Obama's Stimulus Number's: A Return to Enron Style Accounting

by Mike Flynn
The Sarbanes-Oxley Law was rushed through Congress in the wake of an enormous corporate accounting scandal that shook Wall Street and investors across the country. CEO’s and officers at several large companies were found to have “cooked the books”; i.e. knowingly falsified earnings statements to maintain stock prices or propel them higher. The practice came to be known as, Enron-Style Accounting.

The new law had many provisions, but one of its more sweeping was the requirement that corporate officers and executives assume personal responsibility for the accuracy and completeness of financial reports. In some cases, corporate officers could face civil or even criminal penalties if the numbers they reported to the public turned out to be inaccurate.
If only the law applied to politicians.

On October 30th, senior Administration officials went on a full-court media blitz to crow that, to date, the stimulus bill spending had “saved or created” over 600,000 jobs.The numbers were based on reports filed with Recovery.gov, the government’s clearinghouse for stimulus spending.
The Associated Press cautioned that the data was preliminary and reminded readers that a previous Administration report on “jobs saved or created” had overstated the data by several thousand jobs.
Vice-President responded by saying that the latest report “showed the stimulus bill was operating as advertised” and on target to reach Obama’s goals.
No doubt the Administration was in a hurry to get ahead of the October jobs report to be released by its Labor Department the following week. And no wonder, that report showed that the number of unemployed persons increased by more than 500,000 in October and the unemployment rate edged up to at least 10.2%.
By convincing the press, the public and, even, Congress that its stimulus spending had “saved or created” 650,000 jobs, the Administration hoped to obscure the fact that lots of people were still losing their job. At the very least, they could argue that the jobs situation would be a lot worse without the stimulus.
Kind of like, to pick a random example, a company might issue some good future earnings guidance to dull the impact of an analyst’s bad call on a stock.
It turns out the Administration’s media blitz about saving or creating over 600,000 was duct-taped together with some pretty flimsy data. Not to put too fine a point on it, but they seem to have just made up numbers.
Consider:

• The Franklin Center recently reported that, according to Recovery.gov, $6.4 billion in stimulus funds were spent in Congressional Districts that don’t exist. Specifically, 440 Districts that don’t exist. There are only 435 Districts to begin with. A occasional data-entry error is understandable, but 100% more districts than exist?
• GAO reported Wednesday that almost 10% of the jobs the administration said were “saved or created” were in projects were no stimulus money has been spent. It also found that 10,000 projects had spent almost $1 billion and hadn’t created or saved any jobs.
• Ed Pounds, Communications Director for Recovery.gov, told a newspaper today that, “We’re not certifying the accuracy of the information.” Asked why recipients would enter Congressional Districts that don’t exist, he replied “who knows, man, who really knows. There are 130,000 reports out there.”
• Even in Congressional Districts that do exist, the date seems sketchy. Big Government contributor Kristina Rasmussen delved into Illinois’ data and found lots of inconsistencies.

Yes, with the number of records pouring into Recovery.gov there are certain to be some problems. And, not every human being knows their Congressional District and may not know how to accurately estimate jobs “saved,” since there actually is no way to do so.
Still, remember, a couple weeks ago Administration officials used this very same data to take to the nation’s airwaves and proclaim success for their initiative. They reviewed this data and said that over 600,000 jobs had definitely been “saved or created.” That so many problems with the data have been exposed so quickly underscores how irresponsible the Administration’s press blitz was. Even if they were confident Big Media would never hold them accountable for running ahead of the data, the general public does remember these things.
The government requires corporate officers to be personally accountable for all financial  information released to the public. Having tens of thousand of employees making hundreds of thousands of separate reports doesn’t absolve them of final responsibility on the numbers. Neither does a need to get out in front of some impending bad news.
A few years ago, politicians passed a law to hold accountable corporate officers who mislead the public. If only politicians were held to the same standards they wrote.
Until his dying day, Ken Lay, former CEO of Enron, professed his innocence, saying be believed the numbers he reported and had been misled by his employees. We didn’t give him a pass. Why should we give one to Biden.