Cash for Clunkers the New Darling of Stimulus Dollars

 

The "Cash-for-Clunkers" (C4C) program will get an addition infusion of money, this time from stimulus funds. Passed in June, the program's purpose was to use rebates to subsidize car purchases and with the launch of the program this month, it seems Congress underestimated demand by just a little bit. Fortunately, this is a good problem for Congress, which has been accused of spending stimulating money too slowly - the House responded by passing HR 3435, which will allocate $2B from PL111-5 to the program.

The program provoked mild controversy earlier this year when Congress was debating the war supplemental bill. There were other aspects of the bill that stirred much greater debate, such as funding for the International Monetary Fund, but some legislators felt that C4C itself did not belong in a bill whose purpose was to fund foreign policy objectives. Aimed at "clunkers", or cars with lower fuel efficiency, the program provided $3500-$4500 in vouchers for purchases of new, more fuel efficient cars. The program officially kicked off on July 27th, although purchases starting from July 1st could qualify for the rebates. The U.S. Department of Transportation, which manages the program, began to raise concerns that cars were being purchased faster than the paperwork could be processed, ultimately leading to the temporary halt of the program.

The original version of the bill that narrowly passed the house (226-202, largely among party lines with 30+ Democrats voting against the bill) contained incentives valued up to $4.5B but this amount was later scaled back to $1B. The newest $2B allocation passed much more easily, 316-109, and calls for reallocating unused Energy Department loan guarantees that were contained in the original stimulus bill. The Senate will likely pick up the legislation next week, where there may be some objection to providing more subsidies to the auto industry. Given the success of the program, legislators are hoping to introduce new requirements, such as greater fuel efficiency or rebates for low-income communities. It remains to be seen whether Congress will be able to replicate this approach with other stimulus dollars.

 

For more details about the program, go to the site that the government set up.

CQ($):House Adds $2B to 'Cash for Clunkers'

Image by Flickr user youngthousands, used under a Creative Commons license.

(Jocelyn Yin 07/31/09; 2 comments)

Is the Stimulus Working?

 

This morning, the Bureau of Economic Analyses released the latest economic growth data. In the second quarter of this year, the gross domestic product (GDP) shrank at annul rate of 1.0 percent. While this represents a slowing of the free-fall rate of economic contraction we saw in Q1 (6.4 percent), the economy has quite a ways to go before job losses become gains and wages begin ticking upward. This improvement, though, does beg the question "Is the Recovery Act working?"

While there are certainly a number of reasons for the recent improvement in GDP (negative) growth, a look at the numbers behind the number, reveals that growth in both federal, state, and local government expenditures contributed 1.12 percentage points of growth. And as states and localities see falling revenue and increased consumption of public services, the Recovery Act aid going to these governments is no doubt mitigating cuts in vital services like health care, child care, education, and public safety.

And while personal consumption declined at annual rate of 0.88 percent, it could have been much worse. Center for Economic and Policy Research's Dean Baker:

The tax cuts and benefit increases in the stimulus, which began to kick in at the start of the quarter, almost certainly prevented consumption from falling more than it otherwise would have. Consumption fell at a 1.2 percent annual rate in the second quarter. As a result of the tax cuts and benefit increases, disposable personal income rose at a 4.6 percent annual rate in the quarter, even as wage income fell at more than a 5.0 percent annual rate.


(click to enlarge)

(Craig Jennings 07/31/09; 0 comments)

Procedural Issue Ends IRS Exam into Possible Partisan Intervention

 

The Internal Revenue Service (IRS) has closed an investigation into Warroad Community Church in Warroad, Minnesota regarding a sermon the pastor delivered that criticized both Barack Obama and Hillary Clinton. According to the Alliance Defense Fund (ADF), the IRS began an audit of the church in August 2008, and the IRS has now stated "that it is closing its examination of the sermons due to a procedural problem."

Reportedly, the procedural problem is related to the IRS's quandary of who is authorized to sign off on church tax inquiries. In Jan. 2009 a Minnesota U.S. district court judge ruled that IRS incorrectly began an examination into the Living Word Christian Center because it was not authorized by a high-enough official, and as a result the church did not have to comply with an IRS summons for an investigation. Now the question arises whether the IRS will dismiss other cases of partisan intervention by churches because of this "procedural problem."

