The American Recovery and Reinvestment Act of 2009 provided $840 billion in total. It’s your money – provided through your taxes – so you deserve to know where it went and how well it was put to use.

Where It Didn’t Go

According to Republican ads, the American Recovery and Reinvestment Act of 2009 ,it went to “friends, donors, campaign supporters, special interest groups…Solyndra ($500 million), “windmills from China,” “electric cars from Finland.”

Any truth to this? Not really. Politicized polemics – yes.

  • PolitiFact, found the “windmills from China” claim to be “mostly false,” and the“electric cars from Finland” claim to be totally “false.”
  • The Washington Post’s Fact Checker gave the ad overall two “Pinocchios” for having “significant omissions and/or exaggerations.”
  • Media Matters and the New York Times analysis found that “much of the ad is false.”
  • The ABC News analysis found that “less than .000031 percent of the $814 billion stimulus program” went to wind turbines made in China.
  • The Washington Post analysis found that “the stimulus created about 51,000 jobs in the U.S. wind industry.

FactCheck.org also dispelled claims from an ad from Americans for Prosperity that stimulus money went toward “green jobs overseas.”  It debunked the following claims:

Claim: “$1.2 billion went to a solar company that’s building a plant in Mexico.” 

Fact: The loans were to finance a solar ranch built and operated in California. While the company recently opened a solar-panel manufacturing plant in Mexico, most of the panels for the stimulus-financed project will be built in its plant in California.

Claim: “Half a billion went to an electric car company that created jobs in Finland.”

Fact:  The first round of government loans to Fisker Automotive went toward design, engineering, sales and marketing work done in the U.S. While the cars it has built were made in Finland, a second round of funding has gone for development of a second, less-costly line of cars built in a shuttered GM facility in Delaware.

Claim: “Tens of millions of dollars went to build traffic lights in China.”

The traffic lights were assembled in the U.S. For a time, they used LED lights made mostly in Asia, under a waiver the Department of Energy issued in February 2010, but 10 months later that waiver was withdrawn, when a foreign company expanded its LED traffic light manufacturing facilities in the U.S.

Claim: It was falsely alleged that the stimulus did not create any American jobs

Fact: The Congressional Budget Office’s economists state that it created or saved between 1.2 million and and 3.3 million jobs.

Claim: The ad made the overreaching claim that President Obama has “wasted” $34 billion on investments like Solyndra.

Fact: Only 2 percent of such loans have gone bad.

Claim: “$2.3 billion of tax credits went overseas”

That claim ignores the realities of our global economy, in which some American companies manufacture overseas, and vice versa. The ad cites a Sept. 9, 2010, story in the Washington Times, which reported that “as much as 80 percent of some green programs, including $2.3 billion of manufacturing tax credits, went to foreign firms that employed workers primarily in countries including China, South Korea and Spain, rather than in the United States.” The article referenced the reporting of Russ Choma, an investigative reporter who wrote that companies based overseas were receiving stimulus money to build wind farms in the U.S. However, he also wrote that some of those foreign-owned turbine manufacturers have factories in the United States and some American-owned turbine manufacturers have factories overseas, and we simply don’t know where all of the parts were made.

Claim:  “$1.2 billion went to a solar company building a plant in Mexico.”

Fact:  Two largely unrelated facts are mixed together to create a misleading impression. In fact:

  • SunPower Corp., a California based company, applied for a $1.237 billion loan guarantee from the Department of Energy to build a massive solar generating facility in California.
  • SunPower later sold the project to NRG Solar, but will still help to construct the solar generating facility, called the California Valley Solar Ranch, for them.
  • Last August, SunPower announced that it was opening a solar-panel fabrication plant in Mexico.
  • While some of the solar panels installed in the new California Valley Solar Ranch will come from the new SunPower facility in Mexico, as well as from other SunPower plants in Asia,  the overwhelming majority of solar panels will come from SunPower’s nearby plant in Milpitas, Calif.
  • The solar facility is being built in California, employing some 350 American construction workers for several years, and would employ 15 people permanently once operations begin.

