tv C-SPAN Weekend CSPAN November 23, 2009 2:00am-6:00am EST
from akron, ohio on the republican line. good morning. >> and how you doing? >> good, thank you. >> ears what i don't think you understand why we're fighting the war and it is something both bushes talked about and prime ministers have talked about this is part of the new world order. . . since 1991, since the end gulf war, since the end of the cold war, have we changed the way we've done business in a
foreign policy and defense foreign policy and defense policy around the world? our defense department moved around some combatant commands. but as far as how we defend real national security threats to our nation. have we really eff involved in the last 20 years in how we take those on? i think that's another debate we need to have. how do we actually address these threats around the world? why do we keep going back to tactics and procedures that really don't fit the nature of the enemy we're fighting? host: our guest is matthew hoh, former marine corps captain. he resigned his position in september this year as a response to the u.s. policies in afghanistan. edward is joining us from birmingham, alabama. good morning. caller: good morning, matthew, and thank you -- i want to applaud you for your resignation on principle. i think we need more people like
that. i want to approach this -- my comments and get your response from a guns and butter kind of thing. a lot of the debate, as you've seen on the health care debate and other things, is all about deficits and money and so on, so forth. i'm of the opinion that we don't need to be there in afghanistan or iraq period. we can be an ally or offshore or provide support in other ways, but to fight these as wars, like vietnams. and the ussr, they share a common border with afghanistan. fought them for 10 years to their demise. from my perspective, it's an endless waste of human being and
money and we could use that money much better in many other ways. host: again, while that comment was coming in, this twitter comment regarding vietnam was, do you see the request for more troops similar to the generals' demand for more troops in vietnam? guest: i do in a lot of ways. i see more parallels between the soviets' involvement in afghanistan than our involvement vietnam. there certainly are parallels. it is a very good reference. but first, edward, thank you for your comments. getting back to the money point. that's a very big issue. just the fact that we're even debating the cost of the war shows a bit how much, do we really need this war? if we're actually debating the cost of it, do we truly need to be fighting the cost of this war if money is coming into it as a key factor? the cost is overwhelming. i believe we'll be spending well over $100 million a year. i believe it will cost a
trillion dollars. the key things people don't understand is that the afghan government cannot upt itself on its own. it does not have have the revenues to support itself on its own. i do see it, unfortunately, helping to stabilize the afghan government for this years to come with financial resources in order to keep it afloat. hopefully that is in tune with some type of political settlement that brings about some measure of peace and security in that country. host: david is joining us from middletown, new jersey. independent line. good morning. guest: good morning, c-span, the best channel on television. good morning, steve, and good morning, matthew. host: good morning, david. what's on your mind? caller: i'm a world war ii vet and i want to honor you for your service, matthew. i'm an 85-year-young world war ii vet. host: where did you served? caller: i served in the army air
corps in europe and with a unit in germany. interesting enough, in august of 1945, was leaving germ noy go to japan and we heard on the radio, 2:00 in the morning, that the japanese had surrendered and you never saw more happy guys in your life than the guys in the outfit who were heading for japan. but what i want to bring up is this. we had 16 million of us served in world war ii, and out of the 16 million, there's only two million of us left at the present time. and we're losing almost a thousand world war 12 veterans a day. but i want to talk about what's happening in afghanistan. i want to ask both of you. have you read the book "lessons in disaster". have either of you read that book? host: david, not only has this
network read it, but also he was featured on our "booknotes" interview in an interview with -- mr. bun di is available at booknotes.org. guest: that's why i got the book, because i saw the interview on c-span. host: go ahead, please. caller: oh, i'm sorry. i was working for the united states electronics command in fort mammoth as a civilian defense department civilian employee. and i was there on an inspection , on a p.r.c. 77, portable radios that were going to vietnam to our troops, and this was in 1972. and i was talking to this gentleman who was working in the
maintenance department and he was going to vietnam for six years if a row, he was there 10 months, and came home for two months. and every time he came back, he was saying, we have to help the people of vietnam. we have to help the people of vietnam. host: i'm going to stop you on that point. thank you for your call and for sharing your story with us and we'll get a response. guest: thank you, david, for your service, first of all. in regards to -- i guess, david, your point is going with learning lessons from the past. it's true. you hear this phrase all the time while you're growing up up about how we repeat the mistakes of history, and then you reach a certain point in your career and your age and you start realizing that we do that. i'm not sure why we do that. if it's human being riss. -- human being rouse. i'm not sure. but the idea that we can learn from history is true.
host: true di rubin saying the need for a u.s.-pakistani military cooperation against militants has never been greater. guest: i said earlier that al qaeda should be our priority. we have to find a way to work with the pakistani government to ensure its viability and its stability. i think we need to demonstrate to the pakistanis some measure of trust that we are not going to cut and run from that region, that we are not going to abandon them or abandon them to the problems like we did in the 1980's and 1990's. i also want to state clearly, though, that putting u.s. combat forces or u.s. military forces in pakistan would be a huge, huge mistake.
host: kirk is joining us from grand prairie, texas, for matthew hoh here at our washington studio. caller: good morning, matt? how are you? we actually know each other. i was in the cmok in 2006. you and i had the good fortune of being on one convoy. it was good times. guest: i remember that. we took some machine gunfire in a narrow street. it was great. caller: involved in burning that area around there. and it was a key factor in the success, that was kind of the start of the movement in the area. just got back from tour there -- another tour there in september. guest completely there now, isn't it? caller: yes, and no. different from a lot of the reports you hear in the media.
the problem in afghanistan right now is our rules of engagement that have overtly too much concern for civilians in the sense that it hurts our fight there. we are afraid to pursue civilians into buildings. if we are afraid to go, then that's where they're going to hide. they're going to hide among the civilians because they know we are afraid to take them on there. guest: thanks, good to hear from you. there are some elements of truth to that. we have the most disciplined military the world has ever known. it's a military that has been given the hardest task, any military in the history of the world has ever been given, to engage in wars like this. there are some aspects that are true. one of the things i hope people understand is that we've been in afghanistan for eight years and we are in a civil war.
the folks who are on the opposite side, the people that are on the op opposite side, are against us. they're against a central government we support. while civilian casualties are horrible and we need to minimize them as much as possible, it's not going to change their views on who we are and it's not going to make us come around to their side just because we're trying to win their hearts and minds. same goes with development projects. we've spent hundreds of millions of dollars in afghanistan building roads, schools, bridges, health clinics, so on. that is not going to change people's fundamental values and their fundamental beliefs and which side they're on in a civil war. it's not going to pull them over. it's just not. that begs another question as to whether or not we want our troops fighting and dying for a corrupt government like karzai's. we engage american forces in combat. combat to combat. it will never change. there will always be civilian casualties and that's something we as a nation must know and we must accept if we're going to go
to war. we can't go to war and expect it to be clean. we can't go to war and expect for it to be pretty or for it to be video game-like or to be like a movie. all your viewers who have been in combat will attest that. there's absolutely nothing good about war. unfortunately, it sometimes is a necessity. but in this context about afghanistan, is it worth the violence from what we're getting out of it. host: what do you think the president will announce at the end of this month or early next month? guest: oh, i don't know, steve. i know i'd like him to announce -- i think we'll see some level of troop increase. i do think we will see some type of withdrawal plan hopefully tied to some date. hopefully within a year or two, if we can get something like that, that will be so much better, so inif i fitly better than what i thought was going to happen over the summer when we were looking at a minimum of a
four- or five-year commitment or some open-ended commitment to afghanistan, which really would have served none of our interests, but also none of the interests of the people of afghanistan or the region. so hopefully what the president comes out with is some type of withdrawal of our combat troops within the next year or two so some type of political settlement can begin there. host: what's next for you personally? guest: i'll stay involved in this debate as long as it makes sense. i'm not really sure -- my plans were to be a civil servant. i'm not sure if that optio# . . still exists. >> tomorrow, on "in journal"
walter pincus, risk old way -- ruse gold wth goldway, and erikn talks about a new report on illness. washington journal, live at 7:00 a.m. eastern on c-span. >> this morning, on c-span, a house hearing on tracking the use of funds in the economic stimulus package. after that, "q&a" with judy shelton. >> tomorrow, on c-span2 a look at the bread for the world
institute's view on poverty in the economy. that is on c-span2. >> and now, a house oversight hearing on tracking funds in the $787 billion economic stimulus package. the accountability office issued its first report. the house oversight and government reform committee is chaired by adults as towns of the york. -- but also s -- a dollfadolphus towns of new york. >> the meeting will come to order. tracking the money, the use of stimulus dollars. i want to --good morning and
thank you all for being here. today, the committee continues its oversight of the largest spending bill in our nation's history -- the american recovery and reinvestment act of 2009. nine months ago, it appeared that our national economy was spiraling out of control with nothing to slow the freefall. now, with the help of the recovery act, our economy may be on the brink of recovery. this is the fourth in a series of hearings that examines the unprecedented rescue plan to jump start our economy, heal the hemorrhaging labor market, prevent drastic cuts in state budgets, and provide much needed assistance to our nation's working families. with nearly $790 billion in taxpayer money on the line, the recovery act mandated
extraordinary accountability and transparency provisions. among these requirements, section 1512 of the act obligates recipients to report on their use of certain recovery funds. on october 30th, the recovery accountability and transparency board released the first recipient reports. and today, the government accountability office will release its first report analyzing the reporting process and results. the recipient reports indicate that the recovery act has directly created or saved approximately 640,000 jobs. and about 400,000 of those jobs are in education or construction. in my home state of new york over 40,000 jobs reportedly have been created or saved by recovery act funding.
and in new york city, job placements in the third quarter were up 60 percent from last year with 3,043 job placements in brooklyn alone. in downtown brooklyn, the long stalled revitalization project, city point, has been resurrected and will generate more than 300 construction jobs and 100 permanent jobs. additionally, recovery act funds are being used to build nearly 740 affordable homes in harlem and brooklyn, generating 2,800 new jobs. while stories like this are very encouraging, i am gravely concerned that the unemployment rate is now 10. 2 percent the highest in 26 years. it is even higher for african americans and hispanic americans. for people who have lost their jobs, it is not very comforting to say we are making progress. nevertheless, the experts tell
us that employment recovery historically lags behind economic recovery. moreover, according to federal reserve chairman ben bernanke, if the stimulus package did not exist, our nation's unemployment situation would be far worse. and on the positive side, in the third quarter of this year we saw the first growth in gdp in over a year. that being said, today's hearing confronts the question, "how do we know the recovery act is working?" the truth of the matter is that while recipient reports provided for an unprecedented level of transparency, we must be able to rely on the reported data. at this point it is clear that errors found by gao and others should be corrected immediately, not
months later, no matter how difficult. recipient reporting should be subject to strict quality control. the american taxpayer expects reporting to be done, and done well. and $787 billion weighing in the balance is certainly far from pocket change. taken as a whole, the big picture seems to indicate that the job trend is positive. overall, there are some signs that jobs are finally being created, both as a direct and indirect result of recovery act spending. but while we are on the brink of recovery, we have a long way to go. the important message that i get from these recipient reports is that we need to spend recovery act money on projects that actually create jobs, we need to get the money
out there faster, and we need to make sure it is targeted on economically distressed areas. and we certainly need to make sure it is properly accounted for. i'm looking for assurance from today's witnesses that there is a sense of urgency to do that. in addition, i think the congress, working with the president, really needs to focus on the need for further job creation over the next several weeks. the american people are really hurting. again, i want to thank our witnesses for appearing today, and i look forward to their testimony. at this time, i yield to the gentleman from california. >> thank you mr. chairman. i want to thank all the members of the administration for being here. i want to preface by saying that recovery.gov is a new idea
and there are one to be bugs. i think we understand we are not going to get it right but we can and must continue to make transparency in government not just a goal but a reality. mr. chairman, i am pleased that we have a panel before us that can answer questions about passage of $787 billion stimulus, substantial job creation has not occurred. they are peddling false save the jobs created. this number is still on the board, even though it has been discredited. the american people are suffering. we learned that many joined the ranks of the unemployed, bringing the number of jobs lost since barack obama took
office is 2.10% of the work force. if you're in that 10.2% work force, it is 100 percent unemployment to you. we all remember the stimulus pitch, the promise that unemployment would never rise above 7.8% and a stimulus would save 3.52 4 million jobs. -- 3.5 to 4 million jobs for it he has been in this reader of the economy. if he had ever met with the chairman for myself on this issue, we certainly would have told him that we needed to work more closely together and we needed to not predict these numbers without science.
then, the same economists that misread the economy created a policy of this calculation of what to do next and steps in the recovery will clearly be in the wrong direction. the administration continues to rely on the discredited economic theory that put misplaced belief of government spending on pet projects, taking credit for jobs saved that are substantially government jobs. schoolteachers are important and federal workers are important, but that is really all this has done. the main thing about the stimulation of the policy it is the size of government.
