There is only one congressional district in North Dakota, but according to the first batch of Recovery Act data posted on recovery.gov in October 2009, the stimulus sent $2 million to its 99th district. South Carolina’s 7th district was credited with $27 million, even though it was eliminated in 1930. And most of Montana’s stimulus jobs were supposedly created in its “00” district.
“Exclusive: Jobs ‘Saved or Created’ in Congressional Districts That Don’t Exist,” ABC News reported.327 Gotcha! The $6.4 billion the stimulus purportedly distributed to “phantom districts” became a huge national story.
In fact, no money was distributed to phantom districts. There were just some clerical glitches in the 131,000 reports that stimulus recipients had filed that fall, and the independent Recovery Accountability and Transparency Board had posted them to the new website without vetting their accuracy. The mistakes were soon corrected, but the uproar continued. Welcome to the age of federal transparency.
“To read some coverage, one might conclude that a scandal worthy of Sherlock Holmes had befallen the Recovery program,” the stimulus watchdog Earl Devaney wrote.328 “Not really—just critics hyperventilating.”
The Recovery Act’s unprecedented transparency was yet another reflection of Obama’s vision of change, backing up his good-government rhetoric about sunlight being the best disinfectant. As a senator, Obama had teamed up with Senator Coburn himself on a “Google for Government” bill that created the first searchable website for federal spending. After his election as president, he insisted the stimulus should go even further to help Americans track every dime online.
This noble effort handed Coburn and other critics a convenient sledgehammer to bash the Recovery Act. As Glenn Beck put it: “Now you can go right online and see how they’re peeing your money away!” Congressman Wilson, just two months after his “You lie!” outburst, declared the phantom districts were evidence that “the government website charged with reporting waste, fraud, and abuse is its very own worst offender.”329 The comedian Stephen Colbert, in character as a right-wing blowhard, fulminated that the stimulus was creating jobs for “leprechaun polishers” and “Yeti podiatrists.” Even Democratic allies like David Obey blasted the Obama administration, which didn’t manage the website and didn’t control Devaney. “The administration owes itself, the Congress and every American a commitment to work night and day to correct the ludicrous mistakes,” Obey fulminated.
It was just one more example of no good stimulus deed going unpunished. “Everybody says oh, transparency, that’s good government, that’s a good thing,” Biden says. “Hell, transparency is costly. Every wart, you see.”
The press had a field day with the jobs data in those 131,000 initial reports, even in districts that existed. It seemed like every investigative reporter in America was exposing saved jobs that hadn’t really been in danger, created jobs that weren’t really stimulus jobs, raises being counted as jobs, and jobs claims that made no sense. When the administration intervened to scrub a dozen blatantly unrealistic recipient reports from the website—one community college’s $27,000 stimulus grant supposedly saved 14,500 jobs—Republicans again cried foul. “Now we learn that OMB is playing an active role in trying to filter information,” howled Congressman Darrell Issa, the ranking member of the House oversight committee. How dare Obama remove all that erroneous data before he could be properly ridiculed for failing to remove it? When Devaney and other independent watchdogs testified that there was nothing nefarious about the problems, that recipients were just as likely to understate the jobs they were creating or saving, the media just spun that as more evidence of miscues. “Undercounting Concerns Stimulus Investigators,” USA Today reported.330
Recipients were obviously confused about how to report a saved or created job, and Devaney was confused, too. So the administration simplified the definition for the next round of reporting to include any job directly funded by the stimulus. After that, the data problems dissipated. In the first round, Devaney’s “Wall of Shame” exposed over four thousand recipients who failed to file timely reports. Over the next two years, those numbers declined over 90 percent.
But again, the PR damage was done. Macroeconomists believed the stimulus had already saved or created one million jobs, but the coverage revolved around phantom jobs in phantom districts. It was no coincidence that a poll during the controversy found 62 percent of the public thought the Recovery Act had hurt the economy or made no difference.331
The tone was set the day Obama signed the Recovery Act, when OMB went live with a rudimentary version of recovery.gov that it had created in just four weeks. The Associated Press story announcing this experiment in government openness was headlined, “Promises, Promises: Web Site Likely to Fall Short.”332 Why? Because Obama had said Americans would be able to track money spent in their community—and on the first day, recovery.gov only offered state-by-state estimates for stimulus spending and job creation, without breaking it down locally.
