Management & Labor

Did the Stimulus Do Anything for Transparency?

The economic impact of the stimulus is unclear and highly debated. But one thing is for sure: it's done more to promote government transparency than any piece of legislation in recent memory.
by | February 2012

Three years after President Obama signed the American Recovery and Reinvestment Act (ARRA) -- better known as the stimulus -- into law, there’s still a bitter political debate about its legacy. The nonpartisan Congressional Budget Office says that at its peak in the third quarter of 2010, the stimulus increased employment by anywhere from 700,000 to 3.6 million people. Yet those on the right who disagree with the Keynesian idea that the public sector can stimulate the economy say that ARRA has done little to help, and that it has only exacerbated the country’s mounting debt. “We are better off now than we would have been if I hadn’t taken all the steps that we took,” Obama told a CBS affiliate last fall. House Speaker John Boehner had a curt response: “Are you kidding me?”

Today, states’ use of stimulus funds has already decreased dramatically, and the board that monitors the spending sunsets next year. Yet even as the stimulus slowly fades from the spotlight, it’s becoming clear that, for many people, no economic study or analysis will ever provide definitive proof of ARRA’s impact, or lack thereof. The legislation has become too much of a partisan lightning rod, symbolizing everything the political left believes government should do to fix the ailing economy, and everything the right believes is causing it to slump.

But there is one area where the legislation has had a definitive effect, one clear impact that transcends politics and is almost universally acknowledged: The stimulus has done more to promote transparency at almost all levels of government than any piece of legislation in recent memory. Many states launched or enhanced their open government initiatives around the same time as the stimulus, drawing on both the lessons learned and technical know-how they developed as they implemented the heightened federal reporting requirements that came with ARRA. It’s an impact that seems to excite watchdogs and wonks more than the politicians who bicker over the economic impact of the spending.

Now, administration officials, members of Congress and state lawmakers are all crafting plans to build on the historic levels of transparency the legislation helped spur. Three years after the Recovery Act was passed, “we’re in a position to move forward,” says Michael Bird, senior federal affairs counsel with the National Conference of State Legislatures. “It will be legacy legislation.”

When the stimulus was signed into law in early 2009, one of the biggest tasks its architects faced was designing the reporting requirements for fund recipients. Getting those right was critical: The programs funded by the multibillion-dollar legislation would have been seriously undermined by significant fraud. Ultimately, states and localities that received stimulus funds were required to complete reports containing 99 fields of information, ranging from basic descriptions of ARRA-funded projects to detailed data on expenditures. Notably, the federal government also gained access to data from “sub-recipients,” such as contractors and even subcontractors that performed stimulus-funded work. Transparency legislation passed by Congress in 2006 already mandated that type of data; prior to the stimulus, however, it had widely been ignored.

The unprecedented level of data allowed the feds to do two important things. First, the public-facing transparency Web portal, Recovery.gov, offered taxpayers a way to see how the federal funding was used, nearly in real time. Second, the data was used to power the Recovery Operations Center, better known as the ROC, which has been widely praised for preventing fraudulent use of stimulus funds. The reporting requirements driving both efforts were developed quickly -- some state-level critics say hastily -- but by most counts were effective at providing the level of transparency that the stimulus’ architects sought. Some critics have quibbles: They say the program hasn’t done an effective job linking performance metrics with spending data, and it’s difficult to determine the quality of the jobs the stimulus created. But the efforts far surpassed anything the feds had done in the past.

Today, there are several proposals, including the Digital Accountability and Transparency (DATA) Act in Congress that would expand the stimulus’ reporting requirements to all federal government spending (read "The Future of Federal Spending"). Meanwhile, various federal task forces are making similar deliberations, and most observers believe that one way or another, it’s going to happen. “Whether it’s the DATA Act or whatever comes afterward, I think ARRA has helped pave the way, and frankly, put together some success factors that can be built upon in the future,” says Arizona Comptroller Clark Partridge.

State officials and the organizations that represent them say the stimulus also helped forge a new relationship with the U.S. Office of Management and Budget (OMB), which oversees the reporting -- a relationship that didn’t exist before ARRA. As a result, now may be a good time to expand on that relationship, state officials say, lest the transparency momentum fade as the stimulus winds down.

Essentially, the stimulus can serve as a template for the future, says Mike Wood, executive director of the Recovery Accountability and Transparency Board. “It was proof of concept,” Wood says. “I don’t think anyone wants to lose the good lessons learned from the Recovery Act.” Among those lessons is the knowledge that the feds can, in fact, collect sub-recipient data, display spending information on a detailed transparency site and minimize fraud. “We know we can track spending very quickly,” he adds. “I see that going forward.”