-- policy, is the size of government. this stands to grow into permanent jobs. the federal government is clearly not feeling pain. unemployment in the nation's capital is 4%. we have to keep in mind that taxpayers' money is always being wasted in government programs. we try to keep it to a minimum, but clearly it happens. if our stimulus have been one in which we allow the american people to make their own determinations and supported them the investment tax credits, we would be only having the irs make sure they made the investments. perhaps most relevant to today's hearing is the fact that the
administration continues to try to cover up its mistakes with misleading job planes. recovery.gov says that 640,003 ordered 29 jobs have been -- 640,329 jobs have been created. the number of jobs created is not only trouble, it is entirely deceitful. no government agency, private agency grew or anyone else has any idea where these numbers should be. mr. chairman, i would like to put up the oxford english dictionary of propaganda -- dictionariey definition of propaganda. propaganda, a noun, information, especially of a biased or
misleading nature used to bust line >> these jobs continue to be claimed and we are dealing with 3.8 million lost jobs and yet that is propaganda, plain and clear. the administration has to go back to the facts. as i said in the first part of my opening statement, we will recognize there will be mistakes, but the fact is, they do not know how many jobs have been saved or created. >> now, we will move to our witnesses. mr. perle the vein arl devaney.
of course, this is the body created by the recovery act to ensure transparency in the use of recovery funds and prevent the waste, fraud and abuse of those taxpayer dollars. prior to being named as chairman of the recovery board, he served as the inspector general of the department of [inaudible] forensic and training for the in garment protection agency, and as an officer in the secret service. welcome, mr. delaney. >> our next witness has held his position since march 13, 2008. his career is well seasoned,
serving for the gao. over the past nine years, he has held a number of key level positions including chief operating officer in the management division. >> our next witness, the hon. john prcari is responsible for the day-to-day operations with the department. previously, he served as a secretary of the maryland apartment of transportation. -- department of transportation. welcome. the hon. anthony miller is the secretary of education and he
serves as the department's chief operating officer. deputy secretary miller has worked with the los angeles unified school district, and served as a member of the board of education for the city of los angeles budget and finance committee. we welcome you to this hearing today. as a long standing procedure, we always swear witnesses end. if you would be kind enough to stand and raise your right hand. do you agree to tell the truth and nothing but the truth, if so, answer in the affirmative. >>you may be seated. >> we will start with you mr.
dodaro. good morning to you. i am very pleased to be here to have the opportunity to talk about gao's views and recommendations regarding the reports filed under the recovery act. given the national scope of this activity and a relatively limited time frame, we think it was a good first start. however, there are a number of significant data quality and reporting issues that must be addressed. based on our initial analysis of the database that was released on october 30, we find that there were some -- we found 4000
reports that had no money expended, but claimed over 50,000 reports. there were other reports were money had been expended, but nofte's have been reported. -- no ftes have been reported. second, the omb estimates that 90% of recipients reported, the remaining 10% of the recipients that should have reported have potentially not. there are also questions about the quality of the review that was done by federal departments and agencies and by recipients. 75% of the reports are reviewed by federal agencies, but fewer
reviews were documented in the system by the recipients. that needs further inquiry and investigation as well. another problem that we identified, and this is a fairly significant one, dealt with the different interpretations. there was inconsistent application regarding this, especially as it related to the time in which people make the calculations. this area, because of the different interpretation, compromises the ability to aggregate the information across the recipient reports. we made a series of recommendations to work with the recovery board and federal departments and agencies. first is to clarify and standardize the definition of
full-time equivalent positions and set a standard of measurements of the information can be accumulated consistently and properly and to be clearer in the fact that the reporting focuses on hours worked that need to be reported in a consistent manner. we also believe that, given the issues that we and others have identified, that omb should work with the establishment and the recipients to review lessons learned under this first reporting exercise. we will reevaluate the quality assurance and recording -- reporting approaches to make necessary modifications to ensure that these are addressed successfully. because this is a cumulative reporting approach, and gao is
required to review each of the quarterly reports that are filed by the recipients act, we will be following up on this additional analysis and making further reports to this committee and to the congress regarding the extent to which these quality and reporting issues are redressed. there will also be new recipients that did not have to file a report as the recovering money gets spent over the fiscal year 2010 and 2011. there'll be more recipients filing that will need to be addressed to prevent future problems from emerging in this area. i thank you very much for the opportunity to summarize our findings. i will be happy to respond to the questions at the appropriate point in time. >> thank you very much.
chairman devaney? >> thank you for the opportunity to appear before you today. in particular, the recipient reporting period that ended october 30. after i have made my opening remarks, i will be happy to make any remarks. much has transpired since i last testified before this committee in march, but i would like to jump to the end, as it were, by providing some data on the most recent major event that had occurred. we worked together as intended during the historic first reporting period october 1, recipients of recovery funds began reporting on their use of those funds. from october 1 to october 10, one under 13,000 were reports
were filed. since this was the first time that recipients were submitting data reports and some states have been encountering technical challenges in filing boalt reports for the recipients, the board decided to have a 10 day grace period. however, they were also required to explain their reasons for delayed reporting. beginning october 11, we began the review of the recipient reports, providing comments and questions to recipients. primer soviets and some recipients work together to correct errors. as a result, about 21% of the recipient reports were modified. these changes are chronicled on a separate way pelage -- separate web page for all users to see and are also downloadable from more technologically experienced users.
as you undoubtedly know, it created a large amount of guidance. however, the worst -- there were still reporting questions that the recipients were unable to solve. we will continue to play an active role in crafting solutions to resolve those problems. i believe these reporting problems can be divided into two categories. inaccurate data and noncompliance. the data reported was riddled with inaccuracies. for example, a misplaced decimal made it look like a company was awarded a $10 billion contract instead of a $10 million project. even more notorious are significant errors. these mistakes do not surprise
me. in a way, they are not bad. in -- in reality, this should serve as evidence of what transparency can achieve. in the past, the data would have been scrubbed and the agencies would never have released the information. you and american public are seeing what agencies have seen internally for years. what we are all seeing is not particularly pretty. this un sanitized data may cause embarrassment for some agencies , but my expectation is that any embarrassment suffered would encourage self correcting behavior and lead to better reporting in the future. the second major recording problem was not reporting recipients we have not yet
received their list. given my decades of law- enforcement experience, it should come to no surprise that i personally favor a penalty for noncompliance the recovery after has no penalties for failure to report. that might be something for congress to consider. the fact that someone will fully not file it is distressing and must be addressed. agencies will need to decide what actions they're willing to take to ensure the transparency aims are not disregarded. perhaps -- for the board's part, we intend to post those names permanently on recovery.gov. the transparency is only half of the board's mission of transparency and accountability.
over the past several months, we have made great strides in accountability and oversight. and we have procured tools to interface with 8.5 million public records to help identify relationships. we believe these relationships will unveil facts that may not have been transparent to government officials. today, i can assure you that every recipient of a contract, grant or loan under the recovery act is being processed through this multifaceted system. to further assist our accountability mission, there is a hot line solution. citizens can reach us by phone or by mail for whatever suited more than two under 50 citizen complaints. not all of these are confirmed,
but those that didn't have been referred to the approved for it inspector general. more than 300 audits, evaluations and reviews are under way. mr. chairman, i would like to conclude with a thought about transparency i believe that the principle downside of transparency is embarrassing and there is enough of that here to go around. all of those involved, including the board that i chair, will need to dedicate themselves to improve the quality of the data is. if i have learned anything about transparency, it is that it is harder to practice transparency than it is to talk about transparency. it is definitely not something for the faint of heart. mr. chairman, i will be glad to answer any questions that you may have. >> deputy secretary miller?
>> thank you german towns. -- chairman towns. this is to help avert layoffs of teachers, school personnel and other public employees while advancing critical reforms. we have distributed more than $67 billion of these funds and recipients have reported saving jobs for more than 300,000 teachers. the first funds released were settlements to existing grant programs such as title 1 and individuals with disabilities act. these programs have well- developed programs and regulatory requirements. the next round of awards were made from the fund. this was made to support
brandt's and to minimize reductions in education. this was done in exchange for commitment to reforms. we were able to obligate these funds quickly by taking advantage of the existing grant administration systems and working closely with omb. the percentage of the stabilization fund was withheld for a stage to the application. this causes states to become transparent. governors will need to provide data on four key areas. those are, achieving equity and distribution -- equity in distribution, and turning around our most troubling schools. the phase two requirements were published in the federal register on november 12 and applications are due on january 11. the remaining recovery act funding is for discretionary
grants, including the fund. the requirements for the race to the top are posted on the department's website on november 12 and applications are due on january 19. the department is continuing to work hard to provide guidance and technical assistance to grant recipients. we published detailed guidance and are holding seminars to ensure that recipients are well aware of the requirements. we're keeping the lines of communication open and when clarification is needed, we are responding quickly and publicly. to insure adequate public systems, the department utilizes its centralized grants, administration and payments system. at any time, we know exactly how much funding has been awarded and how much funding has been brought down.
we required grantees to certify that they will use the funds within three business days as required by the act. there is also a monitoring feature that requires those funds to be drawn down. we are expanding as process to apply to all department funds. in our ongoing effort to prevent waste, fraud and abuse, are office of inspector general is a significant asset. we have held more than 160 meetings on issues related to the recovery act. the conduct audits for mastering the funds. -- the conduct audits for administering the funds.
allied jean -- oig int -- this is a new tool. for the first time, they are required to provide quarterly reports. we are making considerable efforts to make sure they comply. due in large part to our efforts, the department achieved compliance among state agencies. a relatively small number of recipients encounter technical challenges in their efforts. the department is working closely with them to ensure full compliance in the next round of reporting. the department has forwarded to the board any significant errors that have been corrected such as discrepancies.
where it was flagged to be outside the range, the department has notified the recipient of the concern and maintain a record of how the guidance was being interpreted so it could be clarified. we will also develop a lesson learned document and advance to the next period of reporting. it is important to recognize the impressive level of transparency that has been achieved. every parent can go to recovery.gov to see how much money their school district had received. this transparency is an important tool for taxpayers to see how funds are being used in their community. in closing, i believe that the department has been highly effective in implementing and recovering funds. we will continue to work to
improve their quality. -- data quality. this helps to insure that despite significant budget crises that states face, our children will continue to get the education they need. thank you again and i am happy to answer any questions. >> >> german towns, ranking member and others think you for having me here today. what began with the legislation. the department of transportation receive $48.1 billion to support improved as a great and sustain jobs. in the 38th week following enactment, with and a total of
$30.3 billion on more than 10,000 projects nationwide. nearly 65 other projects are under way or completed. in addition, work is under way to review applications for the grants. we are ahead of the february 17 deadline. the department has made extensive progress and the secretary and i are proud of these accomplishments. recovery act funds are improving our infrastructure will putting people back to work in cities and counties throughout the nation. as i travel around the country, i talk to construction workers to share with me how difficult it was to provide for their families and to labour employed after being laid off by recovery act project. a construction site foreman was
laid off after 18 years of service. a recovery funded project put him back to work full time overseeing grading work on i-94. a new college graduate with a degree in construction management had huge job prospects until a construction company hired her as a full time for men on a major road projects. these workers and many thousands like and can look forward to a pay check and insure their families have the resources that they need. there is no question that the recovery act is working as intended. it puts americans to work and makes investments in our infrastructure. equally important is ensuring that these funds are spent wisely and that we are able to share accurate information with the american people. the recovery act requires that funding recipience provide independent reports of jobs created and other public information.
section 1512 of the recovery act requires recipients to report this information. given that this reporting process was new for the recipient community, the department of transportation staff reached out to their state department of transportation's - departments of transportation and we conducted a series of seminars to help comply with the requirements. dot staff continue to provide support until the reporting database was closed on october 20. as a result of these efforts, we reported 45,000 direct jobs created. dot contractors reported additional jobs. more than 96% of our recipient
community reported their data. overall, we are pleased with the 1512 reporting and anticipate even more reporting. we are in the process of contacting the recipient community to identify any errors that can be corrected in the next reporting cycle. in addition, we are asking for help in lessons learned. as we begin planning for the next reporting cycle in january of 2010, we will build upon our initial training to help ensure success in future recipient reporting requirements. this concludes my testimony and i will be pleased to answer your questions. >> let me thank all of you for your testimony. we will started questioning and i will start off. -- we will start to question and i will start off.
do we all know -- we all know how important this is, but is it really creating jobs? >> i think that it is clear that the use of the money is intended for that purpose. the real question that we're looking at is that the accuracy of the information that is being reported. the accuracy of the information needs to be improved. that would be the bottom line. >> but you think jobs are being created? >> the funds are being used for the improper purposes, but the question is, how many jobs are being created. first of all, of the $787 billion that is estimated to spend, as of the reporting time, only 22% of that money had been spent as of september 30.
