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Sorting out the truth in politics

Checking Obama's claim about economic stimulus projects

President Barack Obama says the economic stimulus has given taxpayers a good bang for their buck.

"One of the interesting things about the Recovery Act was most of the projects came in under budget, faster than expected, because there's just not a lot of work there," Obama said in an interview Sunday on 60 Minutes. "I mean, there are construction crews all across the country that are dying for work. And companies that are willing to take a very small profit in order to get work done."

In the fall campaign, Republicans assailed the stimulus as wasteful spending, but now Obama is citing it as an example of efficiency. And so PolitiFact decided to collaborate with ProPublica — an independent, nonprofit investigative newsroom — to see if Obama was right that "most" of the projects funded by the stimulus came in "under budget" and "faster than expected."

Under budget?

There is no comprehensive federal database that tracks whether stimulus projects have come in under budget. But the White House pointed us toward Vice President Joe Biden's latest stimulus report, issued in early October, which found that "contract bids, in some cases, have come in anywhere from 6 to 20 percent below expected costs, allowing agencies to do more work within their original appropriations."

But that was based on a limited sample — an administration survey of eight agencies with a large number of infrastructure projects. The survey found that project bids came in about $8.5 billion less than anticipated, allowing the stimulus to fund more than 3,000 additional projects.

The bulk of the "bid savings" in the survey came from the Department of Transportation, where low bids for projects came in $7.5 billion less than expected, allowing the department to fund an additional 2,500 projects. But DOT wasn't alone. All of the agencies surveyed reported projects coming in under budget. In the Department of Veterans Affairs, for example, project bids came in 8 to 12 percent below estimates, allowing the VA to stretch its number of funded projects from 942 to 1,521.

Those figures come as little surprise to industry experts who said that projects in the last couple of years have often been below estimates. The recession decimated the construction industry, which led to intense competition for public projects like those funded by the stimulus.

Another factor: Construction estimates were unusually high in 2006 and 2007, when many estimates were first made. They were inflated by strong demand for construction and high materials costs. For example, an Interstate 59 pavement project in Gadsden, Ala., came in 31 percent below the original estimate of $53.9 million.

So there is some truth to Obama's point. But without definitive data telling us what percentage of all stimulus projects have come in under budget, we think it's a stretch for Obama to claim that most stimulus projects have come in under budget. After all, that's based on a survey of just eight agencies that found "contract bids, in some cases" were coming in well below budget.

Faster than expected?

This measure depends somewhat on who is doing the expecting.

The White House again pointed to its October report, which noted the administration met its target of "outlaying," or spending, 70 percent of the stimulus funds by the end of September. The administration also provided data on various deadlines met, or exceeded, to "obligate" money to various agencies. But "obligated" simply means the money has been committed to a project. It could take months before it's spent.

So back to the money "outlaid." Shortly after the law passed, the administration set a goal of having 70 percent of the funds outlaid and delivered in tax relief by Sept. 30. In the report, the administration boasted that as of that deadline, the government had outlaid $308 billion and paid out $243 billion in tax relief — or almost exactly 70 percent of the act's original $787 billion cost estimate.

Liz Oxhorn, a White House spokeswoman for the stimulus program, defended Obama's "faster than expected" claim based on outlays, saying, "Because most projects pay out on the back end, money out the door is one of the best indicators that projects are being completed ahead of schedule."

But if outlays are the measuring stick, the projects have not come in "faster than expected," they have come in exactly as expected. And a couple caveats are in order. The 70 percent threshold is inflated a bit by tax breaks, which don't really qualify as "projects."

An analysis by ProPublica also found that a number of agencies were lagging behind spending estimates.

The Department of Energy, for example, has been the slowest agency to spend its stimulus funds, as many of the agency's programs have been tied up by an onslaught of applications and regulations regarding prevailing wages, American-made materials, increasing electricity rates and environmental clearances. As of Sept. 17, it has spent only $7.6 billion of its $32.7 billion allocation.

While outlays may be a good measure of the progress of stimulus spending, we also think most people would interpret Obama's comment to mean that projects were actually being done faster than expected. But there is no comprehensive federal database tracking that statistic.

ProPublica analyzed a piece of the stimulus, the money awarded to the Federal Highway Administration. Of the 12,932 projects listed in a database provided by the agency, 5,752 are marked as completed, about 45 percent. Of the completed projects, 51 percent were completed earlier than the estimated date. About 30 percent came in late and 12 percent on the same day. Several hundred projects had no estimated date.

In the case of the Federal Highway Administration, Obama could rightly claim that "most" projects have come in faster than expected (though barely, at 51 percent). But this is just one agency.

As with the claim about projects coming in under budget, Obama would have been on firm ground had he said "many" projects have come in faster than expected. Many have. But many have not. And if the claim is based on meeting a deadline to outlay funds, the overall target of 70 percent was reached — barely — by the end of September. That's only faster than expected if you expected the government to fail.

Obama makes a valid point about this being a good time to do infrastructure projects because of the recession. But he stretched the facts when he claimed "most" projects have come in under budget and faster than expected. And so we rate his claim Half True.

Edited for print. For more, go to PolitiFact.com.

The statement

"One of the interesting things about the Recovery Act was most of the projects came in under budget, faster than expected, because there's just not a lot of work there."

President Barack Obama, Sunday in a 60 Minutes interview

The ruling

While it's true that some stimulus projects have come in under budget and faster than expected, Obama exaggerates — at least what is actually known — by saying "most." We rule this Half True.

Checking Obama's claim about economic stimulus projects 11/10/10 [Last modified: Thursday, November 11, 2010 7:27am]
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