Stimulus bill enabled billions in waste, exploitation of employees

When Barack Obama and the Democrats on Capitol Hill forced the $800 billion stimulus bill into law, they insisted that waste, fraud, and abuse would not be tolerated. They put “Sheriff” Joe Biden on the case in March 2009, with Obama warning stimulus recipients that “around the White House, we call him the Sheriff — because if you’re misusing taxpayer money, you’ll have to answer to him.” The Department of Transportation employees gathered for the speech laughed at that statement, according to the White House transcript — and well they should have. An in-depth report from McClatchy and ProPublica shows that the ARRA lost billions of dollars to employment fraud, and that government agencies collaborated in the effort rather than crack down on it:


The largest government infusion of cash into the U.S. economy in generations – the 2009 stimulus – was riddled with a massive labor scheme that harmed workers and cheated unsuspecting American taxpayers.

At the time, government regulators watched as money slipped out the door and into the hands of companies that rob state and federal treasuries of billions of dollars each year on stimulus projects and other construction jobs across the country, a yearlong McClatchy investigation found.

A review of public records in 28 states uncovered widespread cheating by construction companies that listed workers as contractors instead of employees in order to beat competitors and cut costs. The federal government, while cracking down on the practice in private industry, let it happen in stimulus projects in the rush to pump money into the economy at a time of crisis.

Companies across the country avoided state and federal taxes and undercut law-abiding competitors. They exploited workers desperate for jobs, depriving them of unemployment benefits and often workers’ compensation insurance.

Exactly how much tax revenue was forfeited on stimulus projects isn’t clear. This is: The government enabled businesses bent on breaking the rules. Regulators squandered the chance to right a rogue industry by forcing companies’ hands on government jobs.

And guess what? The fraud continues to this day. It’s not that the government is unaware of the problem; they regularly force private businesses to comply with employment law when it comes to restaurants and nail salons, McClatchy notes. When it comes to contractors working on ARRA-related jobs, they suddenly develop very convenient blind spots.


Guess who else it impacts? Unions, which normally would represent employees:

“So we the taxpayers are paying the tax cheaters who are exploiting their workers and stealing work from law-abiding employers?” said Matt Capece, a lawyer with the United Brotherhood of Carpenters and Joiners of America, after reviewing payroll records collected by McClatchy.

“No wonder the bad guys are running roughshod over the industry,” he said.

Yes, the “bad guys” — from the government, here to “help” as always. Well, help themselves, anyway. These contractors who misclassified employees as contractors got away without paying workers comp and tax withholding, the latter of which is especially ironic. Obama and the Democrats insisted that the $800 billion in the ARRA would promote hiring and increase tax revenues, but as this report shows, in many cases it did neither.

Oh, don’t forget that the Department of Labor spent $80 million of that stimulus money to protect workers, while HUD apparently couldn’t have cared less:

Of all 1,278 investigations that Labor Department wage and hour officials opened for stimulus projects from 2010 to 2013, investigators found wage and hour violations 62 percent of the time.

Not eight blocks away, their counterparts at the U.S. Department of Housing and Urban Development distributed stimulus money to thousands of companies to build housing for the poor. Only a few of these projects had federal labor inspectors checking behind the local officials HUD trained to spot wage violations.


Be sure to read it all, and then re-read the Boss Emeritus’ column from nearly two years ago on the same topic:

Sheriff Joe rebuked the “naysayers” who decried the behemoth stimulus program’s waste, fraud and abuse. “You know what? They were wrong,” he crowed.

But Biden was radio silent about the nearly 4,000 stimulus recipients who received $24 billion in Recovery Act funds — while owing more than $750 million in unpaid corporate, payroll and other taxes. (Cash for Tax Cheats, anyone?)

He had nothing to say about the $6 billion in stimulus energy credits for homeowners that went to nearly a third of credit-claimers who had no record of homeownership, including minors and prisoners.

And the $530 million dumped into the profligate Detroit public schoolsfor laptops and other computer equipment that have had little, if any, measurable academic benefits.

And the whopping $6.7 million cost per job under the $50 billion stimulus-funded green energy loan program — which funded politically connected but now bankrupt solar firms Solyndra ($535 million), Abound Solar ($400 million),Beacon Power ($43 million), A123 ($250 million) and Ener1 ($119 million).

And the $1 million in stimulus cash that went to Big Bird and Sesame Street “to promote healthy eating,” which created a theoretical “1.47″ jobs. (As Sean Higgins of The Examiner noted, “(T)hat comes out to about $726,000 per job created.”)

And the hundreds of millions in stimulus money steered to General Services Administrations junkets in Las Vegas and Hawaii, ghost congressional districts, dead people, infrastructure to nowhere and ubiquitous stimulus propaganda road signs stamped with the shovel-ready logo.


Kudos to McClatchy and ProPublica for this expose’ now, but … where was the media two years ago when voters could have used this information?

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Jazz Shaw 8:31 AM on December 09, 2023