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Inspector general says 'jobs saved' numbers are nonsense

Posted By -NO AUTHOR- On 01/11/2011 @ 8:09 pm In Front Page | Comments Disabled

Claims by the federal government that it used stimulus dollars to create and save millions of U.S. jobs are “misleading,” cannot be confirmed and rely on methods that lack “transparency,”
according to reports from government watchdogs that WND obtained.

The first watchdog report takes on the Small Business Administration. According to the SBA’s own inspector general’s office, the SBA received $730 million under the American Recovery and Reinvestment Act – commonly known as the stimulus act – and, like other federal agencies which also received part of the trillion-dollar Obama stimulus package, was required to report job retention and creation statistics. The agency reported the figures initially, on its web site, every month, but the inspector general audited those figures, casting doubt on their veracity.

“I have never been a fan of the SBA,” Donald Mazzella, editorial director of Information Strategies, Inc., a New Jersey-based publisher of small business publications, tells WND. “I have long suspected the numbers.”

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According to the SBA’s inspector general, the SBA never defined what constitutes “jobs saved” for its programs, which provide grants and loan monies to small businesses and banks that deal with small businesses. Thus, SBA “lenders are generally reporting all existing jobs at the applicant’s business as ‘jobs retained,’” the report noted.

On the White House website, Obama administration officials estimate that during the last three months of 2010, they created 3.5 million jobs.

Their report says the government spends only $92,000 to create “1 job-year.”

The inspector general’s report was based on information provided by financial institutions on just 30 loans made by SBA programs during the first year of the Obama administration. Under the stimulus act, the SBA is required to report job creation and retention statistics in its monthly Recovery Act Program Performance Report, which is published online.

The SBA’s two major loan programs are colloquially known as the 7(a) program and the 504 loan program. The inspector general reported that the loan programs’ “lack of a definition for ‘jobs retained’ and the discrepancy in the forms used to collect job statistics from 7(a) borrowers and lenders has resulted in a performance metric with questionable clarity and transparency.”

The inspector general, what is more, indicated that only one of the programs, the 504 program, even asked loan applicants how many jobs are to be saved. The other program, the 7(a) program, made something of a leap of faith as to jobs created.

“In the 504 loan program, where job creation and retention is a program criteria, applicants are required to report the number of current employees, jobs to be created in the next two years, and jobs to be retained because of the loan,” the IG report said.

Applicants for the 7(a) program, meanwhile, were just asked to report on their application the number of employees at the time of application and the number of employees “if [the] loan is approved.”

As the inspector general noted, as a result of this shoddy methodology, the report “results in unclear and misleading reporting.” Those who follow the SBA have suspected that something was amiss for some time, as surveys of small businesses do not indicate the stimulus bolstered main street during the recession. There are also side-effects of the stimulus that have actively harmed small firms.

“I think that any jobs purportedly saved should be offset by the thousands of jobs that have been destroyed by the stimulus package, such as the jobs it destroyed by igniting trade wars with Mexico and Canada that the U.S. effectively lost,” Hans Bader, an attorney with the Competitive Enterprise Institute (CEI), tells WND.

Green Gaffe

Another watchdog report indicates that the feds actually gave stimulus funds to foreign firms – located in Australia and China – meaning that any jobs “created” were created overseas using U.S. money.

“Its green-jobs subsidies … funneled money to foreign firms and effectively outsourced American jobs,” said Bader. “Seventy nine percent of all green jobs funding in the stimulus package went to foreign firms, according to the Investigative Reporting Workshop at American University – such as money given to a bankrupt Australian investment firm, Babcock & Brown, to import Japanese-made wind turbines.”

According to the report, it gets even worse: a proposed wind farm in Texas stands to get $450 million in stimulus money even though a Chinese company would operate the farm and its turbines would be built in China.

Research by the Congressional Budget Office, what is more, indicates the stimulus package may, in the long-term, shrink the economy by driving up the national debt and crowding private investment through increased debt-service costs.

ABC previously reported that among the White House claims was that 30 jobs were “saved or created” with just $761,420 in federal stimulus spending in the 15th congressional district in Arizona.

The only difficulty is there is no 15th congressional district in Arizona.


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