried in the middle of the speech somewhere. Obama is always an advocate for improving the education systems of America, but because this particular initiative would involve new direct federal expenditures, it will likely draw strong opposition from across the aisle.

Broadband Tower Construction

While the stimulus early in Obama’s term appropriated a great deal of cash for studying the broadband needs of unserved and underserved areas of the nation, there has not been a lot of actual communication tower construction with those funds. Only about 68% of U. S. land area is currently covered by broadband communication networks – Obama will seek expansion of that coverage to 98%. This is another program which could bring private investment into play with minimal direct federal expenditures, as revenue from broadband users could ultimately repay investors for most of the cost of connecting outlying populations to cable TV and the internet.

Power Grid Modernization

This has been another favorite of Obama’s, as part of his alternative energy initiatives and climate change reduction legislation. Of course, power grid modernization should also attract considerable private investment from utility companies if the right incentives are enacted. And, significant segments of the skilled construction trades would be put back to work should power grid construction expand significantly. The massive outages on the east coast from recent storm damage will highlight the need for this sort of infrastructure investment.

Local Construction Initiatives

You may not hear anything about this one in Obama’s speech, but Representative Judy Biggert (R. Ill. 13^th District) announced a couple weeks ago that Veterans Administration Secretary Eric Shinseki has approved construction to transform the old Silver Cross Hospital building in Joliet, Illinois into a 60,000 s.f. VA outpatient clinic to serve the growing south suburban population of returning veterans. Silver Cross is moving into a new hospital facility in New Lenox.

Other Obama Proposals

Of course the construction industry won’t be the president’s only target for economic improvement. His speech will likely also include initiatives like tax incentives, direct federal expenditures, and cutting red tape to improve the economic competitiveness of American private enterprise. In the tax incentive category, look for proposals to extend the temporary 2% reduction in payroll tax rates; a tax credit for putting new employees on company payrolls; and an additional tax credit for hiring returning armed forces veterans. Proposed direct federal expenditures could include further extension of unemployment benefits for out of work Americans; assistance to local school districts for hiring more teachers; and specialized job training programs aimed at the long term unemployed. Finally, in the competitiveness category, we expect Obama to push ratification of three pending free trade treaties; and improvements in patent law to speed up commercialization of new American inventions.

High Speed Rail Shuffle Could Be Chicago’s Boon

Newly elected governors in Wisconsin, Ohio and Florida – all of whom have announced their opposition to high speed rail construction projects in their states – could be the secret ingredient in increased funding for high speed rail construction projects and rolling stock manufacturing jobs in the Chicago area. Under the stimulus appropriations from early 2009, $8 billion was set aside to fund high speed rail construction projects planned but not yet implemented across the United States. In January of this year the Obama administration announced allocation of $1.23 billion of that money to Illinois, to fund high speed rail corridors between Chicago and St. Louis, Missouri, and between Chicago and Milwaukee, Wisconsin.

Of the remaining $6.77 billion in high speed rail appropriations, $810 million was awarded to Wisconsin for construction of a high speed line between Milwaukee and Madison, and also the Wisconsin portion of the Chicago to Milwaukee service. Another $400 million was awarded to Ohio, for high speed connections between that state’s capitol, Columbus, and Cleveland and Cincinnati, Ohio’s other two major cities. Florida was awarded $2.06 billion for a high speed rail link between Orlando and Tampa.

Under the “claw back” provisions of the stimulus legislation, any money allocated to particular projects, but not spent by the states winning the funds, must be reallocated among other proposers who got less than they asked for in the initial grant process. Florida’s governor elect Rick Scott, Ohio’s governor elect John Kasich, and Wisconsin’s governor elect Scott Walker have all publicly stated their opposition to going forward with the high speed rail construction for which these federal stimulus funds were awarded, putting a total of nearly $3.29 billion back in play among the states seeking federal funds for high speed rail development projects.