$173 billion. that was spent in tax cuts and entitlement programs and on and on insurance and medicaid and others. the recipient reports only deal with the grants and contracts. of the 173 billion has been spent under the recovery act, only sport -- only 47 billion is subject to the reporting requirements under the act. even if you get an accurate count under the recipient reports, it is still a subset and it only focuses on job creation. we believe that we make good recommendations to improve the accuracy so that there is a better basis for making an informed judgment on how many jobs are created or saved. >> i think i would agree. there is no doubt that jobs are being created or saved.
it is just the number and the accuracy of the number. we have a number. it is based on what the recipients told us their interpretation of the guidance was. as it suggests, that guidance needs to be clarified in a big way to help recipients be a lot clearer the next time that the report. i have no doubt that there are a lot of jobs being created. i think it could be above or below 640. i think there are enough inaccuracies to question numbers. it is somewhere in the middle. that is a balancing act. as the accuracy gets better and recipients get better at reporting accurately, i think we would get a much better picture. this was the first time, and
there were a lot of challenges. my hope is that as we go forward, this will all get better. >> the noncompliance, is that a lack of staff or being an unfunded mandate? what do you think creates the noncompliance. of the overworked? is this too much for them to handle at this time? i am trying to get a handle on this. you indicated that there should be some kind of penalty. as you know, the ranking member of this committee put forth legislation, trying to create some relief and that is another reason why i have interest in this. >> there are probably a number of reasons of why recipients to
not report. it could be as simple as they did not want to as today did not know they had to. there are no penalties and in that kind of situation, it leads me to believe that penalties are a deterrent effect. if there were some, we would have had better compliance. the fact is, i am still trying to get a handle on how many did not. i think the suggestion that it is as high as 10%, i am in that range myself. i am waiting for that list. >> you indicate that your situation is very different. you said 96%? >> yes, mr. chairman.
about 1037 recipients that are required to report, 96 percent did and i would point out that they are widely varying capabilities. some were very large d.o. cheese and also had municipalities like north carolina where you have one person that was doing all the reporting requirements, and we believe that is one of the reasons and that that 4 percent was not able to report. >> i yield to the gentleman from california. >> thank you, mr. chairman. secretary of good -- lahood said that they had created or saved 640,000 direct jobs so far. these are real, identifiable jobs funded by the act.
can you support that? >> i think it may be a fact that that is on my website, but that may not be the correct number. >> to characterize, he may have been no overzealous by saying real, identifiable and direct but in fact it is a damn estimate. >> i was reminded that when a fish hits a wall he says the dam. >> the white house press secretary says that the direct jobs in that is city under $20,000. the same day, vice president biden's choose economic adviser
i recognize the gentleman from ohio. >> thank you, mr. chairman. i appreciate your a much the opportunity in all the witnesses being here and providing the testimony with regard to how difficult it actually is to pinpoint the numbers of jobs created and the jobs being retained through the efforts in the stimulus package. certainly we have heard a lot of propaganda. we have heard propaganda suggesting that isn't having any effect that we are not impacting the economy. it seems crystal clear to me that not only is this having a significant effect, and we can argue as to whether or not it's 600,000 jobs, 400,000 jobs,
700,000 jobs in terms of direct benefit but i would like to get to a minute talking about exactly what it is those jobs are in terms of direct spending but then also talk about the multiplier effect we see in this investment so the jobs that you're referring to are only looking at a small portion, relatively small portion of the spending itself. $63.7 billion went into entitlement, tax relief was another almost third of this so this is only looking at a portion of the contracts and grants to loans -- correct? mr. dodaro is that correct? >> that's correct. >> so when we look at just those portion we believe there are jobs upward of 600,000 that are being created. >> take for instance a construction job, and i just brought with me the spending we have seen in greater cincinnati which is upward of almost
$700 million. and they describe here a project that will directly employs 75 people in a construction project. now i assume that 75 is reported. but the individuals that might be supplying the hardware for that job, the individuals that might be supplying the lumber for that job, the individuals and the companies that our supply and the roofing material for that job, the transportation workers to bring the material to the site, the uniform manufacturers that make the uniforms that help these people on the job. none of those are being included in this direct number; correct? >> that's correct. the indirect cost or indirect benefits rather as you are talking about all the materials, the supplies and all those things as well as how much additional spending is then induced is not covered. it's just focused on the direct jobs created. >> and i assume we can use the same line of reasoning if we are talking about a construction
electricity and energy. i assumed the salaries that are going into those teachers and supporting the families of those teachers through that spending is going to create and support jobs across the economy; is that correct? >> that is absolutely correct and i would also say that we have seen other uses of funds for example in the rural communities where the districts have bought laptops for students, put smart boards, electronic devices to help accelerate and improve learning and allow them to develop skills, that the jobs associated with the producers of the smart boards, the training provided to the teachers is also not reflected in the over 300,000 jobs numbers that we have reported. >> so in while you are reporting several hundred thousand jobs have been retained in terms of teachers is it fair to say that that same direct creation of jobs we would see the inverse or that investment not made so that we wouldn't see the 300,000 jobs or so that have been created for teachers, but we also wouldn't
see the results affecting the economy of that investment going into those teachers? >> yes. i think looking at the notice is that were literally picked up, that were announced and later rescinded because of the receipt of stimulus money were confident hundreds of thousands of teachers and educated related jobs would have been not saved had it been now for this money. moreover the impact that would have had on education and students in their learning and the compromise that would have been to the long term growth because we need to have a student population that is prepared to compete with think what also be at risk. so we actually see the impact. >> outside of the direct contracts that your reporting on, do you also believe, mr. dodaro, the medicare transfer payments for example are critically important supporting the healthcare industry and long-term care? i assume nursing homes, i assume assisted living providers, medical device manufacturers, doctors, nurses, physician aids,
all of these individuals who work in the health care field. do you believe that their jobs are being supported or retained due to the direct investment made by the medicare transfer payments? >> as we have reported in the past on the use of the money by selected states and localities a deep medicaid additional federal matching shares had at least two effects. one it helps support the increased number of people on the medicaid role as a result of unemployment and allowed the states to maintain eligibility requirements for medicaid. so it's helped achieve one or the other objectives of the act in addition to the jobs created and obtained is to help the recession. it's also helped achieve another one of the goals which is to stabilize state and local government budgets and increase federal share meant some of the last eight share could be reduced particularly in those states with high unemployment because they got additional medicaid funding based upon the
on and plena rate so that allowed them to then use that state money for other purposes as well. >> the gentleman's time is expired. >> on the yield to the gentleman from ohio, mr. jordan. >> mr. devany, in your response to the ranking members letter you said there is no way to really audit or solidify that the jobs number is accurate. earlier dual source said that the data, the information and numbers you get comes directly from the recipient. isn't it true it first goes to the state and then omb and in to you guys? this information recipients are getting the dollars and then you get the information. >> actually, congressman, it goes from recipients, sometimes to states in 31 states the states collected that information and send it in and other states we got information directly from the recipients. but it comes to something called
federal reporting.gov -- >> in some cases it comes directly 3q and malt omb? >> the recipients are for the most part reporting -- >> in 31 states there's some intermediate steps so there's a couple of bites at the adelbert for the information goes public; is that right? >> in 31 states, and the states did this differently, but in some of those 31 states there was a quality review -- >> the 12 projects, the 12 programs that were left off that were not reported because someone made a determination that there was so much ridiculous information that there shouldn't be public, who made the decision, you guys are some one else? >> omb asked us to look at it -- >> so it went to omb before it went to you? >> no, sir, it was in the database and omb had access to the database -- >> so who makes the call? who is actually making the call on when this goes public and how
will it is displayed and reported? >> at the end of the day the board makes the call as to whether or not it was significant era in the data and would have cost public confusion. >> did the board makes the call on these or did omb make the call? >> we both made the call. secure said the board makes the call -- >> omb asked us to look at it and we concur with their assessment is a lot going on with the 12 including 60,000 jobs that absolutely did not look right -- >> is there any -- change in direction -- is there a penalty for people who provide you with false, misleading ridiculous information like in other words if we are getting ridiculous information these folks -- the money spent if we could get it some of it back is there a penalty? >> another ascent. >> no penalty? then put it in context the way the american people see it. we have a health care bill moving through the house, moving through congress which says if you don't buy health care you can go to jail, and now people
are getting a tax payer dollars, giving ridiculous information, so ridiculous you don't even list and there is no penalty for that? how are we going to correct that? >> as i said earlier in my testimony this morning i am a big advocate for having penalties but congress didn't put any penalties in. >> you'd be in favor of stronger penalties for people who take taxpayer dollars and report crazy information? >> i would be interested in certainly penalties for people who didn't report, and i would be equally interested in looking at the issue of what happens when people knowingly false report. i think that could be a criminal penalty. >> mr. dodaro, how many years of experience have you had with the general accounting office? >> 36 years. >> in 36 years of serving in that part of the government, do you ever recall a time we had this term created or saved?
in other words is this the first time the past year we have used this kind of sort of measurement if you can even use that term, is this the first time in 36 years you have been looking at what the government does and accounting for how -- it's the first time we've ever had that term? >> the whole issue of tracking the creation of jobs has always been a difficult -- >> my question is straightforward, created or saved is this the first time in 36 years your experience in government that you know what that we have ever had that term used as some would call some kind of measurement? >> based on my immediate recollection i can't recall. >> do you think that is a little strange we have this new term? >> it definitely is something that, given the context of what the act was trying to achieve with the objectives i don't think that it is unreasonable. >> anyone else -- >> it's difficult to measure.
>> anyone else recall prior to this year we have ever had this, quote, measurement created or saved? i will take that as a no. last question i would have for the panel. i will start with the deputy secretary for transportation. what kind of contact do you have on a weekly, by weekly, monthly basis with the administration in particular mr. biden whose responsibility it was to make sure we got this information in an accurate way, do you have meetings weekly or what kind of contact to you normally have? >> we have a number of contacts in daily interactions, twice weekly calls, regular meetings, and the common theme is making sure we are getting the products out there and making sure -- >> what kind of contact do you have with the vice president with the office of the white house? >> the vice president leads periodic meetings to include the department on the topic. >> if i could, one more question for mr. devany, to have contact
with the administration on a regular basis or with the white house or is it strictly with omb? >> i do see the vice president from time to time, probably an average of once a month. >> to the vice president weigh in at all on keeping the 12th of the list. >> the gentleman from ohio. i now yield to the gentleman from the gentleman from vermont mr. welch. >> good afternoon. >> i want to thank you gentlemen for being here. you have an incredibly important job. it's about accounting for the enormous amount of taxpayer money that has been invested in the stimulus program. and are you doing a good job? and the reason is all we want are the facts. it's congress that authorized
this program. the only thing you are being asked to do is report on how it is working. you were being asked to report whether the money has gone missing and you are on our side of the all and i expect the other side the goal is for us to get information as opposed to make political speeches. but we have heard quite a few political speeches and frankly that is distressing to me and i will tell you why. we have got to rebuild america and we know how we got to where we are. we had a private-sector financial system but by the big banks and wall street that completely disregarded the public trust that they have and nearly destroyed our economy. and it was so bad that one of the most conservative presidents in my lifetime came to congress secretary of treasury, the former chair of one of our major
investment banking houses and said that if congress did not approve a 750 billion bailout over the weekend in the economy as we knew it would be destroyed. i am just reciting that because it gives us some perspective of why we find ourselves in the situation that we are in. the private sector financial system put a gun to the end of the american economy. and they pulled the trigger. step one was to stabilize the financial system. i was one of the members of congress who had no desire whatsoever to vote that legislation to take $750 billion of taxpayer dollars and stabilize the financial system it inflicted, self-inflicted wound. but it did its damage. and when the economy went off the cliff about a year ago we started seeing the unemployment rate skyrocket and we saw hard-working americans lose their jobs through no fault of their own and that rate is
continuing to rise as we speak and president obama came forward with a proposal on the stimulus package and that by the way was endorsed as you know by republican and democratic economists. there was no dispute exit on the extreme edges as to whether or not in this dire situation the federal government have to be the standard of last resort. again not anything any of us wanted to do. but something that was brought consensus position had to be done. had to be done so we did fight another day. not so that we -- not because we wanted to do it. and in the doing of this stimulus there was a commitment that was made by congress and i think share republicans and democrats with the voted for it or not the money should go to jobs, it should be accounted for in that shouldn't be distributed on the basis of political party or affiliation. it should be broadly beneficial to america. taking a look at how it works
that is a fair and square question and there was a lot of debate in congress how much the stimulus should be allocated to the tax cuts, how much for infrastructure. in the house, and i was among those who believed in more infrastructure the better because it would create more jobs and tax cuts. there was a big debate whether we should use stimulus money to go back to the states to help maintain our teachers, firefighters and police and maintain and preserve those jobs and i haven't heard any acknowledgment in the speech here and this has been a lifeline, the stimulus has been a lifeline for our state and i can speak for vermont. we would have had a catastrophe in vermont that if we had not had a stimulus funds even with the stimulus funds vermont with a democratic legislature and republican governor had to work together very hard to pass a budget and we are continuing and experience a lot of pain and
it's not my custom generally to make speeches but apparently@@@) suggestions about penalties, let's give them to us and we can vote on them but i hope it is specific and i encourage you to do the great work that you are doing and i encourage our members, mr. chairman, to focus on getting america back on its feet. thank you. >> the gentleman's time is expired and i yield five minutes to the gentleman from utah.