Claim:  “Half a billion went to an electric car company that created hundreds of jobs in Finland.”

Fact: The car company, Fisker Automotive, was awarded more than a half billion dollars worth of loans to make fuel-efficient electric cars. But in fact:

  • The first loan, according to a statement from Dan Leistikow, a spokesman for the Department of Energy, was a $169 million loan guarantee to support the development of Fisker’s first luxury electric car, called the Karma. But the Department of Energy and Fisker say the government loan money was spent exclusively in the United States “to support the engineers who developed the tools, equipment and manufacturing processes for Fisker’s first vehicle, the Fisker Karma.” According to Fisker officials, that work was done in Fisker’s U.S. facilities, including its headquarters in Irvine, Calif.,”which has 700 employees and plans to continue hiring.”
  • Fisker has raised over $1 billion in private equity, and that private money was used to finance the manufacture the cars in Finland, he said, while the DOE loan was used exclusively in the U.S. for engineering, design and marketing,  and sales that supported more than 600 jobs in the U.S. “All of the DOE loan money that we got for the Karma project had to be spent in America,” according to Fisker spokesman Roger Ormisher.
  • Moreover, a number of American suppliers were used to make parts that were assembled in Finland, Ormisher said, creating about 1,500 jobs. Last year, Fisker officials estimated more than 45% of the components of the Karma were manufactured by about 40 U.S. suppliers.
  • In addition to the $169 million, the DOE approved a much larger, $359 million loan to help Fisker develop a lower-priced version of its car, called the Nina. The plan is to build those cars at a shuttered General Motors factory in Delaware. Fisker plans to move forward with the car, and the “first option” is still to build them at the factory in Delaware. If it moves forward, the plant could employ up to 2,500 workers.

Claim: “President Obama wasted $34 billion on risky investments.” (in the background is a banner for Solyndra.)

While Republicans want to focus on the small piece of this that went to the failed Solyndra (a $535 million loan), most of the green investments have been quite successful.

To put that in perspective,  that isn’t very much in comparison to the $90 billion total, and not very much in comparison with the $2 billion that went missing in Rumsfeld’s Pentagon just before 9/11.

Fact Check reported that the Energy Department has committed $34.7 billion to nearly 40 green projects under low-interest loan programs, according to information published on its website. Only two of them — Solyndra ($535 million) and Beacon Power Co. ($43 million) — have filed for bankruptcy, according to aMarch 12 report by the Government Accountability Office. It looks as if DOE may get back as much as 70% of its loans to Beacon. Says Fact Check:

Worst-case senario, the government is out a total of $578 million on those two deals. That’s less than 2% of the total program, so it’s a stretch to claim the entire $34 billion has been “wasted.”

Claim: Mitt Romney has claimed that spending under Obama has “accelerated at a pace without precedent in recent history.”

Fact: Politifact recently wrote that  Mitt Romney is wrong to claim that spending under Obama has “accelerated at a pace without precedent in recent history,” because it’s actually risen “slower than at any time in nearly 60 years.” Politifact concludes:

 Using raw dollars, Obama did oversee the lowest annual increases in spending of any president in 60 years. Using inflation-adjusted dollars, Obama had the second-lowest increase — in fact, he actually presided over a decrease once inflation is taken into account. Bottom line: The Facebook post’s claim that government spending under Obama is “slower than at any time in nearly 60 years” is very close to accurate.

Where DID the Obama Stimulus Money Go?

ProPublica has an excellent breakdown here and here, which is put into graphic form (at the top of this article) by The Daily Kos.