Barry Lynn, executive director of Americans United for Separation of Church and State, told BNA Money and Politics ($$) that he thought the case was going to be reopened. "[T]he alternative is for IRS to be faced with the 30 churches that participated in the ADF activity last fall. You can't just give them all a pass because you are confused about the procedure."

(Amanda Adams 07/31/09; 0 comments)

Bureaucratic Unrest Surrounds New Regulations.gov Site

 

In his “In the Loop” column in today’s Washington Post, Al Kamen reports that Department of Transportation officials are unhappy with the new version of Regulations.gov, the federally run website that allows users to comment on proposed regulations. (I blogged about the redesign here.)

Kamen obtained an email from Esta Rosenberg, chief of the U.S. Air Carrier Licensing Division in the Office of International Aviation, sent to frequent commenters on aviation issues. Rosenberg says Regulations.gov "has been redesigned and is even more difficult to use." She advised commenters to duplicate their online comments by sending DOT a paper version. That’s not exactly a vote of confidence in the new site.

I’m not sure what would lead DOT to believe that comments won’t be getting through. There are certainly some functional problems with the site. Some of those problems have existed for years, and some are new. (For example, search result pages no longer display the date a document was posted – an unfortunate omission of a crucial bit of information.) But why would a largely aesthetic design change alter the ability of the website, and the underlying Federal Docket Management System, to receive and store comments?

Either way, the site has lots of room for improvement. This most recent redesign includes both steps forward and steps backwards.

In 2008, the American Bar Association released a report recommending an overhaul of Regulations.gov and e-rulemaking – the term used for online participation in agency regulatory decisions. The report calls for the government to establish both an interagency working group and an advisory committee made up of citizens and experts that could recommend reforms from a user’s perspective and test changes to Regulations.gov. Considering the largely negative reaction to the revised site, this design change could have benefited from the input of those panels.

(Matthew Madia 07/31/09; 2 comments)

Supplemental Briefs Filed in Citizens United Case

 

The Federal Election Commission (FEC) and Citizens United have filed their supplemental briefs in Citizens United v. FEC. On June 29 the Supreme Court ordered a rehearing of the case to address whether the Court should overturn two previous rulings. One is the decision in Austin v. Michigan State Chamber of Commerce, ruling that a state ban on corporate spending in election campaigns does not violate the First Amendment. And secondly, McConnell v. FEC, upholding the ban on corporate and labor union spending for electioneering communications.

U.S. Solicitor General Elena Kagan filed a joint motion with former Solicitor General Seth Waxman, representing Senator John McCain (R-AZ) and other sponsors of the Bipartisan Campaign Reform Act. The motion asks that ten minutes of the government's half-hour argument time be allocated to Waxman, arguing on behalf of McCain, Sen. Russ Feingold (D-WI), and former Reps. Martin Meehan (D-MA) and Christopher Shays (R-CT).

Rick Hasen at the electionlawblog.org, has an analysis of the government's brief, and asserts that "the government does not even mention the central holding of Austin, much less defend it." The government's brief argues that the Court should affirm the ruling of the district court, which held that Citizens United should have to abide by disclosure requirements.

Numerous amicus briefs for both sides have been filed, including one from the James Madison Center for Free Speech on behalf of eight former members of the FEC, calling for the overruling of both Austin and McConnell. Most of the amicus briefs are compiled here and available from the FEC.

(Amanda Adams 07/31/09; 0 comments)

Food Safety Overhaul Approved by House

 

Yesterday, the House of Representatives passed the Food Safety Enhancement Act of 2009 (H.R. 2749) by a vote of 283-142. The bill was crafted in response to a raft of foodborne illness outbreaks, tied mostly to produce and nuts, that exposed regulatory vulnerabilities at the Food and Drug Administration (FDA).

