Understanding Government

The verdict is in: Chicago’s use of federal stimulus money for weatherization was a glaring failure. The Chicago Tribune’s Kristen Schorsch and Julie Wernau had a long piece this weekend of the main Chicago non-profit in charge using federal stimulus money to weatherize homes. The federal Energy Dept. and state of Illinois gave the Community and Economic Development Association of Cook County $90 million toward weatherization — part of $5 billion contained in the stimulus for weatherization. But, “As CEDA’s part in the federal stimulus program heads into its final months, contractors continue to fail in 1 in 7 inspections, and a federal plan to fix mistakes revealed in a blistering audit last year still hasn’t been completed.” (more…)

At first glance, Louise Radnofsky’s report on the slow rollout of stimulus-funded weatherization jobs looks like a typical Wall Street Journal story, i.e., government can’t do anything right and labor unions are getting in the way of progress.  Radofsky writes that the $230 billion in stimulus funds was supposed to be “the most visible element of the job creation effort” — those energy sector jobs that everyone has been wondering about.  The weatherization program — with an extra $5 billion invested — was supposed to bring people jobs in the midst of the Great Recession.  But only seven states have managed to get more than 50% of targeted homes weatherized.  What’s the holdup?  Yes, there’s been too much bureaucracy and paperwork.  Yes, there’s micromanagement that makes government look bad. But there’s something else at work as well: accountability. (more…)

The Energy Dept. inspector general has done a pretty damning report on the the Energy-funded home weatherization program, writes the New York Times’ Matthew L. Wald and Leslie Kaufman. The stimulus bill gave the weatherization program $5 billion to improve the insulation of low-income resident’s homes — the program’s 2008 allocation was just $450 million. Yet only eight percent of this $5 billion (in other words, about $450 million) has been spent as the states that administer the program simply haven’t hired the workers needed to do the home insulation.

The key reason behind the lack of hires seems to be the budget deficits faced by most states:

[T]he report said action was hobbled by bureaucratic delays and by the recession itself, as spending cuts resulting from the economic downturn forced states to trim personnel expenses.

Many states either furloughed the state employees who would administer such programs or instituted hiring freezes that prevented state offices from processing additional work — even though the federal government would have paid the additional salaries, the report found.

So even, though, the federal government would eventually pay for the weatherization, the state’s no longer have the institutional capacity to hire people. This is another example of why a possible stimulus/jobs creations bill needs to prioritize giving money to the states, which, unlike the federal government, can generally not do deficit spending. Also, the weatherization program should be changed to give some money upfront to states, instead of doing reimbursements.