And Congress, which would ideally need to take the lead role in creating a robust reporting regimen, is likely to notice that success. “I think it helped show Congress that there is a use for and a need for more information on where federal money is going and how it’s being used,” says Sam Rosen-Amy, federal fiscal policy analyst with the watchdog group OMB Watch. “I think in the coming years, it’s only going to be expanded. We’re going to get more information and expanded information. That’s entirely due to the Recovery Act.”

The stimulus’ greatest legacy actually may be the demand for transparency it created across levels of government, especially at the state level, where officials are developing increasingly sophisticated transparency portals. “It definitely pulled some states forward,” says Kristin McMurray, managing editor of Sunshine Review, a website that evaluates state and local transparency sites. In 2010, the year after the stimulus was created, at least 14 states built transparency sites or made big improvements to their existing sites, according to research by Phineas Baxandall, a senior analyst with U.S. Public Interest Research Groups (PIRG), which publishes a widely read annual report rating each state’s transparency initiatives. All totaled, 40 states now have transparency websites that provide checkbook-level information on government spending. “I think the stimulus requirements set a new standard for states,” Baxandall says. “A lot of what states started doing was really mimicking what they had done with their stimulus transparency.”

Among those is Arizona, which launched its transparency portal a year ago but already has one of the best-rated sites in the country. Much of its backbone was built upon an earlier transparency portal the state had developed to track funding specifically from ARRA. In Kentucky, which also has a top transparency site, the state’s open government portal existed before the stimulus. But its latest iteration relies on much of the same programming as its ARRA portal. “When we knew the stimulus was coming, that was an impetus to look at the way we presented the information ... making sure it’s done in a clear way that’s automatically updated,” says Greg Haskamp, executive director of Kentucky’s Office of Policy and Audit. In Massachusetts, the state’s Open Checkbook site is also the legacy of the state’s work with the Recovery Act, says Francisca Rojas, research director of the Transparency Policy Project at Harvard.

Elsewhere, the impact has been more subdued. Indiana, another of the top-ranked states for transparency, began pursuing open government initiatives long before ARRA, says State Auditor Tim Berry. But he acknowledges that “ARRA put more focus on transparency at the time.”

To be sure, other states may not have drawn inspiration from the stimulus. “I don’t quite see the ARRA connection,” says Michael DiResto, communications director for Louisiana’s Division of Administration.

Yet it’s hard to ignore the fact that states have been creating transparency sites and expanding their capabilities dramatically over the last three years. Wood, of the Recovery Board, has observed the change too, but he believes it’s mostly just a serendipitous effect of the ARRA requirements. “I don’t think when they framed [the stimulus], it was intended to be a power surge for this,” he says.

No one believes that the stimulus has been a panacea for government transparency. Advocates such as the Sunlight Foundation are frequent critics of the website USASpending.gov, which tracks federal spending outside of ARRA. About 87 percent of federal spending reports on the site in 2010 were incomplete. One-third of the reported spending didn’t match up to data reported on a different federal spending database. And almost 13 percent of the spending data was reported late. “The overall spending reporting picture has been improved a lot by the experience with the Recovery Act,” says Tom Lee, director of Sunlight Labs, a part of the foundation that develops tools for analyzing government data. But he says there are still “huge problems” with federal grants data. “Improving data quality has got to be a priority for government, whether or not the DATA Act is implemented.”

Meanwhile, state sites need work too. One of the biggest flaws is that many of them lack timely numbers and the ability for citizens to download the data so that they can crunch the numbers on their own. “People want to be able to manipulate and touch the data in their own ways,” says McMurray of Sunshine Review.

Several states have actually closed their ARRA transparency portals, including California, which shuttered its own statewide transparency site last fall. A spokesman for Gov. Jerry Brown said the portal was “poorly maintained, underutilized and had not been updated,” drawing the ire of watchdogs who instead preferred rebuilding the site to shutting it down. Today, visitors to the portal are referred to a handful of other government agencies that house the data. “When I started my research, everyone said, ‘You can’t roll back transparency,’” says the Transparency Policy Project’s Rojas. “It’s actually pretty easy.”

Despite those shortcomings, U.S. PIRG sees more states moving toward what it calls “Transparency 2.0.” That includes one-stop portals that pull data from across government agencies, give users the ability to conduct comprehensive searches and provide detailed information not just on spending, but also on contracts, subsidies and tax expenditures. Kentucky, considered the leader in state transparency, posts data on government-owned land parcels, details of economic incentive packages and the jobs they create, and salary information for every government employee. In Indiana, portal users can view detailed budget information for individual cities, counties and even townships. That type of data is considered to be on the cutting edge, and it’s what transparency advocates hope to see more of. “A more accountable government will also be a more efficient government, and in that process a more effective government,” says Berry, the Indiana auditor. “When individuals know that decisions they make in spending tax dollars are readily available 24/7, they have second thoughts sometimes on how those dollars are spent and allocated.”

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