The bill would shift the focus of federal food safety efforts by placing a greater emphasis on the prevention of foodborne illness outbreaks, which sicken millions of Americans – and kill thousands – each year. Washington Post reporter Lyndsey Layton writes, “It places significant responsibilities on farmers and food processors to prevent contamination – a departure from the country's reactive tradition, which has relied on government inspectors to catch tainted food after the fact.”

Here is a rundown of some of the major provisions in the bill.

Preventing contamination

Facilities would have to identify hazards that could potentially adulterate food that is grown, housed or processed in said facility. Once the hazards are identified, facilities would have to implement “preventive controls” (e.g. sanitation, hygiene training, and/or various best practices).

The bill would also require FDA to set food safety standards that would prevent illness outbreaks connected to specific pathogens or stemming from specific foods.

Recall authority and enforcement

The lowest hanging fruit Congress is reaching for is a provision that gives FDA mandatory recall authority. Currently, FDA works with producers or retailers to recover dangerous food, but the recalls are voluntary. If a particular firm does not want to announce a recall, that’s tough toenails for consumers.

The bill would boost FDA’s enforcement authority in other ways by compelling farms and facilities to turn over their records and by allowing the agency to dole out larger fines.

User-fee-funded inspections

The bill would require food-handling facilities (manufacturers, processors, importers, and warehouses, but not farms) to register with the FDA and pay $500 a year to fund more frequent inspections. FDA would then inspect high risk facilities every six months to one year and low risk facilities every 18 months to three years. The bill would also establish a “dedicated foreign inspectorate” to keep tabs on overseas facilities.

Traceability

The bill would create a system to help investigators and regulators more quickly identify the source of a foodborne illness outbreak. Last summer’s salmonella outbreak underscored the need for better traceability: the source of the outbreak was not identified for months after initially being misidentified. A traceability system should allow FDA “to identify each person who grows, produces, manufactures, processes, packs, transports, holds, or sells such food in as short a timeframe as practicable but no longer than 2 business days.”

The traceability system would have to be established by FDA regulation. Before writing those regulations, the bill would require FDA to identify tracing technologies, conduct a feasibility study and a cost-benefit analysis, hold two public meetings, and pilot the system.

For a more in depth analysis of the bill, check out this update from Food and Water Watch. Although it has not been updated since the bill was reported out of the House committee, it is still accurate and quite useful.

Consumer groups, and some industry groups like the Grocery Manufacturers of America, support the Food Safety Enhancement Act of 2009. Their support will be critical to Senate passage. The Senate is expected to consider food safety legislation after the summer recess, which begins this weekend.

Caroline Smith DeWaal, food safety director for the Center for Science in the Public Interest, lauded the House passage of the bill: "FDA has been operating under the same law for 70 years and can do little more than respond to outbreaks after the fact. This bill gives the FDA more authority and real enforcement teeth to help prevent more outbreaks, illnesses, and deaths."

(Matthew Madia 07/31/09; 0 comments)

Product Recalls Bring Big Pain to Industry

 

A spate of toy recalls that dominated headlines in the second half of 2007 damaged the toy industry’s bottom line, according to a new research paper.

toys 2007 saw a huge spike in the number of toy recalls announced by the Consumer Product Safety Commission (CPSC). Most of the toys had to be recalled because they were coated in lead paint.

In response, Congress passed the Consumer Product Safety Improvement Act of 2008, which tightened the allowable limit of lead paint in children’s products from 0.06 percent to 0.009 percent and required CPSC to set a general standard for lead that would limit the metal in the content of toys. It also boosted CPSC resources and allowed the agency to dole out stiffer penalties to ne’er-do-wells.

Unfortunately, potential damage had been done to any child exposed to the lead in those toys. And, it turns out, the damage was not limited to consumers. A new paper by two University of Maryland researchers, Seth Freedman and Melissa Kearney, and one University of Toronto researcher, Mara Lederman, finds that the recall notices hurt sales of those products: “[T]he types of toys that were involved in recalls in 2007 experienced above average losses in Christmas season sales.” (Thanks to the NY Times Freakonomics blog.)

That’s not a surprising finding. Here’s what’s interesting: the authors found that manufacturers saw a decline in sales, even if none of their products was subject to a recall: “Christmas sales of infant/preschool toys produced by manufacturers who did not experience any recalls were about 25 percent lower in 2007 as compared to earlier years, suggesting industry-wide spillovers.”

