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News Link • Economy - Economics USA

Wanted: More Fraud, Abuse in Government Spending

• The New Republic / Jonathan Cohn

A new government report says the stimulus was virtually free of waste, fraud, and abuse. This is supposed to be good news. I’m not so sure.

The report, which Vice President Joe Biden officially delivered to the president on Friday, is the official 2010 audit of the American Recovery and Reinvestment Act. It’s a full accounting of how the government has spent Recovery Act money, but it’s the section on waste that’s gotten the most attention.

And rightly so. Of the nearly 200,000 prime and sub contracts that the Recovery Act awarded, just 293 led to “consequential investigations” of fraud. That’s 0.2 percent--i.e., two-tenths of a percent. Given the amount of money we’re talking here, that’s astonishingly clean, even by private sector standards.

Mike Grunwald, who’s been covering the issue for Time, explains how the feds are doing it:

The board is using newfangled computer algorithms that can track suspicious spending patterns before there's a complaint; the inspectors general of every major agency are bird-dogging the stimulus as well. Devaney likes to say that if you really want to steal, you'd be crazy to steal from the Recovery Act; it's far too transparent, with every dollar traceable at, and there are far too many eyes on it.

Make no mistake: This is a genuine accomplishment and reflects a commitment to good government by prominent Democrats that dates back at least to the early 1990s, when policy expert David Osborne published Reinventing Government and Vice President Al Gore made bureaucratic reform a personal obsession. If the goal of the Recovery Act were simply to prove that government could spend a ton of money in a very, very careful way, then it's been an absolute success.

But efficiency isn't the Recovery Act's primary purpose. Reviving the economy is. And that's required spending a vast amount of money very quickly--a goal that, inevitably, is at odds with spending the money carefully. Or, to put it another way, a stimulus that threw a little more money away might have created more jobs.

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