IDOT’s original funding proposal under the stimulus appropriation sought a total of $4.5 billion, and the clawed back funds could more than make up the entire shortfall from the Illinois grant request. Though it is unlikely Illinois will be given the entire amount, U. S. Transportation Secretary Ray LaHood said last Monday, November 15, that he will soon be announcing the reallocation of the $1.2 billion coming back from Wisconsin and Ohio. Several governors who support high speed rail development, including Illinois Governor Pat Quinn, will be holding their breath until LaHood’s announcement is official, and maybe even longer, until Florida’s $2.06 billion grant is reallocated.

Quinn is already wooing Talgo, Inc. the rolling stock manufacturer that recently opened a plant in the Milwaukee facility formerly owned by Tower Automotive, where Talgo expected to put 125 people to work building cars for the Chicago to Milwaukee high speed rail corridor, which plans to include stops at Mitchell Field, Sturtevant, Wisconsin, and Glenview, Illinois, as well as the terminals in downtown Chicago and Milwaukee. Talgo has said it would consider moving to Illinois after fulfilling its spring 2012 orders for two high speed trains in Oregon.

So, because of politics in three other states, Illinois could end up a much bigger winner in the competition for high speed rail funding and jobs that initially seemed possible.

Stimulus High Speed Rail Curtailed

The first fallout of the election returns came down in Wisconsin today, with the announcement by the outgoing Democratic Doyle administration that design and engineering work on the $810 million stimulus funded Milwaukee to Madison high speed rail construction project will be suspended, pending a determination by the incoming Republican Walker administration. Wisconsin Transportation Secretary Frank Busalacchi says the stoppage is temporary, but governor elect Walker campaigned against high speed rail as a waste of taxpayer money.

Permanent cancellation of the extension of high speed rail from Milwaukee to Madison would imperil jobs at the Milwaukee plant of Spanish based Talgo, Inc, which was slated to manufacture new rolling stock for the Madison branch, where the intent was to increase train speed from the current 79 mph up to 110 mph along the route.

Additionally, Ohio governor-elect John Kasich has also reiterated his opposition to development of a high speed rail corridor in that state connecting Cincinnati, Columbus and Cleveland. It seems the $8 billion in federal dollars allocated to high speed rail construction in the stimulus package may never get spent after all.

Senators Rip Texas Wind Farm Use Of Chinese Made Turbines

In a blinding flash of protectionism, New York Senator Charles Schumer has written a letter to Energy Secretary Steven Chu, asking Chu to block federal funding for development of a huge $1.5 billion Texas wind farm which will be build using turbines manufactured in China. The project is expected to create 330 jobs in Texas and 800 jobs in the Chinese factory which will build the turbines. “The purpose of the Recovery Act was to jump start the economy to create and save jobs – American jobs,” Schumer wrote. “American taxpayer dollars should not be used to finance those Chinese jobs.”

Walt Horniday, president of one of the U. S. partners in the project, responded, “This project will not take place without the planned benefits of the American Recovery and Reinvestment Act. Any characterization of this planned project as anything other than an economic development lifeline to the wind industry during tough economic times is just inaccurate.”

National Republican Senatorial Committee Chairman John Cornyn of Texas used the wind farm project as one example of a failure of Obama administration economic policies. “This just shows how ridiculous this whole stimulus proposal was,” Cornyn said, acknowledging, however, that “Texas would like to have the investment.” Cornyn seems to forget that the American Recovery and Reinvestment Act was crafted in Congress, and apparently passed without much thought by Senators and Representatives as to what American businesses would do with the $787 billion they were doling out.

Stimulus Impact Expected To Begin Tapering Off Now

White House Council of Economic Advisers Chair Christina Romer says the impact of the stimulus package Congress passed early this year has already reached its peak impact, and will now begin to taper off. The stimulus won’t contribute any significant economic expansion in 2010, Romer says. She testified to the Joint Economic Committee that she expects unemployment to remain above 9.5% nationally through the end of 2010, peaking at 10.1% during the second quarter of next year. She acknowledged considerable uncertainty in her estimates, pointing out that the economy needs to add nearly 100,000 jobs a month just to keep up with population growth, before any recovery of the 7.2 million jobs lost since the beginning of the recession can be expected.