  • About 60% of the stimulus money went to tax cuts to individuals, small businesses, and others.
  • Another $153 billion or so went to help states with Medicaid expenditures and to protect teachers and first responders from layoffs.
  • Another $117 billion went to building and repairing roads, bridges, rail, and other crucial infrastructure.
  • Around $100 billion to help people hurt by the Bush recession.
  • $88 billion went for Pell Grants, NIH, upgrading health care IT, special education, etc.
  • $75 billion went towards energy efficiency, science and technology, R&D, and broadband.

Was It Really Needed – And Did It Work?

As the New York Times summarizes it:

The president is no more likely to get credit for the Fed’s action — for which he was not responsible — than he gets for the transformative law for which he was fully responsible: the 2009 stimulus, which fundamentally turned around the nation’s economy and its prospects for growth, and yet has disappeared from the political conversation.

The New York Times article highlights Michael Grunwald’s book, “The New New Deal” which puts to rest claims that the law “failed,” and that “it was too small and sloppy to have any effect.”

Keeping the Economy Afloat

The majority of economists agree that The American Recovery and Reinvestment Act is responsible for:

  • Saving and creating 2.5 million jobs.
  • Helping the economy grow by as much as 3.8%.
  • Keeping the unemployment rate from reaching 12%.

Protecting the Most Vulnerable

Beyond just keeping the economy from shutting down, the stimulus  protected the most vulnerable from the full impact of the recession. Of the act’s $840 billion cost:

  • $1.5 billion went to rent subsidies and emergency housing that kept 1.2 million people under roofs – which is why the recession didn’t produce rampant homelessness.
  • It kept at least 7 million Americans from falling below the poverty line through increased spending on food stamps, unemployment benefits and Medicaid.
  • It made crucial investments in neglected economic sectors that are likely to pay off for decades.
    • The switch to electronic medical records will all but end the use of paper records by 2015.
    • Over $1 billion was put into comparative-effectiveness research on pharmaceuticals.
    • It extended broadband Internet to thousands of rural communities.
    • It doubled renewable power output by spending $90 billion on a huge variety of wind, solar and other clean energy projects that revived the industry.
Then Why Is The Success Of the Stimulus So Little Known?
According to the Times, the Democrats did a poor job of explaining, and the Republicans did a good job of confusing:

Grunwald argues that the recovery act was not timid, but the administration’s effort to sell it to the voters was muddled and ineffective…Mr. Obama, too cool to appear in an endless stream of photos with a shovel and hard hat, didn’t slap his name on public works projects in the self-promoting way of mayors and governors.

How many New Yorkers know that the stimulus is helping to pay for the Second Avenue subway, or the project to link the Long Island Rail Road to Grand Central? Almost every American worker received a tax cut from the act, but only about 10 percent of them noticed it in their paychecks. White House economists had rejected the idea of distributing the tax cuts as flashy rebate checks, because people were more likely to spend the money (and help the economy) if they didn’t notice it. Good economics, perhaps, but terrible politics.

From the beginning, for purely political reasons, Republicans were determined to oppose the bill, using silly but tiny expenditures to discredit the whole thing. Even the moderate Republican senators who helped push the bill past a filibuster had refused to let it grow past $800 billion, and prevented it from paying for school construction.

Republicans learned a lesson from the stimulus that Democrats didn’t expect: unwavering opposition, distortion, deceit and ridicule actually work, especially when the opposition doesn’t put up a fight. The lesson for Democrats seems equally clear: when government actually works, let the world know about it.

Conclusions:

Stimulus programs are largely bipartisan. Past programs were put in place by Bush, Clinton and others. However, unlike former stimulus programs, this one has been highly politicized, due to a hyper-polarized environment. The stimulus was needed, passed a bipartisan vote and was largely successful, and not wasteful.

The reason the public is largely unaware of these facts, is that, while the case against the stimulus made by the Republicans is almost entirely a series of distortions and untruths, the Democrats have been mostly incoherent in explaining it. As Michael Grunwald puts it,  that the economics were good, but the politics was terrible.

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