Obama's Stimulus Dilemma: Spending Billions Quickly Without Waste

Obama speaks during the Recovery Act Implementation Conference.

With the $787 billion from the stimulus package beginning to roll out of Washington's coffers, the money is arriving in places like Columbus, Ohio, where it's covering the salaries of 25 police cadets, and Kansas, where it's funding the widening of U.S. 69 outside of Kansas City. But even as economists debate whether the cash injection will kick-start the economy, there's plenty of concern about how much will actually get to its intended destination.

The Obama administration has emphasized the need to avoid fraud and waste. "This is a big deal," Vice President Joe Biden said Thursday at a conference with state officials on maximizing accountability in stimulus spending. "We have a responsibility to make sure that there is unprecedented transparency for the American people."

Watchdog groups say that while it's still early, the White House's commitment to openness and minimizing waste, including launching the Recovery.gov website, is heartening. They applaud the appointment of Earl Devaney to head a new stimulus oversight board. While inspector general of the Interior Department, Devaney directed the investigation that led to lobbyist Jack Abramoff's imprisonment.

Still, no matter what provisions are put in place, experts agree, there will be waste. "Experience tells us that the risk for fraud and abuse grows when billions of dollars are going out quickly, eligibility requirements are being established or changed, and new programs are being created," the Government Accountability Office's acting comptroller, Gene Dodaro, told Congress last week.

There are some ways to limit abuse. One option is to make spending details accessible, as with the Recovery.gov site, which has already received more than 150 million hits. "We've been saying for weeks now that the way to keep the Recovery Act clean is to set up a system where millions of eyeballs can watch the money," says Greg Leroy, executive director of Good Jobs First, a Washington policy center.

The site remains a work in progress. Critics complain that information on how funding decisions are made and by whom isn't clear enough. They also want more details on specific contracts because the public contracting process is so vulnerable to corruption.

There are always risks when agencies receive a massive jolt of funding, say experts, who point to the Energy Department's Home Weatherization Program. It will absorb $5 billion of stimulus cash, a sum 10 times its annual budget. Another area to watch, says former Congressional Budget Office Director Rudolph Penner, is the $21.5 billion set aside for research and development on everything from energy to medical science, because it is so hard to define its effectiveness.

So far, watchdog groups say the Obama administration's efforts at transparency are unprecedented, particularly given their political risks. "We all know that this accountability will be used as a sledgehammer by those that are critics of the administration," says Gary Bass, executive director of the nonprofit advocacy group OMB Watch. After all, if incidences of abuse are uncovered, they will give new fuel to those who are lambasting the bill as wasteful spending.

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