To further prove that the high number of recalls had a negative industry-wide impact, the authors also examined the stock market’s treatment of toy manufacturers and found that stock prices declined across the board: “We view the stock price patterns as prima facie evidence that toy firms in general experienced a drop in stock value relative to other sectors during the wave of 2007 toy recalls.”

Perhaps manufacturers will remember this information the next time they are lobbying to prevent new laws or regulations meant to make products safer. Not bloody likely.

Trade groups like the National Association of Manufacturers are pushing back against CPSC efforts to implement the Consumer Product Safety Improvement Act, including the lead-content standard and new rules that would require manufacturers to place tracking labels on children’s products in order to help consumers identify the source of a product in the event of a recall or report of harm.

While regulations can be a hassle for firms, they can also save a lot of pain and heartache later on. The public health crises (or financial crises, or environmental crises) that sometimes emerge when a market is under-regulated can bring dire consequences – not just for the public, but for industry too.

Image by Flickr user solsken, used under a Creative Commons license.

(Matthew Madia 07/30/09; 11 comments)

Climate Transparency Lacking on Senate Websites

 

The websites of U.S. senators are a poor place to look if you are interested in their views on climate change, according to a recent analysis. Although websites are one of a politician's best ways to present their views and educate and engage their constituents about important issues, many of the nation's senators fail to do so, based on a review of websites by Grist, the environmental news outlet.

Grist combed through 99 Senate websites (Minnesota's new Sen. Franken missed out) looking for the members' views on – or even just a mention of – several climate and energy related topics. For example, just by having a webpage for energy, environment, or climate issues, a senator earned 3 points (out of a possible total of 25). If climate change is at all mentioned, he or she wins 3 points. Several senators failed to even get that far. Minority Leader Mitch McConnell (R-KY) got zero points, as did Illinois' Roland Burris (D) and Mississippi's Thad Cochran (R). McConnell does, however, have a link to last April's Hillbilly Days.

It is odd that what is viewed as either a serious national security threat or the greatest hoax ever perpetrated on the nation would get so little attention on the websites of those with significant power to do something about it. (Speaking of hoaxes – the website of infamous climate change denier Sen. James Inhofe (R-OK) scored in the top five – the Senator's views on climate are crystal clear and there for all to see.)

One theory is that by keeping constituents – and fellow senators – in the dark about their positions, senators increase their leverage. According to John Wonderlich, policy director at the Sunlight Foundation, 

"There's an incentive to not have a clear position," he said. "For a senator whose vote is going to be courted, it's in their interest to be a little bit coy, because their vote becomes a bargaining chip ... It's all about jockeying for clout within your caucus, or trying to get a committee seat, or trying to secure support for some other measure."

 Plus, it's harder to hold your senators accountable when you do not know where they stand on major policy questions.

The Congressional Management Foundation has been reviewing congressional websites for years. Their most recent report is the 2007 Gold Mouse Report, which presented awards to congressional websites, including a gold medal to Sen. Jeff Bingaman (D-NM), who received a D (8 out of 25 points) from Grist for his website's climate transparency.

The U.S. and the United Nations agreed that climate change was a big problem back in 1992, and the problem has only gotten bigger since then. It's past time for senators from the planet's biggest contributor to climate change to let us know where they stand.

(Brian Turnbaugh 07/29/09; 0 comments)

Report Shows Most States Failing to Provide Recovery Act Information Online

 

While we here at OMB Watch have dedicated a great deal of time and effort to Recovery.gov, it's important to remember that the states themselves have Recovery Act websites. And it's just as important that these state websites are fully functioning, useful sites. Thankfully, Good Jobs First, an organization that is also part of the Coalition for An Accountable Recovery, just put out a great report today on this very subject, although it found that most state Recovery Act websites are in need of improvements.

The report, "Show Us the Stimulus: An Evaluation of State Government Recovery Act Websites," evaluates how the fifty states are using technology to "educate taxpayers about the impact of economic stimulus spending." It looks at how the states display information about the different categories of spending, the distribution of spending statewide, and the specific projects in the state, along with employment information. Additionally, the report evaluates the states on how they show transportation stimulus information, since that is often the most high-profile spending.