No New Stimulus, But Some Job Creation Measures, Pelosi Says

House Speaker Nancy Pelosi says her chamber will not consider another major stimulus package this session, but that Congressmen are preparing some individual measures designed to promote increased employment in the coming months. Bills under consideration, according to Congressional leaders, include the stalled expansion of unemployment benefits, increasing the tax loss carry back time period for businesses, extending and expanding the home buyer tax credit, a business tax credit for new hires, increased transportation construction appropriations, and extensions of food stamp and COBRA health insurance benefits for the jobless.

President Obama is proposing an increase in SBA lending limits from $2 million to $5 million to stimulate hiring by small businesses. He plans to lower the interest rate smaller community based banks pay to borrow from the Treasury Department for loans to smaller businesses in SBA programs.

Despite Obama's Restrictions, Lobbyists Still Have Plenty Of Access

When the economic stimulus legislation passed, President Obama made a big show of restricting the federal officials charged with distributing the $787 billion from accepting meetings, e-mails, documents or phone calls from lobbyists from businesses seeking to share in the grants and contracts stemming from the huge appropriations. So, the front door of the administration was shut tight on K Street. However, as many industry groups have managed to discover, there's a wide open back door, and they are making good use of it.

Every rule coming out of the federal bureaucracy has to be vetted by the Office of Management and Budget for a review of its impact not only on government budgets but also on the parties to be regulated by the rule. The OMB office charged with this task is called the Office of Information and Regulatory Affairs, or OIRA. OIRA keeps meticulous records of who sits in on meetings to review each proposed rule. Regulations require OIRA to meet with anyone who asks, from a business or organization likely to be regulated under a proposed rule.

One of the rules drawing a lot of back door lobbying was the stimulus legislation's mandate that domestic industries be favored in government construction contracts funded with stimulus cash, called the "Buy American" provision. In March and April OIRA hoisted three meetings with more than 20 people to discuss the Defense Acquisitions Regulations Council proposed buy American rule, including six lobbyists from the United Steelworkers Union, the United Autoworkers Union, and the American Steel and Iron Institute. The Japanese Embassy (Japan makes steel, too) also attended one of these meetings. So much for closing the door on lobbyists.

A second proposed rule, on the renewable fuel standard provisions on calculating greenhouse gas emissions from ethanol production, attracted more than 40 people to four meetings in March, including lobbyists representing Shell Oil, the American Petroleum Institute, the Environmental Defense Fund and the Union of Concerned Scientists. The biggest lobbyist draw of all so far was the EPA proposed rule on industry reporting of greenhouse gas emissions, which attracted over 50 folks to six meetings last month, including lobbyists for Chevron, BP America, Exxon, Mobil, Shell, the American Petroleum Institute, and the American Paper and Forest Association. Seems like government always has a back door.

Transparency Can Hoist Obama On His Own Petard

Republican politicians all across the country today are preparing to skewer the Obama administration with its own partial data on economic stimulus activity released yesterday on the Recovery.gov website. The reports thus far show only 30,083 jobs created by stimulus appropriations spent to date. Obama's allies argue that the reported data represents only 5% of stimulus spending to date, and that if the other 95% of the spending is creating or saving jobs at the same rate, the stimulus actually produced 600,000 jobs directly. They further argue that these 600,000 jobs would have meant an indirect creation of a similar number, for a total job creation of about 1.2 million due to the stimulus appropriations.

Vice President Biden's Chief Economist Jared Bernstein says, "All signs - from private estimates to this fragmentary data - point to the conclusion that the Recovery Act did indeed create or save about 1 million jobs in its first seven months." Republicans point instead to Obama's failed promise that the appropriations would hold unemployment under 8%. Ken Spain, spokesman for the National Republican Congressional Committee, put his response this way, "After wasting taxpayer dollars to produce an unimpressive 397 jobs in Michigan, middle class families are still asking one thing: Where are the jobs?"