>> thank you for your work and being here. mr. devany, falling on the question when is the last time you personally spoke with the vice president, vice president fighting? >> i believe it was last week >> is there a master list of who was supposed to get the stimulus money? do you have a master list who is supposed to get the money? >> i don't have that. >> that is just mind-boggling to me that we don't have a list of evin who was supposed >> congressman, i think it is fair to say that each of the 21 agencies that see the recovery money have such a list and they are in the process right now trying to determine whether or not each and every one of the recipients on that list actually reported and i hope to get that result soon. >> it seems like a simple basic
accounting process to understand. but it highlights is we don't know what we don't know and that to me is a very scary proposition and in a moving forward. in my own state of utah representative bishop, one of my colleagues pointed out there is some $1.2 million that went to the fourth congressional district of utah. we only have three congressional districts. there was 529,000, to be great hundred $34 that went to the 00 district, congressional district of utah. i simply do not understand how those very basic things can happen and put to me the entire reporting into question. now suddenly go to the website and it says well, they are not accounted for. it is an attribute it. how are we going to resolve this? we don't know who is supposed to get the money and when we see where it went to it's going to
districts that don't even exist. >> i think first and foremost the recipients in utah put the wrong congressional district in. they are the ones that entered the data. now, going forward, i think we can put technology in the system that says something like if you or any state with only one district you can't put anything other than that district in. if you are -- if you enter a nine digit zip code it comes to correspond and match the congressional district. looking forward we can eliminate that. >> time is so short if we could follow up with additional procedures i would sincerely appreciate that. my understanding from your testimony is that there have been some 340 complaints. 77 investigations open, and more than 390 audits. can you help explain those numbers to me, please? >> of course. >> and how many people do you have dedicated to performing those functions?
>> the actual board has a limited number, maybe perhaps a dozen people that work in that area that we leverage the resources over 29 inspector general's that oversee the money. so, some of those complaints are coming in on our hotline since the data has been released. some 350 plus and some of them came before the data was released and directly to inspector general's. so out of all of the complaints we have had come and 77 investigations have been opened and 390 or so -- >> we will follow additional details but that does help clarify. mr. miller, having read through your testimony in hearing what you have to say at the top of the printed out portion of page five it says we have accounted for 97% of the recovery act obligations to date. what does that mean for the other 3% that there is no -- what does that mean? >> it means the bulk of the money is formula and the state fiscal sterilization flows
through states. there's to programs on impact aid and federal work study which goes directly, work study goes to individual students on part-time programs through colleges and universities. given the distributed nature of that, some of those recipients, colleges and universities had difficulty understanding but that represents such a small percentage. but specifically -- >> you might think it is small but it represents $2 billion. what i want to make sure we understand is how we are going to account for what isn't accounted now, $2 billion worth of dollars and i would like to follow up, i see that my time is ending here. let me ask one more question of you, mr. miller. it says a total of 700 reports out of 2002 eckert 29 were changed during this recent review period. there is concern on many fronts that literally about one-third of these reports had to be changed either the information
that they are getting into the system and process the have to go to it's terribly flawed or there is fraud going. it's just such a staggeringly high number to have to go back and change literally one-third of the reports coming in. >> i think with the unprecedented transparency we had the incorrect treasury code, the incorrect number. these were technical changes in terms of to be consistent with transparency these were not changes to the jobs being reported. >> the gentleman's time is expired. i now deal to the gentleman from california, congresswoman -- >> thank you so much, mr. chairman. i think this is a very crucial hearing. the timing of it is great. and i am so glad to see secretary miller from my district, l.a. unified, as our deputy secretary of education. so, he knows the condition of the state and tremendous
shortfall. so given the economic crisis in the state of california we are especially glad to see that my school district, los angeles unified school district was the third largest recipient of the recovery act funds in the state and can you explain the impact these funds are having on the quality of education, we are able to provide for our youth, and i do know that we have a serious shortfall in the budget unified. >> i think that l.a. unified being the second largest school district in the country is a great story in terms of the impact. i know from the press there were thousands of jobs that were at risk but the superintendent was desperately trying to address given the state's shortfall and receiving dustin and less money allowed in this case particularly thousands of pink slips to be picked up and so that the school year for the 09
and ten school year in fact could be preserved and have more and i think in a large urban school district which has substantial student achievement issues in terms of the gap between those with high poverty and low poverty that the need to maintain class sizes and not have them skyrocket, the need to ensure you have the latest equipment is paramount if we are ever going to close the achievement gap, and i thank the stimulus money very much have helped us make progress and prevent us from falling back. >> we could use another fund, couldn't we? because even with the money that has been received there is not enough to close the gap and i have heard the superintendent at the beginning of this week talking about the layoffs, shortened school weeks, time off at no pay and so on. i believe we are almost up to a million students.
i understand before i got to the committee meeting that there were some challenges to the data in talking about propaganda but i wish that we would remind ourselves the mistake the war with falcon direct costing $15 billion a month. and now they are asking for more troops in afghanistan which will cost us $5 billion a month. and if we could get in just a portion of that to improve our education system, to improve our transportation system we could do wonders and strengthening the education of our youth. i just attended a high-tech meeting earlier this morning, and i mentioned to them at around the table that we are going to do the best we can in educating our children and sciences and laugh so we can be
competitive, and i take india with their large $1.1 billion they test their kids and send the most talented ones to a certain school. so, i am hoping that we can stimulate particularly in the educational field, and i want to get mr. dodaro to comment on this. but i hope that we can send money out to our educational institutions, school boards, directly so that we can support their curriculum and in particular in higher education. we are turning away students from our community colleges. and so, those who are seeing that the figures or propaganda i can say come to my district. our unemployment has always been over two digits and for having national and and would limit of
10.2% hours would be close to 11. mr. dodaro, in your overseeing are you satisfied with the information you are getting about how we have used that stimulus money and are we seeing jobs created? can we look to the future with the stimulus and if we have a second one if we can indeed create jobs so that we can enhance school boards throughout this nation, not just mine, but throughout the nation, can you respond? >> yes, on the first point the national data collection system setup was a good first step but there are a number of data quality reporting issues that are significant and need to be addressed and completeness so that is a challenge. we have made some recommendations. omb agreed to implement those
recommendations to the extent they are implemented will increase the information. with regard to the future stimulus, one of the other mandates we have under the current bill recovery act is to look at the impact of economic downturns on state governments and what affect it has on health care and other important areas like education. so i think we will be examining that. it asks us to go back to the 1974, 75 recession and look historically including the latest economic downturn. one of the areas i think is a very important is the future targeting of assistance whether it is based on on employment levels or another factor. there were some targeting in this stimulus bill and a medicaid area but in other areas i think that is something that could be looked to to perhaps be improved in the future. >> the gentleman's time is expired and i now recognize the
gentleman from louisiana. >> thank you, mr. chairman. and i am not interested in what are not the stimulus bill is right or wrong. what i am interested in is plaine number crunching. mr. miller, based on your testimony you said $67 billion have been spent through the department of the jewish and from the $67 billion approximately 400,000 jobs have been created or saved. my question to you is of the 300,000 educators what is the average salary? >> as we look at the calculation would be roughly represent jobs saved roughly 105,000 which when we actually look at -- >> my question is what is the average salary of an educator -- >> about $70,000.
>> of the average -- >> on a fully loaded basis, so when we actually look at the total jobs saved and the context of a words we trying delayed and save for $100,000 of typically 70% as personnel costs the numbers seem -- >> 100,000 jobs that are remaining what kind of jobs are they? >> we call them government services. many of them are government services -- system eckert the salaries for those positions? >> i don't believe i have that information but i can get the information to you. >> what did some be saved is a 50,000 per job? >> i would hate to speculate. >> based on my own number crunching if you take $67 billion divide by 400,000 jobs the number comes out to be about $167,000 per job.