That’s because no one had any clue how much money any particular community would get from the earmark-free bill. The AP conceded this: “The problem facing the administration is that it’s impossible to put decisions on the website that have not yet been made.” The 2.0 version of recovery.gov would break down contracts by Zip Code, with GIS mapping to show visually where money was being spent. Transparency advocates say the Recovery Act’s sunlight efforts, while imperfect, are by far the best ever. “It’s a sea change,” says OMB Watch director Gary Bass. Governing magazine concluded “the stimulus has done more to promote transparency at almost all levels of government than any piece of legislation in recent memory.”333
On Day One, though, the AP was already writing its obituary for Obama’s promise of greater openness. From the start, the narrative was: What a mess.
My favorite example of this narrative was a USA Today story from May 2009, as the stimulus was starting to accelerate. Despite the Biden Bridge stumble, Pennsylvania transportation officials told the paper they expected a “record building program” that summer. But when it came to the Recovery Act, every silver lining had a cloud. The headline was: “Traffic Set to Slow as Stimulus Gears Up.”334
This was not isolated nitpicking. Three weeks later, the same reporter, Brad Heath, had a new scoop: “Stimulus Projects Bypass Hard-Hit States.”335 Gotcha! But he only analyzed 0.5 percent of the Recovery Act, an absurdly tiny sample. His primary example of a victimized state was Michigan, even though he acknowledged that its officials were “generally satisfied with the pace of federal aid.” He didn’t mention that the Energy Department had just announced its advanced battery grants, and five of the six largest factories would be built in Michigan.
In September, Heath was at it again: “Pace of New Stimulus Spending Slows.”336 Gotcha! But as he conceded, that was only because the feds had finished cutting multibillion-dollar fiscal relief checks to the states. In reality, the pace of new projects was, as he had already reported, gearing up. Later that fall, Heath tweaked the Recovery Act for sending too large a share of its highway dollars to rural America: “Stimulus Takes Detour Around Ailing Metropolitan Areas.”337 This was a more plausible critique, but it would have been more compelling if Heath hadn’t published another gotcha making the opposite case three months later: “Metro Areas Get Chunk of Rural Stimulus Aid.”338
Maybe it’s unfair to single out Heath, who wasn’t the only aggressive investigative reporter trying to dig up dirt on the Recovery Act. I’ve been a grouchy journalist for two decades; I’m familiar with the ethic that if you don’t have anything nice to say, put it in the paper. Reporters are supposed to follow the money, hold public officials accountable, and shine a light on failure; investigations that don’t uncover wrongdoing don’t make Page One or win prizes. But something about the stimulus seemed to turn reporters into runaway prosecutors, desperate to pin something on their target. Another example from my overflowing gotcha file: A month after a ProPublica article claimed t
he weatherization program was too focused on cold regions, a New York Times article suggested it was too focused on warm regions.339 “The nation spends twice as much on heating as on cooling,” the Times declared. Yes, and the program was spending twice as much in regions that relied more on heating—neither too hot, nor too cold, but just right.
When programs like weatherization had early problems, the media pounced; when the problems got fixed, the media were nowhere to be seen. For example, Wall Street firms initially charged high fees for underwriting Build America Bonds, prompting a slew of stories portraying the program as a backdoor bailout. But underwriters often charge high fees for new products; the fees gradually came down to the level of regular municipal bonds. And Build America Bonds were far more successful than even the White House had hoped, financing over $180 billion worth of school renovations, road improvements, and other local infrastructure projects, from a seismic retrofit of the Bay Bridge to a widening of the New Jersey Turnpike to a new performing arts center in Alliance, Nebraska.340 They were like a Recovery Act tucked inside the Recovery Act. But the media weren’t interested in that story.
