- The Washington Times - Thursday, February 26, 2009

As the Obama administration moved to shore up the financial system and disbursed an initial chunk of funding from the $787 billion economic-stimulus bill, Vice President Joseph R. Biden Jr. and budget officials warned of potential problems in spending the money properly.

Mr. Biden hosted the first stimulus-plan implementation meeting on Wednesday, saying that it’s “a problem” that second-tier staff at government agencies are not yet in place and that he would personally oversee the process to make sure the government agencies get what they need.

“Procurement officers - it’s going to be a problem; many of you do not have your second-level staff folks … helping you to move the process up on the Hill,” the vice president said, asking for agencies to give him weekly reports identifying both shortfalls and progress.

Earl Devaney, leading the new Recovery Act Transparency and Accountability Board, said the government has the same number of staffers who at the start of the decade were tasked with a meager $220 million in contracts but must now tackle more than $500 billion in contracts.

Mr. Devaney, a well-respected former Interior Department inspector general, said that is a “major challenge.”

“The procurement staffs have not risen in the departments; they’ve stayed the same,” he said. “So that will be a major challenge for all of the secretaries to address, to make sure that the staff is available to make this happen quickly and to monitor it once it goes out.”

Office of Management and Budget Director Peter R. Orszag said the administration needs “sufficient numbers” of officers to “oversee the money flowing through the system and to make sure that it is well-spent.”

He also told the group of Cabinet secretaries gathered for the meeting that Recovery.gov, the site tasked with tracking the funds, is getting 3,000 hits per second.

David Walker, former head of the Government Accountability Office, said the administration should not be surprised that there’s a shortage of procurement officers with such a massive sum.

Although contracting is more sophisticated and larger in scope, the government work force has shrunk, and with a “significant increase in the volume of activity, that’s only going to make it that much more of a challenge,” said Mr. Walker, now president and chief executive officer of the Peter G. Peterson Foundation.

The consequences of the shortfall could be a delay in processing the stimulus funds in a timely manner, defeating the point, he said.

Mr. Walker advised President Obama’s administration to learn the lessons of the Troubled Assets Relief Program and make sure there are criteria and conditions in place for receiving the money to minimize waste.

“If not, you can throw all the money and all the manpower you want to doing oversight, but it’s going to be too late, because once that money is spent, it’s g-o-n-e,” he said.

But it wasn’t all tough news for the administration, which is aiming to put people back to work quickly and score a win with fast action.

Mr. Orszag said the first $15 billion in stimulus money was given to states for Medicare payments for children and seniors and announced that the Department of Housing and Urban Development Wednesday is awarding $10 billion to state and local governments.

The money is for projects making public housing more energy-efficient, making improvements in affordable housing and funding the program for the removal of lead-based paint, he said.

Mr. Orszag said that in the next few weeks, state will get floods of funding for food stamps, unemployment insurance, low-income-housing tax credits, law enforcement grants and transportation funding.

He said states will not be allowed to put their stimulus cash into rainy-day reserves or to pay for projects that are “basically already done.”

Mr. Biden asked the Cabinet secretaries gathered for the meeting to let him know if they run into bureaucracy speed bumps, and added he would chastise mayors and governors if the money isn’t spent.

“I’ll tell you what, the moral disapprobation of this office will be used if the money is not being out there spent,” the vice president said. “I’m going to go on television and say, ‘We gave so-and-so X amount of dollars, and nothing is happening. Why hasn’t it happened?’ ”

The vice president, who displayed a black smudge on his forehead to honor the Catholic Ash Wednesday, highlighted the unique scenario: “We’ve never been in a position where this much money with this much need with this much urgency is available, and the need for us to follow the money in ways we haven’t done before.”

Mr. Obama, meanwhile, huddled with key congressional leaders and Treasury Secretary Timothy F. Geithner to outline broad regulatory-reform principles the White House said are needed to prevent a total fiscal collapse.

“We now know from painful experience that we can no longer sustain 21st-century markets with 20th century regulations,” the president said, noting that his economic team would be offering recommendations to Congress for legislation to be presented in the coming weeks.

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