now if an average educator makes about $70,000 my question to you here is where did the other $100,000@@@@@@@@@ @ @ @ @ @ @ @r @ would have the whole -- >> if 7% goes to personnel costs the other 30% goes -- >> capital, computers, all the evidence to support, office, on a fully loaded the bases beyond benefits you have personal salary --
>> based on your own testimony the numbers don't come out correctly. >> the opposite because we were confident they actually coming top-down it matched. >> if you have 70 cents of every dollar goes into personnel. in other words going to the actual jobs saved or created; is that correct? which according to -- based on your calculation than 70% of $167 would be approximately $140,000. >> we are talking about education. part of this is understanding which math we are talking about. if you take the three and 25,000 educated related jobs and looked at the average education job per salary and say it is roughly over $100,000 if you said 70% of that typically if you look at the allocation of education budgets, 70% of educators of the educational spend is personnel on a fully loaded basis. you would save roughly --
>> mr. miller i have taught middle school, have taught at the college level so. when i taught middle school you know what my salary was? 20,000 per year. when i taught at the college level, do you know what my salary was? $28,000 per year. now my question -- i am a little bit confused with respect to how you are right at the $100,000 per educational job because i know for a fact teachers don't make $100,000 a year. all of the teachers in my district, if they are lucky, if they have a 20 or 30 years experience they will be lucky to make 60 or $70,000 per year. so my question to you here is based on your numbers it would cost $167,000 per job if an average educator makes 67,000 per year where did the 100,000
remaining go? >> like it try to clarify -- i can follow the details. the average salary based on the educational science is roughly $50,000. if you actually look at -- >> once you look for benefits it is roughly 24%. when you then -- that is how you get just under 70% of the personnel related cost for an education and that is again -- >> if it is consistent with how you ask me how do you spend this money i would tell them the money that went to an educational job, 50,000 print to an educator and i don't really know where the other $120,000 go >> i spent my professional career both operating and like you and finance. one of the first things we did as we try to scrub the numbers was ensure -- >> you try to scrub the numbers? >> the gentleman's time is
expired. you should have been teaching in new york or california. you would have made some money. [laughter] >> the word is he wanted to teach. >> thank you, mr. chairman. thank to the panel. let me start with deputy secretary porcari. transportation jobs allow for the awarding of contracts, loans, grants, and creation of projects all around the country. what is being done to ensure of the 46,000 jobs reported to be created or saved by the recovery act a fair proportion are going to women and minority employees. >> congressman, that's an excellent question. first, none of the normal requirements including disadvantaged business enterprise goals were waved as a part of the recovery act. so we started with a promise
that in all the transportation projects, highway, transit, aviation, that those requirements apply. our recipients are required to certify that they are actually doing that. we have been working in addition directly with the state dot and transit agencies among others to make sure that is the case. we have focused on getting the projects under way quickly and making sure that it is equitable at the same time. >> many of the nation's transportation projects are less than or just more than 50% complete. can you project future job numbers based on the reports you have received? >> congressman, i am reluctant to projecting to the future on the job numbers because first of all what isn't linear. is partly dependent on season in
many parts of the country the weather, the weather dependency is a big part of that. we also know that the actual outlays we have lagged the work gets done under local funding and we reimbursed at the end, so on the employment side it is and linear but we know that we have many additional create and save jobs to come. we also have portions of our transportation dollars including high-speed rail program at $8 billion tiger grants at 1.5 billion that have not been awarded. so those will come as well. we were trying to get projects out the door quickly. i think we were largely successful in that and we were trying to make sure there was a steady flow of projects around the country throughout the entire time period of the recovery act and we will be
successful at that as well. >> thank you for that response, mr. secretary, and i will not bring up the recission issue. that is a separate hearing. let me go to the secretary miller. mr. secretary, in your report it shows some of their greatest success is other recovery acts have occurred in school districts by saving or creating 325,000 education jobs for teachers and personnel. in my state of missouri an estimated 8500 teachers have been saved from dismissal. can you discuss with the short and long-term impact on our children and their schools would have been without the recovery act and education fund's? >> i think as we have travelled around the country and talked first hand to the superintendent
says, principals and teachers whose jobs literally were saved by the recovery act, what they tell and what the parents tell us is if we could afford to have this teacher is not in the classroom at this critical time and that without those jobs our children's ability to continue to learn and to be more colleges and career ready at a time when it is so important our high school graduates are prepared to go on to college and go on to careers and increasingly competitive world where more jobs are being competed in india and china and as they make investments in their education system that this is a critical time we must sustain and enhance investment in education and so they are very thankful and they feel if this money hadn't been there those jobs wouldn't have been there and their children would have suffered. >> thank you for the response to read and real quickly, mr. devany, given your experience in government are yo aware of any other efforts to collect data publicly provide
going to be included in the survey? >> who decided what questions? that would be omb. >> why in the world what a congressional seat be included in a report of this type lacks >> i actually believe, sir, if my memory serves they write up better than the act in the large self, that the recipients were supposed to report that. so omb put up the guidance of the act. spivak said the act was actually engineered to specifically identify lyrical subdivisions within the government rather than using the traditional what we abuse or 30, 40 years and that is using zip codes. >> zip codes are included as well. the congressional districts will be reporting. >> said the act we passed literally had this political
element mandated into it. >> it did. >> and it sort of indicates author intent when you see that kind of thing. in your experience, do you remember any identifications like this before rather than just using the zip codes and extrapolating that i do not? >> off the top of my head, i don't. >> this problem could've been avoided if the act itself amid good and stuck to their dues additional reporting. in this reporting, by using the districts, what if you had a situation like the improvement of the rideshare lane on i. 15 that goes through mr. hunter's, mr. issa and my district. does that count as re- jobs? >> no. i think that each -- if it was a
company or a contractor that was building that, that contractor as a vendor would report to the state that they were building a highway and they would count the jobs no matter what state or what district they were in. so you're going to get a lot a project that stand multiple districts and states. >> okay. distressed situation. as we are throwing this money are spending this money out to build projects, has there been any discussion about saying that we took an extraordinary effort in an emergency polish to get that money out there? has there been any backup push on the regulatory issues that will face. a good example as i was on the light rail system for san diego. the environmental obstructionism of trying to use an existing
rail, technically as they are, the uni in a logically it is absurd. if you're going to make rail there is not the issues environmentally out there. has there been any discussion in your department at coming back in getting us to construct the regulatory process to allow projects like the high-speed rail in california to be able to move forward and spend the money and construction rather than litigation lacks >> commerzbank, there's been a lot of ways to streamline the process whether it's our internal working group on new starts during the streamline process or in more general terms. which offended many of the transportation recovery projects is the states and authorities aviation in transit but an emphasize on ready to go off the shelf projects that i've been through this approval processes so they could get underway quickly and the jobs would be either saved or created quickly.
that's the bulk of what you see around the nation and the projects that are underway. the transportation projects that are imminent tend to be the larger, more complex ones that needed -- that need final approvals or were finishing design. >> we can go through the issue of what we see is all the advertising signs that were mandated in the mandate was withdrawn and the flexibility of cost going from 3000 in one state to 5000 in the other. but this whole process, been engineered from the beginning with a political statement engineer it into the counting process. i mean, this kind of the county were you exaggerate the benefits, you underestimate the problems is exactly how enron itself in trouble and ended up in jail. and as public agencies we damned them for doing that in this accounting process -- >> time is up.
accounting for monies allocated, but the core issue of our investment is one. two, while it may have been confusing, we actually looked at state budget -- a portion of state budgets that were addressed by the stimulus money reported by the states. we then did the calculation, the jobs that were reported by the states and aggregated and looked at what i would translate a bike on a per job basis. understood how did that compare with historical trends and i was another way we could triangulate it. third, we actually looked at that. there have been well over 1000 new stories, independent news stories. they gave us confidence that the numbers that are being reported
are accurate. as we described, and we have the process in the terms of policy, with automatic or grand but actually looked at recipient reporting, where they're outliers, flag outliers, contacted all 50 states that decide an aggregate we are confident. >> as you know, those words are going to be quoted back to you. so i'll give you an opportunity if you think that there's any pullback that you go on the record need to do it. because that's a very specific number and a very vital -- >> and i think i understand. i think the question becomes with 14,000 school districts, with 100,000 schools, as you then get to the precision of school a versus school be that we don't have access and that level of transparency. you said do i expect that that level, will these numbers be fine tuned from school a to
school be from district a two district v. i think will see adjustments over the next quarter. but i think an aggregate, that as this gets rebounds and fine tune do i think will silly coming back to jobs they've numbers, magnitude and 325,000? i think the answer is yes. >> i actually appreciate what we're trying to do for the first time ever here. we probably need to be operating in the plus or minus and in some kind of range, given the many levels of government with which we're dealing. we are not even trying to do this kind of thing before. i think the problem may have much to do with the expectation that here is a number and nothing is more specific and finite as a member. so if i've got the number i've got the goods on you. as far as we're concerned, speaking for myself, the most
important thing is the transparency, tracking these numbers, correct and these errors. let me ask you a question in that regard. given human fallibility, and even a all of this data were at one level, there is -- there has been established by omb a way to do quality reviews. so that here you've got something very specific between the 22nd day and the 29th day. during following the end of each quarter. they are supposed to be a review and this review is apparently intended to resolve just such material omissions and reporting errors as i've been under discussion at these hearings. at this hearing today.
if the user views were conduct it, and if a material omission or significant reporting error was discovered, was there an immediate process for correcting it? we are just so quick to just get on to the next step to report the data. if you had a quality review. , why didn't that. work better? i can ask -- secretary miller, porcari. either of you might, or senator devaney. >> if i could take a stab at that. i think this was the very first time that so much davey had been asked to be reported by recipients. it is also the very first time the agencies had to oversee that kind of an activity.
they had to report -- >> was ten days inadequate time? you gave ten days -- it's seven days for that matter enough time for federal agencies to review the information? >> well, at the end of the day, i don't think it is. >> are you considering what time. mac given the experience you now have >> i think we are trying to think of the way to extend the period of time with which directions can be made. >> at this point, since even the smallest error will be had against you, it probably would be better to engage in some delay. there are a whole lot of us here, on this panel, who are more interested in jobs created, recognizing that the united states has never undertaken
quite the logarithm and you have how much were created, how much would've been created anyway. u.s. come back and say they would've been created anyways, but you can't, not in this recession, we believe. the economist may need to get to work on their model, by the way, about how many jobs do you create on your own in a recession? okay -- locality, you're in the deepest recession ever. leave out the word depression. the deepest recession ever. there must be a model someone or that tells me, intimate stabs localities lay not everybody even after they get stimulus money, there must not yamato that says jobs get created in the kinds of jobs to get
created. we see people, for example, district of columbia dismissed after school starts. school has started and teachers dismissed. then, we know for sure this is not a very exact science in whatever models were using have not had to confront this situation before. but frankly, i've been very impressed by all the overlapping accountability. and given that overlapping accountability why it did not work. i'm looking not the recovery board. then we have the id and the state orders. and we have the prime recipients then all this gets publicized through recovery.gov between omb and recovery board.
now, the first in that occur to me was that all the factors are involved, surely they're not stumbling all over one another. forgive me if it seems to me that maybe this comes out of my background of dealing with appeals. if one doth sequentially so that one finds errors in the prior -- higher-level, for example, i can understand that. but what i need to understand here is how these layers even get bored and needed, whether they have specific roles, the ig, the recovery board, the people responsible within the state, the recipients themselves have they been given any guidance that would sort them out so that they might be a check one on another? or are they all trying to go at the data at one time with their
own version of how it can be interpreted? >> with respect to the ig's, they haven't gotten involved. >> right. of course they are. >> and the board has a small staff and omb has a small staff. at trying to be as helpful as we can be -- >> who does that leave with the responsibility? >> it leaves the recipients themselves responsible not only for what they put in by forechecking later to make sure they did made a mistake. it also leaves the agency is in a position where they have to make darn sure those recipients are reporting as accurately as possible. >> at the federal level or the state level? >> at both levels, quite frankly. i think the agencies can only see so much, so if they let down their going to have to depend on their state counterparts as well to talk to the recipients. nsa cascades down, hopefully at the end of the day, the recipients will get a
notification that something's wrong and you need to look at that. the way the omb guidance is only recipients can actually change the data appeared federal agencies, the board, at the omb can't change the data, so the recipients have to be notified that we think there's a mistake and then they have to change the data. >> and that of course goes to how long it takes to make sure that all of that occurs. >> yes. >> i recognize that the administration was very pleased to have some data to use with the 30,000 jobs came out. to indicate that this money was certainly producing something. and you've been under a lot of pressure to show that it's producing something. now of course, as is always the case of congress, when they do oversight that you would continue to be under that pressure and under the same pressure to correct the errors.
at least you have the understanding for me that you're doing what it's never been done before. let me ask you about analyzing what's occurred. i think this is pretty organic that this is one of those things, kind of like common law and you learn doing it and you build on it and you build a better mouse trap each time. or you perfected the mouse trap each time. in addition to omb, agencies had to provide guidance to recipients to sway the requirements. now we've got the next quarterly reporting theory. that's going to be sometime in january. and each quarter thereafter, the funds are going to continue to be spent. i guess that's flashier of the stimulus spending. is there a way in which advanced
administration, you are reviewing the first quarter reporting to analyze the problems, then to streamline or improve upon the process in some way that everybody -- so that everybody will be doing the same thing. could you tell us how -- what that process looks like? that review process based on hard data now before you sorted out what kind of mistakes were made. i think some of them inevitably made so you can give, i take it, new or revised instructions to whom and how is that being communicated across? >> well, certainly everybody involved in this is engaged in the lessons learned exercise. we are all looking not -- and i would include, i'm sure, the agencies are as well. but omb and the board are
engaged in the lessons learned activity right now. and we will -- we have learned a lot from this first reporting. we have learned a lot from what the train to put out today as well. and i know that omb has responded that they are going to implement gao's recommendations. i expect the ig's will ask them recommendations as well. and what we have to do is make each and every reporting. run more smoothly than the last. there is certainly some technical fixes that the board can do on this next report. two make sure it is easier for recipients to report. an additional guidance or clarification of guidance by omb is going to be very helpful as well. >> and if i may add, madam chair, in practical terms even during this first reporting. we've been trying to make these in real time. we have these twice weekly conference call them include all the agencies were were talking about recipients reporting, what
i'm not here to tell you how to do it, but people who engage in uncertainty every day have learned how to develop ranges so that people do not have raised expectations. and for the people do not play a game. we have never had before this committee anything approaching quarterly reports. the way in which the congress has operated certainly in the years i was in the minority is wait until something is all over. then the easy thing to do is to call in people and recount the errors that occurred. what this hearing is doing, is working with the administration
to track what has never been tracked before. so that we can get something out of a hearing that is correct to and helpful, so that while we are disappointed that the numbers were erroneous, we believe that the importance of this hearing is the process you just described. that may be the most important thing that could possibly happen because of the kind of error -- errors that my agency found may be entirely different from that of another agency. and next quarter i get that kind of error. but nobody forewarned me that that kind of error comes up. so this sharing of errors and corrections across the boundary lines of agencies, despite their different missions, could not be more .
years. and dr. army holds a phd in economics from the university of oklahoma and is the former chairman of the university of north texas economic department. of course welcome, good to see you. and now we all will introduce dr. irons as a research and policy director at the economic policy institute. with an emphasis on federal tax and budget policy, dr. irons earned his phd at economics from the massachusetts institute of technology, mit, and is the author of numerous publications. dr. irons was in economics professor at elmhurst university
omb watch and of course brookings institute and federal reserve word of governance. welcome dr. irons. there's a long tradition here do we square our witnesses then. so please stand and raise your right hand. agree to tell the truth and nothing but the truth, please answer in the affirmative. let the record reflect that the witnesses answered in the affirmative. dr. irons, we will start with you first. and as you know, the procedure is that we have five minutes and then of course we have the opportunity to raise questions with you and further comments that you might have. so we welcome you dr. armey. [inaudible] >> push that button.
