As Committee Probes Costly Stimulus Program, Treasury Admits Job Creation Not a Requirement, Not a Factor for Handing Out Cash

April 6, 2012

WASHINGTON, DC - House Energy and Commerce Committee Chairman Fred Upton and Oversight and Investigations Subcommittee Chairman Cliff Stearns continue to press the Obama administration for answers and an accurate accounting of the 1603 energy stimulus program's record, including its proven job creation. Upton and Stearns recently launched an inquiry into the $10 billion program with letters to the Energy and Treasury Departments, a step that was necessary as details have been difficult to come by, despite the administration having already spent billions of dollars and now asking for more.

"Today's weaker than expected job creation figures are a reminder that millions of Americans are still looking for work. It's essential to understand what happened to the billions of dollars pushed out the door as part of the stimulus program as we work toward a stronger economic recovery, and particularly as the president urges more spending on his favored programs," said Upton and Stearns. "The slow and skimpy response from two key agencies about the direct effectiveness of this program are disappointing, and make clear that much more information is needed about 1603 grants."

The committee leaders called on the administration to produce the information by March 29; DOE only today offered a response, pointing to a new report touting its own job creation figures but leaving many unanswered questions about the cost and effectiveness of the program. Treasury sent a brief but startling reply 24 hours after the deadline, offering scant materials including the 1603 application and documents printed from the agency's website. The agency's comments on jobs in its five-paragraph letter to the committee were most enlightening.

The administration has touted the more than $10 billion handed out in 1603 grants as a jobs program, and Secretary of Energy Steven Chu previously claimed that it "has created thousands of jobs in industries such as wind and solar." However, the Department of Treasury insists otherwise in its response to the committee (emphasis added):

"Job creation is not one of the statutory requirements for eligibility and thus it is not a factor in the consideration process. Because the 1603 program's primary focus is on domestic renewable energy production, Treasury also does not report on the number of jobs created by the program."

Multiple reports have questioned figures detailing temporary and permanent jobs spawned by the Section 1603 grant program. In a November 2011 study, the Congressional Research Service wrote, "quantifying and measuring green job creation and growth has been difficult" and added that "it is recommended that any job creation estimate be viewed with skepticism." A Wall Street Journal investigation found problems with accounting for the number of jobs created by the 1603 program, finding "evidence of far fewer (jobs). Some plants laid off workers. Others closed."

Amid lingering questions about the program's lasting effect on job creation, the Department of Energy is out with a new report today estimating the economic impact of the 1603 grants. The report takes credit for both direct and indirect job creation, while acknowledging that gross, rather than net, jobs are estimated. The economic model "does not account for displacement of jobs or economic activity" Moreover, according to its report, DOE is unable to estimate how many of the jobs are actually linked to the 1603 grants.

"The results presented in this report cannot be attributed to the §1603 grant program alone.  Some projects supported by a §1603 award may have progressed without the award, while others may have progressed only as a direct result of the program; therefore, the jobs and economic impact estimates can only be attributed to the total investment in the projects."

It is important to note that federal funds expended under the 1603 program, more than $10 billion to date, amount to only about one third of the total investment in these projects, as estimated in the DOE report at over $30 billion.

As Speaker Boehner said last week on the 1603 program, "Listen, the American people continue to ask the question "˜Where are the jobs?'  They deserve answers and they deserve the truth."

Even in the face of unprecedented debt and unanswered questions, President Obama is urging Congress to "double down" on spending like this $10 billion stimulus program. A program for which his own administration cannot account for the number of jobs that were created, let alone agree on whether they should be counting them in the first place.

Read DOE's response letter HERE.

Read Treasury's response letter HERE.