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Watchdogs Won't Be Chained

The trend toward fiscal oversight could outlast the current bailout spending.

As federal spending on bailouts and the economic stimulus soars into the trillions, the Obama administration faces growing pressure to account for just where all those taxpayer dollars are going.

"To spend that much money that quickly is inviting fraud and abuse," warned Danielle Brian, executive director of the Project on Government Oversight. Her group is one of 30 that have banded together to form the Coalition for an Accountable Recovery. It's a diverse alliance of anti-tax activists, community organizers and government transparency watchdogs all tracking the $787 billion stimulus package.

The coalition of strange bedfellows brings together progressives, libertarians and conservatives, noted Gary D. Bass, executive director of OMB Watch, which co-chairs CAR with Good Jobs First, a policy center promoting accountability in economic development. Other coalition members include the Center for Cities and Schools, Public Citizen and Taxpayers for Common Sense.

Concerns over sloppy oversight of the first $300 billion in the Troubled Asset Relief Program -- Treasury paid too much for shares in faltering banks and the banks have failed to use the money to prevent foreclosures, according to the Congressional Oversight Panel supervising the bailout -- helped spur OMB Watch and its allies to form the coalition. OMB Watch has also helped spearhead another, smaller coalition dubbed Bailout Watch, which is bird-dogging the $700 billion financial stabilization plan.

CAR and Bailout Watch are part of a growing fiscal oversight craze both on and off Capitol Hill. House Speaker Nancy Pelosi, D-Calif., has called on committee chairs to develop plans for fiscal oversight hearings. House GOP Whip Eric Cantor, R-Va., has announced a "stimulus-watch program" that invites citizens and watchdog groups to report how contractors and agencies dole out the $787 billion. There's even a new "Stimulus Watch" wiki set up by a couple of senior research fellows at George Mason University that invites citizens to find, discuss and rate state and local projects receiving federal stimulus dollars.

All this comes on top of the Obama administration's own stepped-up oversight, which includes a Web site to disclose spending and performance data as well as monitoring by a chief performance officer and an oversight board. A Feb. 18 OMB memorandum for federal agency and department heads also requires that agencies summarize and publicly post any contract over $500,000, a step government watchdogs hailed.

But conspicuously missing is any requirement that agencies report information at the so-called subcontract level -- that is, which vendors are receiving the stimulus money from state and local governments. That's crucial, say CAR members, because state contracts have been magnets for fraud and abuse in recent years -- witness the controversies involving erstwhile Illinois Gov. Rod Blagojevich and New Mexico Gov. Bill Richardson, who withdrew from consideration as Commerce secretary due to a pay-to-play inquiry.

"That's where the rubber hits the road, and that's where I see a gap right now," said Bass, of OMB Watch. A municipality, for example, may distribute federal bridge-building money to five separate vendors -- whose names need never be reported. Those names are crucial to track not only where the money went and for what purposes, but how many jobs were created and at what wage, Bass said.

"Taxpayers have a right to see where their money's going and what kind of bang they got for their buck," concurred Greg LeRoy, executive director of Good Jobs First. LeRoy noted that new federal reporting requirements may open the way for states to improve their own often-spotty disclosure practices. While some states have improved transparency and disclosure in recent years, he said, state and municipal spending remains notoriously difficult to track.

"Right now we've got this kind of 'Tower of Babel' situation out there, with very incomplete, very fragmentary, very nonuniform reporting," said LeRoy. But he hopes the disclosure requirements attached to the stimulus package could help improve state reporting habits: "We want millions of eyeballs on that money."

That may not prove difficult, given growing concerns over the vast amounts of federal cash being thrown at the failing economy, coupled with sunset provisions that require it to be spent in record time. Indeed, organizers of CAR and Bailout Watch say they expect their coalitions to outlast the fiscal crisis.

As part of a longer-range reform, they're calling for an agency-by-agency overhaul of how the federal government discloses all budgetary and other data. Gone are the days when disclosure meant handing something over on a piece of paper, transparency advocates say. Today, disclosure has to mean making information available online in real time, in a sortable, searchable, downloadable format.

Some government agencies are sure to resist, particularly financial institutions like the Federal Reserve Bank, which has long cultivated a culture of secrecy. Bloomberg News filed a Freedom of Information Act lawsuit against the Federal Reserve last year in a bid to find out more about loans to banks that it says totaled $1.5 trillion. As federal spending accelerates, however, the pressure for better budget disclosure will only increase. After all, few would dispute that lack of transparency helped create the economic mess to begin with.

Said Bass: "I think this coalition is going to be around for quite some time -- well beyond the recovery act -- to talk about building a national system that ties state and federal funding data together, so the public has a method for true accountability."

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