thank you mr. chairman for the invitation. i like to spend two minutes with a quick review. the intellectual gantry or such public policies as a stimulus package of course is john mccain's general theory and the notion was that in times of economic disgraced downturn, governments could with the screwed up the economy in texas we call it the economy. by either temporary running deficit or by either increasing spending or cutting taxes, there is a mixed review of the history of the policy prescriptions and their success. i would be one i would suggest that on the stimulate the economy through the increases spending side there's a pretty de minimis record of success in the history of the application of these theories. while on the other side,
stimulating the economy through reduction in taxes has been a fairly rich history of success with the two most notable cases be in the kennedy tax cuts of 1962 and the reagan tax cuts of 1982. i of course lived as an economist through both of these times, they are exciting times for our profession, but one of the sweet irony is that i reflect back on in the academic community is when president kennedy proposed stimulating the economy through cutting taxes so he could also increase revenues. he was considered an active genius. he was celebrated in the academic community of being a president who is teaching of economics when ronald reagan came back with exactly the same idea 20 years later he was considered a and the academic community. despite the fact that he has success to be considered even greater than that temporary success, the kennedy tax cuts.
i would argue that the larger problem that the lakers is we have an economy that is institutionally structurally out of balance. and by that, i think you should look back and say the strength of every economy is the private sector. every nation statement in the history of the world has tried to grow a strong economy through the public sector has had abject failure resource misallocation and poverty and hardship. while the united states, on the other hand, building this economy on the basis of private sectors initiatives has the greatest track record in the history of the world here it there's a balance that must be struck between public and private activity and there are various subscriptions. he had a very good outline, but the general principle was the public sector should be de minimis and focused on such
things as public capital, administering a system of justice, especially such things as a system of contracts, which is of course of your private enterprise contracts and you must of course be confident that your government will protect your contracts will rates. and of course security needs. the basic notion here is that the government must, as a limited list of things they must do, and it must do well, with the efficiency, the primary product of their successful efforts of courts increase productivity on the private side you're such things as roseanne transportations. i believe what has happened in the united states is we've crossed beyond the point of diminishing returns as government has grown out of control, we've gotten to the point of negative returns. this discussion is a discussion discussion -- a lively
discussion internationally. what is the appropriate size of the government relative to the economy? i'm proud to tell you that this international discussion is being carried out by and large in terms of something called the army curve. and the army curve says there's a point that is optimal where you have the necessary and sufficient rational devotion of enterprise in support of private sector initiatives and you maximize your economy. eon that it becomes a burden. i think we've long since gone beyond that optimal point and we are now a point where the biggest single problem that the labors the american economy is the fact that the federal government is such a burden. my analogy is this, in the competition between world economies, the united states has the fastest most beautiful horse in the race. there's no doubt about it.
our record of a congressman in providing designer living for a citizen is unparalleled, unchallenged even. but the horses carrying a 500-pound gladness jockey. this whole theory that you can improve your performance in this race of international economic competition by feeding the jockey and starving the horse is asinine. i don't know any other way to put it. but it is certainly counterproductive. when i was sick gu is the difficulty that i've belabor the american economy in the past year or year and a house have first been born out of misguided public policy. most importantly, two decades of two easy money i asked myself when i looked at the bubble burst on housing, how could so many people make so many bad decisions irresponsible and
counterproductive decisions. it's hard to imagine that. so my response was, well when was the last time i did something foolish. the last time i had too much easy money. so what we had was a period where the government created this housing bubble, maybe for the best of misguided intentions, but nevertheless a product of a bad public policy. market could have corrected that as they did the.com crisis just a few years earlier. if left alone, the government said look, if we have too much of a good thing, the best way to improve on it is to add more of a good thing. and so we had first the bush stimulus package, which was a failure. and the high drama at the bush bailout was not only a failure but very offensive failure to the constituency our citizenry at large. and then i was followed by this
enormous package that is the current stimulus package. there's one innovation in this recent effort that i find interesting. and that is the idea that we can track of money and make a direct tractability recording of the jobs. my own view is this effort is by and large becoming clearly seen as empirically a bogus offers that is misconception and it's an administration only politically defined and finally to observation on that one. politics is morally and intellectually inferior to virtually everything with the possible exception of sociology. and so if you're in fact making decisions out of a politically defined motive than you're letting your politics definer economics. you're probably going to come up with a bad notion. and just to be fair because in my testimony i quote so many of the correct thinking economist
and let me just end with a quote from john kenneth galbraith related to this exercise that is frankly,, coble at best. galbraith said the you where. i've got an example of what it was he wanted to suggest at that time. thank you. >> thank you very much dr. armey. and now dr. irons. >> thank you for the opportunity today. i should warn you that i'm an economist and manufactured numbers for the purpose of this testimony. hopefully my members are not made up and are actually good estimates. but let me start off by saying there can be no accountability without transparency. and i applaud the efforts of this committee and the congress administration to take transparency seriously. my testimony today will focus primarily on jobs, on the four
required to report on job creation. is one recipient of a $2.5 million contract of which 90% was a working subcontractors stated and again i quote, one full-time job is created with contractors organization as a result to this war. the job is titled project manager. clearly, this is the person who is in charge of managing the subcontractors. over $2.5 million, the reported just one job created. they likely did not include the subcontractors. to give you a sense beside this potential problem, by my count there are 2181 report to which projects have been started and recipients receive more than $50,000, get the reported zero jobs in their report. there are 528 reports in which projects have been started,
recipients receive more than $1 million yet fewer than two jobs were reported. so there may be legitimate explanation for these outliers, but we should not necessarily conclude that the 640,000 total is presented by recovery.gov is an overstatement of the jobs and might very well be an understatement. my third point, i want to stress that recipient reports, well priding valuable information on projects and employment cannot and will not capture the full, true impact of a recovery act. in fact, the recovery act would be far greater with the subtotal of the recipient reports. for example, the data only includes contract, grants, loans. tax benefits and entitlements are not included. the funds paid out so far only about 52 billion is one fourth of the two bill is in the form of contracts, grants, and loans. further, and importantly, these recipients only include direct charge, for example, a new construction worker hired to
install a roof will be included. it does not include the job impact of the construction workers spending on car repairs or restaurant dining. the data does not also include upstream supplier jobs and the companies that manufacture roofing supplies at the wholesale or retail value. my fourth and last point, despite the problems of individual reports, it appears that the recipient totals are consistent with the council economic advisors job and with other macroeconomic data and estimates. the economic evidence shows that it is having impact. before the recovery at comment window is was declining on average of over 500,000 jobs a month in the fourth quarter of 2008. and by nearly 700,000 jobs in the first three months of this year, the economy was in very much freefall. in the most recent revamp it, the employment declines have averaged 200,000 jobs. for the recovery act, gdp was declining at a rapid rate. in the nine-month period ending in march this year we saw the
most rapid decline in gdp since courted the data was first collected, went all the way back to 1947. where the most rapidly deteriorating economy in over 60 years. the most recent data shows turnaround. gdp grew in the most recent quarter. using methodology used to include tax cuts and invade and also rescinded after supplier jobs the total number of jobs created or saved so far is likely between one and one and a half million jobs. this estimate is consistent with the estimate in may of 1.5 million in fourth-quarter 2009 other forecasters including goldman sachs and others had estimated a gdp consistent with these estimates as well. these macro estimates are also consistent with the micro data for recovery.gov reports. in summary it does appear that the recovery act is on track.
evidence of macro level data to model estimates to recovery.gov recipients all point to significant impact on jobs in the rotary economy. thank you. i look forward to your questions. >> thank you very much, gentle man. i'll think of you for your testimony. i will ask you a question, both of you, recovery act, what is your impression of it? >> my impression of a recovery act was that it was a fully futile effort. if you look in my adult lifetime, all those years i spent watching and studying economic policy, what has worked to spur growth and recovery in the economy is cutting taxes and leaving the taxpayers who earn the money, actually become more of an investment. one of the things -- and we have some very greediest institutional dislocations in
this fundamental structure of economic policy. and we start with the tax scope. if you go back to adam smith 1776 wealth of nations he says the road to economic growth is abstinence savings and investments. the savings and investment are to economic activities that are double taxed so they're given a double whammy disincentive. every smart tax reduction we've ever made, that his tax reduction aimed at diminishing the load on the sabres investors of this activity is generated the economy. if in fact the federal government by size and the magnitude of spending is already redundant with even the interest on the national debt at that time, being equal to the entire budget of the defense department, with already
existing current deficit of $500 billion to double down on what is redundant is not protect you. >> let me share our prodding tension. but use a different analogy. before the recovery act was passed, the economy was in freefall. the economy had jumped out of the plane. it was declining at a rapid rate. the recovery act with a parachute. it explode the decline. it gave the economy a chance to recover. it's not going to be the end to get us from where we are. no one is claiming the economy we're in is a great environment. but at least it stops the worst from happening. in terms of the policy, i tend to be more of a kitchen sink economist. i think i try a little bit of
everything. in the recovery package he saw there was a number of investments. there were states, there is tax cuts as part of the package. and i think the problem demanded a comprehensive broad-based solution. i think that's what the recovery package represented. so i'm very optimistic that this gives the economy a chance to turn around, stop the downward spiral, and give us a chance to recover. on the tax-cut component, i think there are components of the recovery package in which i may not be as spohn and in other parts, including some of the tax cuts i find it interesting that the bush tax cuts were not in listed as part of his excess story in terms of stimulus. in fact, we had one of the worst recoveries on record after the bush tax cuts were passed. and so i think the record in most recent times of the efficacy of type has has been at best mixed and i think we need to think about what kind of tax cuts. there are tax cuts for low and middle income americans which
will be spent can be very effective stimulus. tax cuts for businesses who need customers, not tax cuts are in many ways probably not a good idea. so i don't think will use tax cuts as. >> dr. irons, i'm deeply concerned that unemployment has now surpassed 10%. is this evidence that the recovery act is not working or that the rejection of the council of economic advisers that they were wrong? >> i don't think it is. i agree with you he unemployment rate is a huge problem. i think the high rate is a result of the economy that was in place before the recovery act was passed. i think when you look at the projections of the council economic advisers where they thought the economy would be, they along with private forecasters were very -- were overly optimistic about five the
unemployment rates would rise. as a statement about the economy before the recovery package was passed. and in fact, if you were not for the package would have a higher unemployment rate. to my example of the economy in freefall in parachute you're in a slow down but you still see some increase in an employment rate. at the same time, you don't want to cut yourself loose of the parachute. and that's the case would be in if we did not have a parachute or a recovery act. >> i yield to the gentleman from missouri. >> tank -- thank you, mr. chaiman. thank you for your testimony, mr. armey. i am curious. i know that in the previous testimony we heard earlier, they were talking about all the jobs that have been created and
saved. one of my concerns is the two thirds of jobs happened to be with the department of education. they've created 400,000 out of the 640,000 jobs and in the testimony it appears that all they did was make sure that the teacher's budget for the education budgets were funded for another year, which means what are we going to do next year. and so it doesn't look like we created or saved a permanent job because we haven't fixed and economic problem that will allow that job to continue unless we continue to find another stimulus that primes the pump in. >> first of all, there's been very little distribution in this amount of money that shocked the world. but by and large it is governmentally. you're getting some public jobs that are perhaps being retained that might not otherwise banned, but there are certainly not constitute a recovery. the thing that gives you
recovery is when the private sector investor class engages. that's what happened in the aftermath of the reagan taxes. and you are correct. i did not mention the bush tax cuts. we've got an anemic recovery out of them because there was so much income redistribution in that package of tax cuts as opposed to a simulation for investment and savings. that was a tax-cut package that was too politically defined to be as effective as they might otherwise have been. and i made a point earlier. you need smart tax cuts. if they're just income redistribution of tax cuts they do very little guy. so the fact of the matter is you have some direct linkage between jobs in the government sector with intergovernmental awards, but i'm more than discouraging dramatic menstruation of declining employment in the private sector, it gives you the
10% overall reduction in unemployment rates. >> thank you. i am on the small-business community and it takes about 67,000 jobs, according to testimony we've heard, to create a job for small business. yet the average in this package is about $246,000 that's created so far. i know that in this package, there were $31 billion roughly of small business tax credits and things like that. do you know off the top of your head, mr. irons, how many jobs were created or saved as a result of those tax credits? >> no, i don't. again, let me say, there's a generic rule of thumb i think you can imply that public-sector job creation is very costly and enhance no productivity for the economy as a whole. private sector job creation coming from the investment sector, where in fact you expand the application of science and engineering through new capital investment increases productivity and impact results
in a much greater or bang for your buck in terms of the productivity gains that result sustainability of the jobs. as what you see greater permanence in the jobs created on the private sector. >> also, with regards to -- this stimulus package we are incurring a huge amount of data. mr. -- dr. irons, what you feel is the adequate level of debt for our economy to be -- to live with? >> that's a good question. i think that's a noble question. there's no specific number where if you're below what you are fine, if you're above it you're in trouble. >> a half a trillion dollars of interest is something we can sustain forever? >> the question is whether it is a sustainable level. i think you have to look at how bad the economy grows and how bad the deficit increases the data. and i think if you are underneath the threshold, which keeps the debt from rising as you share the economy you're an
debt. the fact is the government acquires money in three ways. they tax it directly or they borrow it with a decline in world willingness to do so, they end up printing it. if they printed up they tax indirectly by deflating or inflating the currency, deflating the purchasing power and it comes back. now most every case, the cost of current mismanaged fiscal policy falls on the future generation. >> thank you for your testimony. i yield back my time. >> i yield to the gentleman who at one point share this committee for six years. >> you know, the president has said and his administration has said they created 640,329 jobs.
that's pretty specific. you'd think they'd be able to account for those jobs since they are so specific down to the actual job. 329? how do you account for that? >> well, i think the number that's presented -- the >> do you think they can really be that accurate? >> is the number actually 640,329? no. absolutely not. this is the sum total of the recipient reports. these are with recipients accord when they added up. >> where did you go to school? >> graduate school, mit. >> how old are you? >> that's a good question, what year is it? thirty-nine. >> how would old would have been in 1982?