Republican Leadership Seeks To Tap Stimulus Cash For Social Security Payment

Continuing to argue that the American Recovery and Reinvestment Act is not working, Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner both said yesterday that the Obama administration's proposed one time $250 check to each Social Security recipient should be paid for with unspent cash from the stimulus appropriations. Neither leader went so far as saying he would oppose the measure if it is not paid for. The Obama proposal would cost about $14.25 billion, to fund a single check to each of about 57 million Social Security recipients.

House Speaker Nancy Pelosi views the proposal as an extension of the economic stimulus package, noting that the original legislation provided a similar $250 check to each Social Security beneficiary. Boehner said, "I'd be happy to support the president's proposal; if we pay for it out of stimulus funds that have not been spent. The stimulus bill is not working."

Stimulus Politics? FAA Funds Low Priority Projects

The stimulus appropriations included $1.1 billion to the FAA for high priority airport construction projects. FAA procedures rate project priority on a scale of 1 to 100, and in a typical fiscal year, FAA grants go only to projects scoring above 41 on the agency's priority scale. When the stimulus legislation passed, the agency adjusted its grant process for stimulus funds by raising the priority score threshhold to a minimum of 62.

Now that specific FAA stimulus grants have been announced, however, it turns out that nearly a quarter of the appropriation, or over $270 million, will go to projects ranked below the 62 point threshhold. At least five of the stimulus finded projects fail the ordinary requirement of scoring above 41. The lowest ranked of all stimulus grants will be $1 million for baggage handling at the Rockford, Illinois International Airport, which primarily serves cargo planes, and $1.85 million to expand the passenger terminal at the Pocatello, Idaho Regional Airport. Those two projects both received priority ratings of 31 points.

Three other projects which will get stimulus funding, despite ranking below the FAA's usual 41 point priority floor, including $14.7 million for the Ouzinkie, Alaska airport, $14.0 million for the Akiachak, Alaska airport, and $11.6 million for the Freeland, Michigan airport. That's a total of $43.15 million in stimulus grants for projects the FAA would never have funded even under its usual process. So much for the idea that stimulus spending would be scrutinized for wasteful abuse.

New Hire Tax Credits Pick Up Support

Columbia University Nobel Prize winning economist Edmund S. Philips is throwing his considerable influence behind proposals that Congress enact some form of the corporate tax credit for hiring new workers which was stripped out of the stimulus bill at the last minute to bring its price tag within the desired limits. A new propsal circulating on Capitol Hill would provide a two year tax credit for new hires, equal to 15.3% of the new worker's salary in the first year, and 10.2% the second year, to be credited against the payroll tax obligations of the employer, up to an earnings cap of $106,800.00 per hire.

"It's beautiful if it can be timed at a dire moment like this," Phelps says, "when unemployment is way too high and appears to be going somewhat higher." Actually introducing legislation to enact such a tax credit, however, cound have the uninteided consequence of making the economy worse, warns University of California economist Lee Ohanian. "Particularly for big employers, if they think a job creation tax credit is on the offing, it could certainly be an incentive to delay hiring," while the legislation is debated in Congressional committes and on the lfoor of both houses. Failure to aciheve prompt passage of such a bill, Ohanian says, would be counterproductive. "It could have the perverse effect of actually prolonging the recession."

Stimulus Extension Under Serious Discussion In The White House

Preferring to call it extension of the current stimulus legislation, rather than a new stimulus proposal, senior Obama administration adviser David Axlerod said yeaterday that the White House is exploring a number of job saving and creating measures for Congressional action next year. Among the ideas being kicked around the Oval Office are a $3,000 tax credit for new hires, expansion of five year tax loss carry backs, extension of the $8,000 first time home buyer tax credit, and a $100 billion extension of unemployment benefits along with the 65% COBRA subsidy for the unemployed to continue health insurance coverage.

