Attacks on President Obama's "crony capitalism" are a major theme of Mitt Romney's campaign. And the stimulus typically figures prominently in these attacks. As Romney and his allies tell is, the Recovery Act was full of shady, wasteful giveaways to the administration's friends and benefactors.
This argument is probably effective. Most Americans have no problem believing government programs are a boondoggle. The argument is also untrue—as in, the very opposite of true. Federal auditors watching over the Recovery Act have documented just $7.2 million in fraud, or about .001 percent of the $800 billion the federal government has distributed through the program. That's astonishingly low. And that's not because the auditors haven't been looking.
My source for this is Time magazine's Michael Grunwald, one of the nation's leading experts on the Recovery Act. He's made this point before and he'll be making it again—among other places, in a forthcoming book on the subject called The New New Deal. What piqued Grunwald's interest today is a claim in Romney's brand new ad on the stimulus: "The Inspector General said contracts were steered to 'friends and family'":
That sounded like news. I’ve spent two years in stimulus-world, and I had no idea an inspector general had said that. I asked the Romney campaign for documentation, and it produced a Newsweek article asserting that Energy Department inspector general Gregory Friedman “has testified that contracts have been steered to ‘friends and family.’”
Except that Newsweek article was an excerpt from the book Throw Them All Out, written by Peter Schweizer, a right-winger who has served as an adviser to Sarah Palin’s PAC, edited one of Andrew Breitbart’s websites, and written a slew of books portraying liberals as pond scum. Not exactly a disinterested source. And it turns out that the inspector general never testified that stimulus contracts were steered to friends and family. He said his office was investigating whether stimulus contracts were steered to friends and family. So far, it hasn’t confirmed that any were.
As Grunwald says, reasonable people can disagree about the extent to which the Recovery Act worked. (I think the evidence suggests it worked quite well; like my colleague Noam Scheiber, author of his own book that covers this material, I just think it should have been bigger.) But when it comes to allegations that the Recovery Act was full of fraud and waste, there's no ambiguity. The allegations have no basis in fact.
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