>> we had a guy that came in to the white house and become out of the carter administration with 14% inflation, 12% unemployment, called it a misery index, 26%. and they were throwing money at everything. he put on a sweater and said we had to turn our thermostat down, the world was going to hell in a handbasket. this guy comes writing and from the westin says you have to raise taxes. we've got to put more money in the treasury because everything's going south. and you know he said? he said, well, i think that we have to give people and this is more disposable income to invest. and that to spur economic growth. and you know what? he was right. we had 25 years of economic expansion or 25 years of economic expansion. in this velocity that you can spin yourself out of debt and solve economic problems by spending, to me, i just can't
get it. and when i hear people say well, you spend $1.4 trillion more this year than you've taken and, though we can spend more and get out of debt. i think you've got to be smoking something that's illegal. you know, this is crazy. the health bill were talking about is going to cost at least another trillion dollars over the next decade. it's going to raise taxes who knows how much. were 1.4 in the tank right now and there'll be more spending. like the cap-and-trade. you can't spend your way out of the hole. when you get so deep you've got to stop digging. and that's the problem we have right now. i'm putting this in very simple economic terms. we need to cut spending. there's a book i wish you would read, mr. irons, it's called the forgotten man. have you ever heard of that book?
you being an intellectual, i wish you would read it. it goes from 1929 to 1949. it tracks the things they did to solve their economic problems. and they did almost the same thing you're talking about in the mid-19 30's. and you know what happened? got worse. and it wasn't until the war started that they dug themselves out of the hole because everybody had to go back to work, women and everybody else because they were fighting overseas. the only reason i bring all this up is, you know, i've been here for 27 years in some people say well that's too long. i don't know maybe it is. but i have to tell you this. one thing i do know is that you can't stand more than you take in inevitably it's going to come back and bite you in the rear end. and that's where we are going right now. and this idea and i heard you say that we're in a position now where we could spend more money to get the economy moving. i think, mr. irons, you're
incorrect and i hope you'll read that book and maybe the next time i see you ill have a different perspective on the way we spend money in this country. and that's what that it was good seeing you, i wish she were still here. >> and still majority leader i would say. >> now you're going to far. you are dreaming. >> i'm sure steny hoyer would have a different view than not. >> let me recognize the gentleman from maryland. >> thank you both for being here and dr. irons, i don't know when it became a bad thing to know stuff. ..
again, like almost everything i can think of, even unemployment compensation which can be in fact a good and necessary thing can be carried to extreme. if it becomes a fountainhead for dependents -- >> let me so we are on the same time, i understand where you're going. let me rephrase the question. do you agree for people out of work through no fault of their own and are continuing to look for a job in the economy and can't find one for no fault of their own that they should receive on employment compensation?
>> i don't believe the best public policy option is to make them less miserable in their continued unemployment for a longer period of time as opposed to those policies that can be directly pursued that will give them the job opportunity. one of the things that frustrates me as i look at this past year and half in the united states public policy is the opportunities to expand employment opportunities for people in the private-sector that have been for -- for ghana and the problem is policyholders always oftentimes tend to pacify their own feelings of inadequacy by saying well at least we need them more comfortable in their misery. but i don't find that a very attractive public policy. >> would you have voted for the packages in the economic recovery bill and that the house has passed since then? >> i can't remember -- i'm sorry -- >> we passed unemployment compensation. >> i probably would have -- i
may reluctantly have voted for them while i argued we ought to be doing something more productive, more responsible and with greater part and greater sense of dignity and future for these folks -- >> you would have voted yes? i want to make an understanding. >> i didn't look up the package. i never voted on something i didn't read. >> how about the tax reduction components of the economic recovery bill? >> if there were tax reduction components that were not nearly the become yearly income redistribution all i could probably ss to have something to engage savers and investors more of that activity which would result job creation. >> you keep saying if there were. do you read the economic recovery bill? >> no i didn't. i had no reason to. i wasn't going to vote on it. speaking of the commenting an awful lot both here and in the press about the bill. we asked members of congress to read it when they vote on it and are considering it.
you have said a lot about it so i'm surprised to hear you haven't read it. >> my neighbor has a dead cat stinking of his yard. i don't have to know how it got there to know it's stinking up the yard. >> it's important to read things. there are comments suggesting things are a bad thing, but it seems to me that we await to the people we are communicating with that we have an understanding to read the information. let me ask you this because it isn't clear yet whether he wore for the on and planned compensation components or whether you have supported the tax components to read both of those were significant by the way of the economic recovery bill. dr. irson, can you talk to that bill we are talking about today represents less than one-third of what was in there for economic impact. could you comment a little on that, please? >> that's right. the specific elements that have been recorded on recovery.gov
will represent about one-third of the total amount in the package. right now there are about a quarter because the, out more slowly than the tax cuts. the assistance to the states and other components. so tax cuts are a significant part. and the direct investment, which largely shows in the report talked about today are a significant part, about equal weight each. so the numbers we've seen today are only part of the overall impact. >> can you comment a little bit on the situation that the president inherited with respect to the deficit and the debt following the last administration? >> yes. the deficit which is now well over a trillion dollars is largely the result of policies put in place before the president took office as well as deteriorated economy. the teary reading economy was as i said before the most rapid since 1947 was the prime culprit in terms of reduction revenues and increase in outlays that have resulted from the economy
going down. that's been the prime driver of the deficit so thinking about how you solve the deficit problem the number one priority is to get the economy moving again and we can't solve the problem of we have a recession that is going to last five to ten years. then he is to be the number one priority. >> thank you. thank you, mr. chair. >> thank you. i yield five minutes to the gentleman from ohio, mr. jordan. >> [inaudible] >> would the gentleman yield for just a moment? >> mr. armey, since you didn't have the opportunity to read the entire document let me assure you those of us that had the chance to read it not in the few hours of the airdropping at midnight and the vote, but afterwards, no, there were no long redistribution tax cuts and tax cuts in their word eminem us to the investor class in any way, shape, or form unless you include the green jobs. i yield back and thank the gentleman. >> is on the gentleman's time. >> mr. chairman --
>> this is a little strange though knowing the kind of technical person that you were when you were leadership here that you provide leadership for an organization that is totally against the bill and you haven't read it. but anyway -- [inaudible] >> thank you, mr. chairman. dr. irson, and one of your earlier estimate he said the recovery package and i quote was kind of try a little bit of everything; is that right? >> i'm not sure on the exact wording, but yeah -- >> it seems to me what a mischaracterization. i would argue with this government has done and frankly it goes back to the previous administration as well as not try a little bit of everything, we've tried everything, big government spending. think about it. the bailout package last fall, the stimulus package, the appropriations process that has moved forward -- we are spending 12, 14% increases. all we've done and i argued many times big spending was going to get us out of this mess. we should have been out of a long time ago. that is all the government has
been doing so to characterizof everything is just totally, totally wrong. here's what i want to focus both of you guys i want your response to this. thinking now in a big picture cents, to questions. are you troubled, either one of you are you troubled by what i would characterize as unprecedented involvement of the government and private-sector? and let's go specifically to all of the spending we know but how about this fact, when i think about this in the united states of america, we now have a federal government pays are telling private american citizens how much money they can make. and i understand it's done in the context of the t.a.r.p. repayment plan, but think about that, what's going on and the framework of senator schumer saying maybe we need to look at the idea of any publicly traded company, mr. feinberg has jurisdiction over the pay compensation. so are you troubled by where this administration seems to
want to take this economy? and i will start quickly with mr. armey and then mr. irons. >> first of all yes i'm troubled, on the basis of@@@@d@$ r productive motive in the history of the world that is contributed to human well-being greater by greater amounts and a dime less to negatively affect human well-being and the profit motive
and the government is in fact going to say look, we will confiscate your salaries, your earnings and so forth a few days incentivize people from being productive. >> thank you. dr. irons, quickly. >> it's not a quick answer unfortunately. it's a big question. the government is involved -- >> the question was are you troubled by the unprecedented level of government -- >> you have to be more specific. >> you can answer yes or no if you're troubled. >> i'm not troubled by some and i am troubled by others. i would much rather the government be out of the banking business and the car business. i think once you are in it at the behest of banks in the case of t.a.r.p., you need to do what you have to do to manage effectively, beah a pay azar, oversight, reasonable oversight over the business practices of assets ul and i think that is reasonable to. i would like the government out of the banking sector. >> let me define the question in a slightly different manner. would you -- i would argue one of the things holding us back from coming out of this recession with the type of
growth we would like to see as a business people are smart people. they take educated risk. they don't take crazy risks so they are asking people i would like to bring the people backed i laid off and the expansion. but i don't know what these yahoo! is in congress are going to do. i don't know if they're going to pass this health care proposal which raises my -- i don't know if they're going to pass the cap and trade which is going to cost more in energy cost. would you argue the uncertainty of the policies being promoted, policies being advanced is hindering the ability to create jobs whether they get done or not? and let's go quickly with dr. irons and then dr. armey. >> i think uncertainty is not good for the private-sector. whether or not these are major uncertainty in the life of a business person, i don't think so. i think a lot of this is on your head you can pass health care and without of uncertainty -- >> we can get rid of uncertainty but add a big tax if we do it; right? >> i think certainty is better and the more we can forecast what you are going to do i agree that is a way to go.
>> dr. armey, quickly. >> there's no doubt about the uncertainty kept the investor class on the side line through all of the 70's, and they are sitting in out right now. specifically with what they see as the targeted industries of the big government and visions of the administration. >> mr. chair, if i could since you took -- if you wouldn't mind, one last question on the debt. we are at 12 trillion. we are slightly to go to $20 trillion over the next decade. this scares me to death. i'm not the guy that offered a balanced budget this past spring to cut some spending and get some sanity back in the government. think about what it takes to balance this -- if i could, mr. chairman. >> i give the gentleman 30 seconds. >> to balance this we have to first get to zero then run a trillion dollars surplus to ever get to balance. so how serious -- i mean, to me this seems like the most serious thing the thing the government and the country. how serious is it, dr. irons?