Secretary LaHood Doesn't Understand The Meaning Of "Out The Door"

In testimony today before the House Transportation and Infrastructure Committee, Secretary of Transportation Ray LaHood swore that the Obama administration is spending the stimulus appropriations for highway, transit, rail and maritime infrastructure as fast as it can, testifying that $29.4 billion of the $48.1 billion appropriated is "obligated" as the American Recovery and Reinvestment Act requires. "We've followed every guideline," LaHood testified. "The money is out the door."

While Secretary LaHood's testimolny probably would not subject him to a perjury prosecution, he is dead wrong if he believes what he said. Most of the money is still in Treasury Department vaults. Only $1.4 billion, or a little less than 5.1% of the money, has actually been spent, finding its way into the hands of contractors and material suppliers. So far, very little of it is actually in the hands of the tradespeople and plant workers on their payrolls. LaHood was challenged to do better by Congressman John Mica, who pointed out that in the 10 states with the highest rates of unemployment, the numbers of jobless have either stayed the same or increased since the stimulus legislation was passed.

If you are wondering where your share of the stimulus appropriations is, call Secretary LaHood and ask him.

Why Hasn't The Stimulus Stimulated The Construction Industry?

The Obama administration and the government agencies it runs have fallen right into the "figures don't lie" trap in efforts to convince the populace that the $787 billion in cash appropriated in the American Recovery and Reinvestment Act is rapidly being infused into the American economy, when in fact the vast majority of the money remains locked in federal Treasury vaults in Washington, D.C. In a report released yesterday, the third in a series of every other month reports on progress of stimulus spending, the Government Accountability Office proudly reports that, of $27.6 billion appropriated for highway infrastructure projects in the stimulus bill, $18.0 billion, or 65.1% of the funds, has been "obligated" to 7,000 paving and bridge projects. Sounds impressive.

Buried deeper in the text of the 156 page GAO report is the number which tells the real story of failure of the stimulus appropriation to do anything at all in a hurry to save or create jobs in the construction industry: more than six months after passage of the legislation appropriating all this cash to fund "shovel ready" projects and put construction tradespeople back to work, only $1.4 billion, or a little less than 5.1% of the money, has actually been spent, flowing into the hands of contractors and subcontractors on whose payrolls the rescued tradespeople are meant to be working. At that rate, it would take ten years for all the appropriated money to begin circulating in the real economy of our industry. The shovels were ready, but the bureaucrats and their check cutting apparatus were not.

Of course, anyone in the construction business familiar with the "bell shaped curve" of cash flows on construction projects knows that it won't take ten years for the money to flow out of federal vaults, but the GAO report itself acknowledges that the projects to which this cash has been allocated will last about three years long on average, and since notices to proceed are just beginning to go out, and the peak cash flows can't be expected for at least half of that three year period, the real impact of the stimulus spending won't be felt by construction businesses until 18 months from now, or two years after the legislation was signed into law.

The other significant fact buried in the body of GAO's September 23, 2009 report on stimulus spending which is most telling for construction businesses bidding on and working on these projects is this: profit margins on this work have been shaved razor thin by contractors competing for the work. GAO reports it has been told by state highway officials that bids for stimulus work are coming in within a range of 12% to 35% below state engineer estimates of the cost of the work. This cutthroat competition could lead to a horrible shakeout of the contracting business community, with failing contracting businesses and material suppliers laying off workers, and performance and payment bond sureties facing burgeoning claims by unpaid workers, trade contractors and suppliers, and having to spend billions to take over and finish the work on contracts which were seriously underbid.

This likely fallout of the stimulus appropriations, one of the oft overlooked unintended consequences of hasty and ill conceived government action, will be compounded when fiscal responsibility initiatives to balance future federal budgets result, as they surely must, in reduced future infrastructure appropriations. The pending battle over long term federal highway trust fund reauthorization is just one example. It remains to be seen whether the stimulus was really a shot in the arm of truly additional funding for the construction industry, or only an acceleration of spending which was going to happen anyway, and will be backed out of federal and state capital budgets in 2010 and future fiscal years.

