Topic: Government and Politics

HUD the Dud

Last week I blogged on President Obama’s “stimulus” rally prop Henrietta Hughes — a.k.a. “the face of the economic crisis.” Ms. Hughes and her son, who were homeless, asked our messianic president to help them since they’ve been stuck on a two-year waiting list at the Fort Myers, Fl., public housing authority. Using the government’s own numbers, I was able to determine that Fort Myers and surrounding Lee County received almost $70 million in U.S. Housing & Urban Development (HUD) money in the past three years. Some $41 million — or $600 per man, woman, and child in Fort Myers — went to the city’s public housing authority alone.

I concluded that HUD’s inspector general should investigate what the housing authority is doing with all that taxpayer change. And if a story coming out of Las Vegas about its public housing authority is any indicator, there’s a good chance a lack of federal funding wasn’t the problem in Fort Myers. According to the Las Vegas Sun,

The North Las Vegas Housing Authority failed to spend up to $2 million on federal housing programs even as thousands of people were on lists awaiting that help, a recent audit has found… The total amount won’t be known until the city audit and a federal investigation are finished, but so far auditors have determined that at least $800,000 was misused, [North Las Vegas City Manager Gregory] Rose said. Still unclear is how the money was spent, who is responsible, and whether any crimes were committed, he added.

I keep hearing the Obama administration say the “stimulus” bill, which will be funding a plethora of notorious HUD programs, will come with transparency and accountability. The odds of accountability at HUD are somewhere around the odds of me taking off and flying after running really, really fast down the street.

In other HUD news this week:

  • A city in Ohio plans on using HUD Community Development Block Grant (CDBG) funds to purchase ball field back stops.
  • Tulsa’s city council wants to know more about the $1.5 million in CDBG money the city inappropriately used to pay for employee salaries. The city was to pay it back, but “In December, the city announced that HUD would allow the city to reapply for the $1.5 million to fund two projects it has deemed meet the required use of the funds.”
  • In New Jersey, “The [Franklin] township’s former housing coordinator and her plumber husband have been indicted on a variety of charges — including official misconduct, forgery and witness tampering — in connection with what authorities are calling a conspiracy to misappropriate more than $100,000 in federal housing rehabilitation funds.”
  • And in West Virginia, the Wheeling city council “voted 6-0 to spend $42,000 in CDBG money to install an outdoor modular floor at the Pulaski Playground tennis courts in South Wheeling.”

Omnibus Spending Bill in the Works - Unseen

GOP leaders are calling on the House majority to give them and the American people a look at the omnibus spending bill in the works. It’s likely to see votes in the next week or two. The bill will spend somewhere in the range of a half-trillion dollars on the operation of the government for the rest of the fiscal year.

Stimulus Lobbying Watch

Tim Carney has more details on some companies that hired lobbyists specifically to get a piece of the kitchen-sink spending bill:

For example, the National Association of Home Builders hired Baker & Hostetler a week after Barack Obama’s inauguration to lobby explicitly on the stimulus bill, which, in the end, included an $8,000 credit for home purchases.

Better Place Inc. is an electric car company that hired its first lobbyist — Steve McBee, a former staffer for House appropriator Norm Dicks, D-Wash. — to push for electric car incentives in the stimulus. The resulting cornucopia included an expanded tax credit for plug-in cars, $2 billion in funding for electric car batteries and $400 million to build an electric car infrastructure, complete with recharging stations.

Media giant Time Warner added to its lobbying army, hiring the firm Parven Pomper Strategies to lobby for broadband subsidies in the bill. These subsidies included $2.5 billion to underwrite loans to get broadband out to rural areas and an additional $4.7 billion in spending on other broadband projects. Similarly, network giant Cisco Systems lobbied for the broadband subsidies in H.R. 1.

Carney calls it “The Lobbyist Enrichment Act.” I wrote about “Obama’s K Street Recovery Plan” a couple of days ago.

Update—2012 GOP Contenders and the Stimulus

Louisiana Governor Bobby Jindal has indicated that he may refuse $4 billion in federal funds that his state is scheduled to receive under the stimulus bill that President Obama signed this week.

Earlier South Carolina governor Mark Sanford said he would turn down the money. Alaska governor Sarah Palin has also suggested she may say no to stimulus funds.

On the other side, of course, Florida governor Charlie Crist was perhaps the most ardent Republican proponent of the stimulus bill. (Mitt Romney opposed the stimulus, but since he is no longer a governor he doesn’t face the difficult decision of whether to put principle above “free” federal money).

Who knows, Republicans in 2012 might actually have candidates who are (or at least want to be) fiscal conservatives.

The Obama Recovery Plan: Carter Redux?

The big-spending massive pork barrel bill known as the stimulus package has been signed into law.  Richard Rahn reflects back on the economic crisis three decades ago and finds that the Obama plan looks a lot more like the Carter than the Reagan plans.  And we know which one of those worked best.

Writes Rahn:

President Jimmy Carter inherited a growing economy but one with relatively high inflation and high unemployment. He left office with the economy in a recession, high unemployment, and a record high inflation and interest rates (the prime rate at one point had reached 21 percent). Mr. Carter’s policies were to maintain the very high marginal income tax rates in effect at that time, coupled with a small expansion in the relative size of government.

Mr. Carter had appointed G. William Miller as Federal Reserve chairman, who proceeded to engage in a very rapid monetary expansion. The inflation disaster caused by the excessive monetary expansion caused Mr. Carter to replace Mr. Miller with Paul Volcker at the very end of his administration.

President Reagan inherited an economic situation even worse than the one President Obama has. When Reagan took office, the economy had been in recession for about a year, the unemployment rate was almost identical to today’s, but the labor force participation rate was smaller, and inflation was out of control. At the time, the newspapers were filled with stories about the “worst economy since the Great Depression” - which, unlike today, was true, and the economic establishment seemed to be bereft of ideas of what to do.

Credit markets were in a mess, and both businesses and consumers were not borrowing because they could not afford the interest rates. President Reagan, unlike his critics, had a clear plan to revive the economy, which included: monetary restraint to stop inflation; large reductions in marginal tax rates to renew the incentives to work, save and invest; and a reduction in nondefense spending as a percentage of gross domestic product (GDP).

Unlike other recent presidents, Reagan actually kept and delivered on his promises, which resulted in high growth (7.2 percent in 1984 alone) and large reductions in the unemployment rate - particularly, inflation. He stuck with Mr. Volcker and his monetary restraint because he understood inflation had to be brought under control, even though he also knew it would necessarily prolong the recession. How many of today’s politicians would be willing to take the heat for the long run good?

It is hard not to ask:  do the supporters of the “stimulus” bill really think it will work?  Or did they decide long ago that policy effectiveness was irrelevant to their political success?

The Biggest Check Ever Signed

The Obama Administration has banked a lot of political capital on the economic “stimulus” package signed into law today, and is hailing the measure as a sound-minded reaction to a dreary economic climate.  In truth, many of the programs in the bill are not only wasteful and inefficient, but have the potential to do some real long-term harm to U.S. policy.

Among them:

The economic stimulus bill is merely a nearsighted return to government spending policies which have been discredited over and over again [PDF].

For more on the package, check out Cato’s Fiscal Reality page.