>> i think it is important to maintain a level of deficit and debt that is sustainable. do we need to get exactly to zero? i don't think there is any economist who is going to say there's something magic about a zero balance. i think if you feel it's important to keep books in balance that's one thing from an economic perspective you can't maintain perfect deficits, on permanent it so long as you maintain the sustainability. >> i understand. >> thank you, mr. chairman. >> calling the gentleman from louisiana. >> thank you, mr. chairman. and dr. armey, i was reading through some of your background and says here that when i was professor, so i would assume that you taught at a university level? and if you don't mind me asking what was your salary teaching economics at the university? [laughter] >> well, i left teaching in
1985, or 84. i was teaching both summer terms and my salary was $35,000 at that time, and it was a curious case in my point i was one of the few people i knew that was qualified by way of a comparable employment to actually leave my employment and go to washington in congress and double my salary. very few people could do that. college professors could. so the pay is and always all that good. but still, somebody is going to pay you to do nothing but what you enjoy giving it's not a bad light. >> first of all i would like to thank you for your answer. and the reason i asked the question as previously unquestioned deputy secretary miller on the amount of jobs created in connection with the amount of money actually spent according to the numbers
mr. miller presented. the department of education has spent $67 billion in order to create approximately 400,000 jobs and based on the numbers he presented on a calculated that on the average it would cost $167,500 to create one educational related job. my question for you, dr. armey, is this. based on the average salary mr. miller stated as $70,000 per rich tater, which leaves about $100,000 remaining to be spent on what have you. how can your organization -- you are in charge of freedom works. in what ways can the private sector or your organization and
approved on the efficiency of jobs creation? >> it's very hard to improve on the efficiency because cost efficiency is no part of their incentive structure. so, what happens when you devote yourself to a sustaining employment in the public sector and you also sustained very high costly oftentimes not very productive superstructure support structure of course is not a college professor i know of that isn't aware that donner, which spends too much time and money sustaining redundant administrative positions all of which have to be supported in order to support the faculty. the private sector is much more efficient. that is to say it costs less money to sustain a job and because the job more often than not is of greater productivity, has returned to it and in some
device to hold down the cost. >> based on your experience as an educator as well as being majority leader in your professional opinion, how would the department educator spend its stimulus money in order to create jobs? >> will again, it's very difficult for me to envision very many ways in which the government can spend money and enhance production, output, growth in total output productivity. governments are just frankly not very efficient in their use of people's money and so if in fact you rather than taxing more money for me or my grandchildren to put money in the hands of government agencies and bureaucrats to spend inefficiently now offer very little game and well-being for the community leave the money in my hands i will invest it
wisely. we will have capital expansion. you remember there was a great theory of business cycles called the innovation cycle advanced by joseph and i remember john kenneth galbraith criticizing because we have seen it all there will never be a greater invention, but look at in the 80's when the investments got in class all that invention and creativity in the 60's and 70's and the electronics sector of the economy burst on the scene. so now we have all kinds of careers, jobs, opportunities for further employment and enhancement in the private site in product lines that didn't even exist in 1980. >> thank you. i yield back my time. >> and i yield to the gentleman ranking member from california. >> thank you, mr. chairman. if i could have a slight put up with the majority statement here i've underlined a portion that says october 30, 2009 recovery
accountability and transparency or recovery board released a consolidated account of those reports showing the recovery act funds have directly created or saved 329 jobs. that has been disputed today. mr. armey, if i ask you to calculate what $1.73 billion would promote in the way of jobs if you give it to the gun i would you be able to give it that accurately? >> i would have to first of all brushup my shakespeare and get in touch with the department labor statistics. one of the reliably honest agencies of the federal government. probably rely also a little bit on some of the information i could get -- >> let me ask one you don't have to brush up on which goes to the core of your economics training and ury to the kafiri. if we accept the figures even
though the earlier panel said its plus or minus, there's inaccuracies and so on. if we accept those figures and then if we took fiscal year 2010, mr. obama's fiscal year where we are going to spend 3.552 billion, just call it 3.5 trillion, i'm sorry, 3,552,000,000,000 -- 3.5 trillion, and using the same ratio of my whiz kids in the back came up with 13,145,253 jobs. so, if we continue at that rate that means the federal government, which employs about 3 million people directly can spend 30 million on medicare, medicaid, every social program, everything we can save 13 million jobs without current spending and if we double the spending we could nearly wiped out the 15 million unemployed. so, is dr. irons and dr. armey, is it logical to simply spend
3.5 trillion more dollars every year in order to get unemployment down, or is in fact the keynesian concept simply unsustainable the government jobs are like feeding somebody the fish for a day, spend the 3.5 trillion, keep people on the government pay over, hanging above blue rooms waiting for something to do and then not eliminating any efficiencies and at the end of the year the 3.5 trillion spent and you have to spend the next year if you to keep the people of in planet. isn't that true, dr. irons? >> i think you're mixing apples and oranges to a great extent. >> okay, dr. armey i think you know about apples and oranges. >> you have to go back to my initial observation. a very large portion of the existing expenditure and an employment structure of the current federal government is redundant. so the fact of the matter or even for that matter counter productive. if you add to that you add to the burden.
>> so more rocks in a knapsack if somebody is not going to get any better. let me ask about the hangover. dr. armey, if we were to spend 3.5 additional trillion dollars that those who say more government would take care of on employment don't we have an inevitable hangover where the debt burden in other words amount of money that goes out just to pay the chinese for what we owe them in fact mortgages the future of government decisions in other words it creates a permanent overhead that you can't get past even if it reduces the size of government? >> we are already there. if we were all ready to meet our current obligations and medicare and social security we but consume the existing federal budget. again, the problems still remain government cannot get money unless they printed, unless they take it away from somebody else. people are not willing to buy our notes and lend the money. and byrd and our children with taxes.
>> dr. armey, obviously spending 167,000 for each job and it's only a job for one year. it's one year full-time equivalent could be compared to the private sector. can you imagine your wildest dreams somebody saying if you give me 167,000 what i can do is create one job for one year. can you imagine an investor being asked to do that? wouldn't it typically be if you invest what say 1.6 million other words ten times that figure i will create ten jobs in perpetuity, isn't that the normal business model something along that line of about ten jobs per million that are permanently created in the private sector? >> that's right because the private-sector produces a product people want and there is a productivity enhancement that generally comes from expanding the capitol stock and apply a new science and engineering. but there is repeat sales. the fact of the matter is the government doesn't produce
ohio. >> thank you, mr. sherman. i'm sorry i wasn't here for the entire presentation. i was in another committee but it seems we've gone from defining propaganda to engaging in propaganda. and some of what we are doing here. dr. irons, could you helpless -- do you believe that the estimates, and we are only talking about a small portion of the stimulus in terms of job creation, the estimates of 640,000 jobs even if the statistics are not exactly specific do you believe they are close to being accurate? >> i think they are ballpark as i said in my testimony the errors brought up in mistakes there are some that would underestimate the number of jobs and so as a ballpark matter i think we are getting the ball park right. >> okay. and mr. armey, i find the conversation i was just engaged in very curious. this motion we are spending $167,000 per job and the job being a temporary thing.
when you create a bridge and hire somebody to build a bridge dustin bridge have value in and of itself? >> i'm sorry, what? >> when you build a bridge and hire someone to build the bridge does it have value? >> i assume the bridge is a bridge to somewhere and it would -- observation and economic theory is sound public capital increases productivity of the private-sector. >> if you are building a bridge i assume that the ira and its coming from the bridge is coming from and i are factory on the tools used to create the bridge? i'm assuming the trains coming to create are coming from the private sector. i also assume the engineering studies and architecture studies are private sector jobs, are they not? >> certainly so. >> so the one job that might be created to build the bridge or multiple jobs that might be used to build the bridge are actually
having a ripple effect in the economy. and at the private sector is benefiting quite tremendously just using the scenario that the supply for the bridge are coming from a private sector, the tools being used to build the bridge are coming from the private sector. the engineering studies are coming from a private sector, the architecture studies are coming f it's ly to get the money to build a bridge to take it away from me. i might have bought something and what have been the same -- >> do you have the capacity to build a bridge or a tax cut? >> look, if in fact there were any substantial documented portion of these funds going to real public capital expenditures i would be more encouraged by your argument. >> they're absolutely are and i would point you to -- it's interesting you bring this up because the minority leader suggested and he's from the state of ohio that there have been no projects that were capital in nature, invested in the state of ohio. and then the next day the
government office and the department of transportation state of ohio said in fact while we engage in this hyperbole all the time about no infrastructure dollars going in the lead of the whole series of projects that have been invested in an infrastructure in the state of ohio so are those job creation efforts? >> if in fact they built of real productive public capital you can go back to adam smith, yes this is good investment -- >> so it's creating jobs. >> but i would argue that frankly while president bush as well there was very little expenditure of these big expansive funds allocated to the real public capital structure mostly to income redistribution all efforts like tax rebates and things of this nature. so i guess and the memorable line of shall lie between i would have to say that don't
impress me much. >> i would like to get back to this notion that these are one-year jobs. are you familiar with, you know, in the construction sector jobs that continue if you had a road project and build a house, if you build a hotel and build a building in downtown cincinnati, if you build a bridge -- to those jobs go on forever or does it go project to project and isn't the idea in investing in a project in fact to create that temporary employment to get them over that time when the economy is slow? >> of course if you're talking about capital investment to build your plant and build your road and build your bridge and then on that you have ongoing production productivity and expanding in the economy if it is a real capital structure. and like i said there is a big difference in whether or not it is a bridge to somewhere as opposed to a bridge to nowhere.
it is to know where there are no future employment opportunities pursuant to the bridge. >> i wasn't in the congress when they were building bridges to know where. i'm in the congress when we are putting money in the bridges that matter in cincinnati and elsewhere. but this notion that these jobs, and you know because they employ some one for each year and that is how they are counted doesn't count because the construction project is supposed to last years and years and years. i don't understand that. if you could help me with that i would appreciate it. >> there is a substantial difference in spending the money to build a bridge and enhance production of the community and goods and services were planned or facility. as opposed to paying another year of salary for redundant personally faculty some place. this was an argument that engaged james argued you could improve while being by having
people dig holes and fill them back. >> i'm curious to your -- >> i would ask unanimous consent the gentleman have more time to talk about this small portion of the bill having little to do about the earlier discussion, but if he wants to go on about the small amount of roads and even though there should have been a large amount i would ask yet another -- >> i would ask the witness one more time, you mentioned redundant faculty member. is it your belief that the teachers that are being supported through this legislation are redundant faculty members? >> let me say clearly about this i was a professor for 20 years familiar with what goes on and universities and educational facilities. and they are extremely inefficient at internal resource allocation, and yes there are many redundant faculty members. now, the heartbreak is where you could expand the faculty members where there is a need you are often blocked from doing so will he maintain the employee ability
of the redundancy. >> so your experience as a university professor at the university allows you to suggest that the faculty members retaining employment through this legislation in k-12 education across the country are redundant? >> let me suggest -- >> i am being generous and trying hard but the gentleman's time has long expired. if you have additional questions me to put them in writing and have dr. armey to respond. >> i appreciate the chairman's indulgence. >> may i conclude by pointing out my joining experience in the administration universities is a greater degree of experience than yours and building bridges. >> let me say first of all let me thank both witnesses for their testimony, and i think of
course we have been very helpful and i think that dr. irons pointed out even though a few mistakes were made that when you look at the overall picture is probably balance is out because such information will of go forward so when you look at the overall picture it will balance out in terms of actual amount of jobs created. the testimony we have heard today refutes the and unsupported allegation of propaganda's. not propaganda but most of the witness is a real recovery act spending has created and saved hundreds of thousands of jobs. the 640,000 jobs that were reported as directly created or saved by just a portion of initial recovery spending validates estimates by the government and private forecasters that the recovery act is responsible for more than 1 million overall jobs so far. and of course that to me which includes jobs indirectly and created jobs saved and all these
different categories people talk about here. the stimulus package put forward to help every working americans is a far cry for propaganda. this is putting food on the table in many families. to the people whose jobs were saved and to those who have found work it represents food on the table and a roof over their heads. the real issue is we need to get recovery act projects under way faster and we need to target them on economically distressed areas. the areas that need the most we need to make certain we put it in their and make certain jobs are created. at the same time we need to continue strict oversight of recovery ad spending. the chairman of the recovery board testified that the recovery act contains the most extensive accountability and transparency provision that we have ever seen.
we intend to make sure we see the most of it. finally, i understand that politics is involved in everything we do on capitol hill. i've been here 27 years. but the issue of job creation is too important to play politics with and i refuse to play politics with it. we need to work together to get this economy back on its feet and get people back to work. this is serious and i think that if we work together we can do that. we need to make certain we have penalties involved with agencies and groups not reported. we need to make certain that we get the legislation through that makes it possible for people to have funding. i think that now it's an unfunded mandate and we should make certain that they are able to get administrative people. they are able to get folks in
that will be in a position to get information into a reasonable period of time and making certain that information is accurate. and i think that it makes -- it is very important to the need that. i think to ignore and talk about this is not working and that isn't working and at the same time people are suffering and we cannot afford that luxury any longer. we have a job to do and we need to do it. i want to thank you, dr. armey sshí#xwx of the $787 million signed into