The federal government's reported figures for jobs "created or saved" by the "stimulus" bill (formally the American Recovery and Reinvestment Act of 2009, or "ARRA") are now known to be wrong. The Recovery Accountability and Transparency Board, which oversees these figures, apparently has decided not to correct them.
In a recent post, we explained how this was a violation of the federal Information Quality Act. The Board is obligated by law to perform "pre-dissemination review" to prevent the dissemination of erroneous figures, but by its own admission it has not done so. The Board also is obligated to establish and maintain an administrative mechanism for the public to seek and obtain the correction of error, and it does not have any such mechanism.
The Wall Street Journal's Louise Radnofsky writes that the Board "has no plans to change its claim that the package directly created or saved 640,329.17 jobs through September, despite its own admission and statements from the White House that the number is not accurate." Board spokesman Ed Pound says, "Unless we find significant errors causing public confusion, we are not planning further corrections." The Board's Website, recovery.gov, still prominently displays the same figure dated October 31, 2009 (shown on the right.)
The Board's defense is that recipients are responsible for the accuracy of their submissions, and funding agencies are responsible for reviewing them. Thus, the Board believes that it has no responsibility for "ensuring and maximizing" the quality of data it disseminates, as the Information Quality Act requires.
By law the Board is responsible for the quality of data it disseminates if a reasonable person would infer that the Board's figures are authoritative and enjoy the Board's endorsement. By displaying on its home page the aggregate figure, there is little doubt that the Board does in fact convey this impression. For example, on the same page (A5) of the print edition of the Wall Street Journal, Elizabeth Williamson reports the Board's figure as if it were true.
According to Radnofsky, the Board says only recipients can correct errors. However, recipients who want to correct errors cannot do so:
Some of the recipients contacted by The Journal said they had tried to correct their reports when they discovered the mistakes, but had been unable to do so after Oct. 29. The recovery board confirmed that recipients will not be able to fix their own reports until it is time to file new reports in the next quarterly reporting period in January.
The Lone Wolf Housing Authority in Oklahoma, for example, claimed to have created or saved 162.5 jobs with $46,489 of stimulus money it received for a housing-renovation project, on the assumption it should include the jobs of the 150 workers at the factory that manufactured the new siding it used.
The housing authority's secretary, Myrna Hess, said she began trying to fix the mistake on Oct. 29 but kept getting error messages and then was locked out of the system.
The Obama Administration today [October 30] reported that recipients of Recovery Act funds have informed the Recovery Accountability and Transparency Board that they have created or saved 640,329 direct jobs in reports covering approximately $160 billion, which represents a little less than half of the funds put to work through September 30, 2009. These reports, covering only directly created jobs and less than half the funds spent thus far, support government and private forecaster’s estimates that overall the Recovery Act has created or saved over one million jobs to-date...
“These reports are strong confirmation that the Recovery Act is responsible for over one million jobs so far and we are on-track to create and save 3.5 million jobs through the Recovery Act by the end of next year,” said Vice President Biden. “This is another encouraging sign of progress following yesterday’s news that the economy has begun to grow again for the first time in more than a year, but the President and I will not be satisfied until monthly reports show net job growth. We are working every day to create more jobs and we will continue to report on our progress doing so with the Recovery Act in the same transparent way we did today.”
The White House implies that the figures were reviewed for accuracy before dissemination:
The reports were filed in early October by state and local governments, private companies, colleges and universities and community organizations who received Recovery Act funds and will be posted publicly on Recovery.gov later today following a three-week review process...
The evidence to date shows that this review was demonstrably ineffective. It failed to detect and correct many obvious errors.
Radnofsky reports that the Obama administration continues to endorse the Board's figures, also in violation of the Information Quality Act:
[T]he administration has ... argued that inaccuracies in the data are minor, saying that errors have been found in less than 5% of reports so far and that the number of jobs created or saved could have been undercounted as well as overcounted.
Ed DeSeve, the White House's senior adviser on the stimulus plan, told reporters Thursday that the data "may be imprecise" but that he thought the jobs numbers were "a good representation of what's going on" and were supported by some economists' estimates of the overall economic climate.
At best, DeSeve is unfamiliar with information quality principles. He confuses precision (the degree to which repeated measurements under unchanged conditions show the same results) with accuracy (the degree of closeness of measurements of a quantity to its true value). The Board's figures are highly precise -- they report jobs created or saved ± 0.5 job -- because the auditors who comprise the Board are exquisitely skilled at addition. But the Board's figures are seriously inaccurate. The Board and Chairman Earl Devaney have admitted as much; they say that accuracy is the responsibility of others.
The Obama administration has implemented ARRA in a way that encourages exaggeration and prevents the correction of even honest error. Guidance issued by the Office of Management and Budget explicitly declines to prescribe a methodology for estimating jobs created or saved (see section 4.3):
4.3 Does this Guidance mandate a specific methodology for conducting data quality reviews?
No. However, the relevant party conducting a data quality review required by this Guidance (i.e., recipients, sub-recipients, Federal agencies) must use its discretion in determining the optimal method for detecting and correcting material omissions or significant reporting errors. At a minimum, Federal agency, recipients, and sub-recipients should establish internal controls to ensure data quality, completeness, accuracy and timely reporting of all amounts funded by the Recovery Act.
For its part, the Board designed the reporting tool in a way that requires recipients to report quarterly but prevents them from correcting errors.