Unfortunately, the report finds that most states are failing at displaying stimulus information at this point in time. Only four states scored higher than 50% on the report's criteria, with one state (Illinois) getting a zero rating. Not good.

Recovery.gov, despite its shortcomings, looks good in comparison to many of the state Recovery Act websites. But both Recovery.gov and the state websites should take a look at Maryland's website, which scored the highest on the report with 80%, and start taking notes. While it isn't perfect, it does have a great mapping function, which is very helpful in understanding how and where the state's stimulus funds are being spent.

Hopefully, the people in charge of Recovery.gov's redesign will read this report, and take its lessons to heart. Kudos to Good Jobs First for a helpful, timely report.

Image by Flickr user Chris Daniel. Used under a Creative Commons license.

(Sam Rosen-Amy 07/29/09; 1 comment)

OMB Releases First Contracting Guidance Memos

  Office of Management and Budget

Originally due out at the beginning of this month, the three memoranda released by the Office of Management and Budget (OMB) today are a substantive step by the Obama administration in its attempt to reform government contracting. OMB issued the memos in response to a directive in a March 4 presidential memorandum on contracting reform. The three memos provide guidance to agency heads on performing reviews of current contracts, developing plans to reduce the amount of money spent on future outsourcing, managing the multi-sector workforce, and improving the use of contractor performance information. These memos are precursors to more detailed guidance on competition, contract types, acquisition workforce, and outsourcing due out by September 30 of this year.

Of the current memos, the first tasks agency heads with two assignments. The first is to review existing contracts and acquisition practices and develop a plan to save 7 percent of baseline contract spending by the end of FY 2011. The second is to reduce by 10 percent the share of dollars obligated in FY 2010 under high-risk contract vehicles, such as noncompetitive, cost-reimbursement, time-and-materials (T&M), and labor-hour (LH) contracts. Plans are due to OMB by November 2 of this year.

The second memo deals with managing the multi-sector workforce, and stresses the delicate balance agencies must keep between employing federal workers and contract personnel:

Contractors provide vital expertise to the government and agencies must continue to strengthen their acquisition practices so they can take efficient and effective advantage of the marketplace to meet taxpayer needs. At the same time, agencies must be alert to situations in which excessive reliance on contractors undermines the ability of the federal government to accomplish its missions.

The memo goes on to state that in the recent past (read "during the Bush administration"), that balance was not there:

In particular, overreliance on contractors can lead to the erosion of the in-house capacity that is essential to effective government performance. Such overreliance has been encouraged by one-sided management priorities that have publicly rewarded agencies for becoming experts in identifying functions to outsource and have ignored the costs stemming from loss of institutional knowledge and capability and from inadequate management of contracted activities.

The multi-sector workforce memo also requires agencies to take three immediate steps. These steps are: adopt a framework for planning and managing the multi-sector workforce that is built on strong strategic human capital planning; conduct a pilot human capital analysis of at least one program, project, or activity, where the agency has concerns about the extent of reliance on contractors; and, increase in-sourcing using sound application of statutory requirements. Each agency must complete the pilot program by the end of April next year.

The third memo discusses improving the use of contractor performance information. As of July 1, all federal agencies are required to submit an electronic record of contractor performance in the Past Performance Information Retrieval System (PPIRS), a program I have blogged on before. OMB states that it will continue to improve upon PPIRS based on the recommendations of a recent Government Accountability Office (GAO) report and stresses that agencies should increase accountability within the reporting system by identifying those responsible for the accurate, complete, and timely completion of contractor information.

The three memos released today set the stage for substantive changes within the federal contracting process. These memos demonstrate that Director Peter Orszag and others within OMB have been paying attention to the recommendations of those of us in the contracting reform world. With OMB set to release more guidance in the fall, there could be even bigger changes within federal contracting on the way.

Image by Flickr user johnsolid used under a Creative Commons license.

(Gary Therkildsen 07/29/09; 1 comment)