Lawrence Summers, head of the White House National Economic Council, again insisted last week that the $862 billion economic stimulus bill has been maligned.
“It is an enormous achievement … that with all the projects across the country — weatherization, medical records, high-speed rail, what have you — that there have been essentially no reports, zero, of corruption, of abuse or of egregious delay,” Summers told the Financial Times.
I wonder whether Summers needs to take Dramamine after spinning that hard. Or perhaps motion sickness medicine would be helpful after a ride on one of America’s nonexistent, stimulus-funded, high-speed trains.
In any event, the reality is that detailed reports of stimulus malfeasance are commonplace. The same day the Financial Times published Summers’ preposterous remarks, the Associated Press reported that state auditors in California found officials in Tulare County had wasted $1 million in stimulus money.
I don’t know where Summers has been, but back here on planet Earth, a million bucks is not “zero.” And this is just one example from a day in the life of the stimulus — the full scope of the problem is much, much worse.
Because Summers brought it up, let’s take a look at weatherization. Congress gave the Department of Energy $5 billion in stimulus funds for weatherization. Come December 2009, DOE had spent $522 million of the funds to weatherize 9,100 homes, according to the Government Accountability Office.
Do the math, and the DOE spent roughly $57,362 per home. Either the federal government is buying platinum weather stripping, or Summers has some explaining to do.
The real explanation for the weatherization fiasco is readily apparent. Almost as an afterthought to the stimulus bill, Democrats tacked on a provision requiring that all construction-related stimulus contracts comply with Davis-Bacon, a Depression-era (i.e., outdated) legislation requiring government contractors to pay a “prevailing wage” comparable to private sector workers.
The Department of Labor was mired in red tape all last year, trying to determine the prevailing wage for weatherization in each of America’s 3,000-plus counties. So very few DOE weatherization projects got off the ground, even as unemployment trend lines started to look like a toboggan ride to Hades.
But the important thing here is that labor unions, which spent nearly $80 million electing Democrats in 2008, got an inordinate slice of the stimulus. That’s because the way Davis-Bacon is administered, it forces contractors to pay higher union wages with no correlation with actual market costs.
For example, under Davis-Bacon, residential electricians in D.C. must be paid a minimum of $16.10 an hour, plus $3.10 an hour in benefits. But in Los Angeles, Davis-Bacon mandates that residential electricians only need to be paid $7.73 an hour, with no benefits. Why the huge discrepancy in costs? Well, just take a guess where the local electricians union is more influential.
All in all, Heritage Foundation expert James Sherk estimates that Davis-Bacon inflates the cost of stimulus-related construction projects by as much as $17 billion. Sherk calculates that without Davis-Bacon, the government could save enough money to hire 163,000 additional construction workers, without increasing the deficit.
Unfortunately, the scandal isn’t that corruption and waste are inevitable when the government hands out billions. No matter what Summers tells you, that much is as certain as death and our ever-increasing taxes.
But Davis-Bacon points to an even more pernicious truth: When government hands out a metric boatload of money, the fraud and waste are often by design.
Mark Hemingway is an editorial staff writer for The Washington Examiner.