Your business is lucky if it is already in this tiny construction lifeboat while the industry as a whole continues its Titanic-like plunge to the bottom of the economy. However, it could be a long, long time before any other ship cruises by to rescue the survivors, and food and water will be in short supply.

Homeland Security SBInet Construction Critiqued As Wasteful, Ineffective

A just released report by the GAO concludes that spending by the Department of Homeland Security on construction of border fencing, guard posts and surveillance facilities, under stimulus appropriations and under the Department's Secure Borders Initiative, dubbed SBInet, is both wasteful and probably ineffective in keeping illegals from crossing into the country. The report points out border fencing construction so far has cost $2.4 billion, remains incomplete, will likely cost an additional $6.5 billion to maintain for the next 20 years, and cannot be shown to have reduced illegal border crossings.

The cost of building traditional border fencing in the Southwestern desert has increased from $4 million per mile to $6.5 million per mile since 2005, mostly due to increased costs of land acquisition for fence lines, patrol posts and surveillance camera towers. Senator Byron Dorgan of North Dakota has questioned allocation by Homeland Security of $128 million to build upgrades at little used checkpoints along the Canadian border in his state, leading Homeland Security Secretary Janet Napolitano to put a hold on those projects pending a review of how the construction sites were selected under stimulus appropriations. House Border Security Subcommittee Chairman Loretta Sanchez said at a Congressional hearing today that "I am particularly concerned by the SBInet program's ongoing struggle with transparency and the pattern of delaying planned deployments." Speaking about Chicago based Boeing's $1.1 billion, three year contract to build SBInet, Sanchez added, "As a member of Congress who is very concerned about fiscal responsibility, it is hard for me to believe that DHS would award a contract of $1.1 billion over three years and continue to award task orders without viable results."

Even the DHS cash saving efforts under the SBInet program have gone awry. DHS used bulk steel purchases for the border barrier construction in an effort to save funds, but delays in the actual erection of the prepurchased steel have produced increases in steel storage costs which ate up most of the bulk purchase savings. Is there no critical path schedule for this work?

CEA Reports A Million Stimulus Jobs So Far

In its first required report to Congress on the effect of the American Recovery and Reinvestment Act, the white House Council of Economic Advisors yesterday attributes over one million jobs have been saved or created thus far as a result of stimulus spending. Good news, I suppose, but because the economy has lost 2.5 million jobs since the legislation was signed in February, a lot of people are still hurting.

OMB Director Robert Nabors testified at a Senate Homeland Security and Government Affairs Committee hearing yesterday that a total of $300 billion in stimulus spending and tax relief has been "obligated" so far, meaning that bureaucrats have decided exactly where the cash will go. "Obligated" cash, however is not necessarily circulating in the real economy yet, and no one in government will say what the total of checks actually written thus far has been. Consider it is a whole order of magnitude or two less than the $300 billion obligated.

Chairman Joseph Lieberman told OMB it needs to spend the money faster, but to be particularly careful to protect against fraud and abuse. RAT Board Chairman Earl Devaney has suggested that taxpayers can expect up to 7% of the $787 billion stimulus, or a total of $55 billion, to be lost to waste, fraud and abuse. FTC Chairman Jon Leibowitz testified before Lieberman's committee that FTC and the Justice Department have already brought nearly 400 prosecutions against con artists who have promised victims, for a fee, to get stimulus grants for them. Improvements to the Recovery.gov stimulus tracking web site are due out October 5, according to Devaney, but until we have seen the new version it is difficult to believe the public will experience any real transparency into where all this money is going.