They were more interested in digging up dirt—and when they couldn’t find dirt, they trafficked in innuendo about “potential conflicts” that “raised questions.” My beloved alma mater, the Washington Post, was a serial offender, publishing reams of articles implying that the Recovery Act’s green investments were somehow sketchy. One story tarred CleanTech for Obama cofounder Sanjay Wagle—a green true believer who had worked at a venture capital firm before advising Rogers at the Energy Department—because his former firm had invested in a few stimulus-funded companies.341 There are thousands of stimulus-funded companies, and most venture capital firms invested in a few of them. Wagle was dinged because his former firm had stakes in Tesla and BrightSource, which both received hefty loans. But he had nothing to do with those funding decisions, or with the loan program in general. Wagle made a real financial sacrifice to enter public service, cutting his salary in half, cashing out his holdings at pennies on the dollar to avoid conflicts of interest, only to get smeared for all his hard work.
Local reporters often wrote positively about stimulus spending (a nuclear cleanup, a sewer plant) they saw in their communities, and issue-oriented reporters often wrote thoughtfully about stimulus programs (Race to the Top, high-speed rail) related to their issues. Business reporters wrote about the stimulus as a straightforward economic phenomenon; more of it boosts growth, less of it creates slack. But when national reporters focused on “the stimulus,” their coverage was overwhelmingly negative.342 White House officials understood that their recovery bill wasn’t likely to get much positive coverage when the recovery was so weak. Still, the one-sided groupthink drove them crazy. “The journalism was amazingly lazy,” Pfeiffer complains. “It’s easy to look at a super-long list, find something that adds up to one one-hundredth of 1 percent of the money, and make it sound silly.” Unemployment was higher than the Romer-Bernstein report predicted, so everything about the stimulus was by definition a failure?
Yes, pretty much. The public debate over the stimulus was over, and the stimulus had lost. Even Democrats had stopped trying to defend it. Under the radar, though, it was just starting to drive change.
The Race
As a boy in Chicago, Arne Duncan spent countless hours at his mom’s after-school program for inner-city kids. He wrote his Harvard thesis about the dreams of the urban underclass. He believed that every child could learn, that poverty wasn’t destiny, that tough standards and great teachers and evidence-based innnovation could turn around hellish schools. Some of the things he believed sounded corny, but his pickup hoops buddy in the White House believed them, too. Race to the Top would give them a chance to back up their beliefs with $4.35 billion.
Secretary Duncan wouldn’t get to pick the Race’s winners—the judges would be independent—but he would get to write the rules of the competition, to make sure the states that pursued the reforms he favored would receive extra points. He wanted to be prescriptive, because he wanted to drive lasting change, not just help states extend school hours and restore music classes until the stimulus ran out. He believed that by the time the Race was over, it would shake up education.
That belief turned out to be inaccurate. The Race shook up education before it even started.
For example, Duncan believed in metrics as strongly as he believed in anything. He knew test scores couldn’t tell the whole story about a student, her teacher, or her school, but they told a story nonetheless. So he wanted the Race to encourage states not only to collect data but to use it—to intervene with struggling students and underperforming schools, even to decide how much to pay teachers. His advisers asked: What about states with firewalls? Duncan had no idea what they meant. They explained that states like California and New York—both Democratic states with powerful teachers unions—had prohibited linking test scores to teacher pay. “Are you joking?” Duncan asked. “That’s unacceptable.” He couldn’t force states to change laws, but he decreed that states would be ineligible for the Race if they didn’t get rid of their firewalls. So they all got rid of their firewalls. States like Delaware and Illinois—again, Democratic states with strong unions—passed laws requiring the use of test scores in teacher evaluations. In Illinois, the reforms passed with only one dissenting vote in the entire legislature.
“When I was there, I couldn’t have gotten a unanimous vote that it was August!” Duncan marvels.