Federal Stimulus Dollars Could Make Illinois A Bright Spot In Any Recovery

Illinois is among the top five states receiving federal stimulus cash to create jobs on transportation and clean water construction projects, according to information released recently by the House Transportation and Infrastructure Committee. Only Washington, Oregon, Pennsylvania, and Indiana have created more construction jobs by accelerating the spending of their shares of the total $26.9 billion appropriated by Congress for such projects. Additional stimulus cash slated for clean ups at Department of Energy nuclear sites in the state is also putting more hard hats to work here.

Another uncharacteristically prompt response to stimulus appropriations has been the Illinois participation in a multi-state effort to grab a big slice of the $8 billion federal pie appropriated for spending on development of high speed passenger rail transportation corridors. Illinois officials are lobbying hard for $2 billion of that money to come to our state. A lot of that money could go to tiny Mount Vernon, Illinois, where National Railway Equipment Co. already builds diesel electric locomotives for export, and has begun design work on an aerodynamic slope nosed passenger engine capable of cruising at 110 miles per hour.

National Railway Equipment now builds and sells freight locomotives with 60% better fuel economy, and 85% better noise control, that other models. The company's N-Viromotive technology uses multiple 700 horsepower diesel engines in place of the single mammoth diesels used in more traditional freight locomotives.

Of course, we can't count suburban LaGrange based Electro-Motive Diesel, Inc. out of the competition for high speed passenger rail locomotive technology, either. All this high speed rail development has been going on here for several months, mostly under the radar. I guess the cheering will begin when the cash starts flowing.

Unemployment Benefit Cash Unclaimed By 23 States

Despite the determination of Congress and the Obama administration to quickly pump billions into America's moribund economy, including extended assistance for the millions who have been rendered jobless by the recession, local politics has once again stifled the flow of federal cash into the economies of 23 states where governors and legislatures are refusing to change their unemployment compensation systems so that they qualify to receive the federal cash. A total of $3.1 billion sits in the Treasury vaults in Washington, D.C., when it should be going out to 350,000 needy jobless families who could be using the money to buy food, clothing and back to school purchases for children deprived by parental layoffs.

Dissatisfied that the benefit extension cash is not an unconditional gift to their states, Republicans in 11 states refuse to consider making the legal changes required to qualify for the federal handout. Twelve other states have partially complied with the Congressional requirements, but object to other changes needed to get the cash flowing in their direction. The problem is worst of all in Alabama, Florida, Indiana and Texas, where business taxes will automatically increase when state unemployment benefit funds run out, and local politicians refuse to do what is required to get their share of the Congressional unemployment extension appropriation.

The objections of the states - nearly half of the country - refusing the federal assistance, center around requirements to provide benefits for dependents of the unemployed, benefits for those whose work hours were cut but who were not entirely laid off, benefits for workers in job training programs, or benefits for people who quit work to care for a sick family member or because they fear domestic violence.

The negative results of this local political intransigence is not only denial of extended benefits to people out of work through no fault of their own, but also slowing down economic recovery to the tune of $3.1 billion which would be going directly for consumer purchases rather than into savings accounts, where the people still employed are squirreling away a larger portion of the tax cuts and other stimulus benefits they are receiving as a result of the American Recovery and Reinvestment Act. Seems spending nearly a trillion dollars in a hurry is a much more difficult task than Congress and the Obama administration thought it would be.

GSA Stimulus Project Resource

Our friends at greenerbuildings.com have created an excellent resource for those of you trying to find out where the General Services Administration is proposing to spend the $5.5 billion in stimulus funding appropriated for construction and renovation of energy efficient courthouses, post offices, and other federal government buildings, before the cash is all spent.

Follow this link to an interactive map of the United States, and click on the flags near your location to find out where each of the 250 projects in the Federal Buildings Fund will be undertaken. The map will tell you the name of the project, the address, and how much money is allocated for the job:

http://tinyurl.com/GreenBizStimulusMap

Once you have this information, if you are interested in a particular project, you can get the project bidding information and details at the federal business opportunities website:

https://www.fbo.gov

Hurry up, before your competitors beat you to the bid openings.