Before the first Race grant was awarded, forty states adopted Duncan-friendly education reforms to ensure their eligibility or improve their chances of winning. They removed or loosened caps on charter schools. They expanded testing regimes. They made it easier to fire bad teachers and reward good ones. And a bipartisan coalition of forty-five states began collaborating on uniform K–12 curriculum standards to prepare students for college and careers, shattering an age-old tradition of local control.
“That was the third rail in education. You couldn’t even talk about it,” Duncan says. A former pro basketball player in Australia, Duncan attributes the shift in the zeitgeist to the power of competition. “There’s been more reform in the last year than we’ve seen in decades, and we haven’t spent a dime yet,” he told me early in 2010.
The mere existence of the School Improvement Grants to finance radical reforms at failing schools was also driving change. In Central Falls, Rhode Island, the teachers union refused to endorse a turnaround plan for a troubled high school that included longer hours. So the school board fired the school’s entire faculty, and Obama voiced his support. “If a school continues to fail its students year after year, then there’s got to be a sense of accountability,” he said.343
Investing in Innovation, the initiative for scaling up proven reforms—reading programs, teacher ratings, successful approaches to gifted or delayed students—was also starting to shake up the status quo. James Shelton, the assistant secretary overseeing the grants, was a former Gates Foundation executive, a tall, energetic, charismatic African-American who reminded me of a younger version of the president. He explained his vision in the data-driven language of venture philanthropy, diagramming “Paths to Innovation” on his office whiteboard. But he also spoke the language of inspiration; he had an “Imagine the Possibilities” poster on the wall near his whiteboard.
“We’re creating a pipeline of innovation in education, and that’s never existed in history,” Shelton said. “There’s just incredible demand for new ways of doing business.” Investing in Innovation would receive over 1,000 applications for just 49 grants.
These programs were already transforming the national conversation about schools, swinging many Democratics over to the side of reform, inspiring high-profile debates about and within teachers unions, drawing praise from Republicans like Schwarzenegger, former Florida governor Jeb Bush, and Indiana governor Mitch Daniels. But it failed to transform the national conversation about the stimulus, whi
ch retained its reputation as a partisan Democratic hack job.
If Secretary Duncan was the kind of cosmopolitan forty-something Harvard wonk you’d expect to find in the Obama cabinet, Ray LaHood seemed out of place, a lumbering sixty-something Republican pol from Peoria who looked like Abe Vigoda in The Godfather, a former civics teacher who had worked his way through junior college and Bradley University. He was not a transportation expert, unless bringing highway pork home to his district counted as expertise. He only got the job because he was the closest Republican friend of Rahm Emanuel, who originally wanted to make him agriculture secretary. Transportation reformers were horrified, dismissing LaHood as “an unbelievably disastrous pick,” “status quo we can believe in,” “same.gov.” But he became a passionate Obama loyalist, calling out stimulus critics in his own party, defending the Recovery Act as if it were his own child. “No earmarks, no boondoggles, no sweetheart deals,” he told me.
In his office, LaHood has a photo of himself walking in front of the president, running interference on an outreach mission to his former House Republican colleagues. “Great downfield blocking!” Obama scribbled. One former colleague jokes that if LaHood had been at Jonestown, he would’ve been the first one dead. But LaHood has been more than a stand-up guy. He has been almost as energetic a reformer as Duncan. At a department known for mindlessly shoveling money to states to pour concrete, he became a vocal advocate for sustainability and “livability,” transit-oriented development and smart growth. The bicycling community embraced him as a hero; Lance Armstrong sang his praises on Twitter. LaHood even got to create his own race to the top, courtesy of the Recovery Act.
That was the TIGER program, which LaHood and his staff designed to reward nontraditional projects with the highest economic and environmental benefits—and to start changing the culture of the department.344 “The beauty of TIGER was you didn’t have to go through the rigmarole of the bureaucracy,” LaHood says. “It’s just about solving problems.” LaHood brought together volunteers from all the department’s silos into “TIGER teams” to judge the competition, empowering bureaucrats to think seriously about national needs instead of just making sure projects had submitted their minority hiring plans and traffic studies.
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