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GOP Report Points to Stimulus Money Gone Awry

Two Republican senators have conducted an exhaustive survey of the Obama administration’s $787 billion economic stimulus spending and found that some of the spending didn’t create jobs — it actually led to job losses.

Call it the federal law of unintended consequences.

All in all, Senators Tom Coburn (R-Okla.) and John McCain (R-Ariz.) scrutinized 100 projects, finding that some eliminated jobs, and others were simply questionable expenditures of money.

The report, obtained in advance by CNBC, spotlights everything from federal stimulus money that went to study the effects of cocaine on monkeys to dollars that went to construction projects that blocked access to local businesses — which laid off employees as a result.

The findings come despite a hearty endorsement of the federal stimulus just a few days ago in another report, this one by the economists Alan Blinder and Mark Zandi. The duo found that the effects of the federal stimulus were “very substantial,” raising 2010 real GDP by about 3.4 percent, holding unemployment about 1.5 percentage points lower and boosting US payrolls by almost 2.7 million jobs.

Not surprisingly, the Obama administration prefers Blinder and Zandi’s take to that of Coburn and McCain.

“We made clear from the start that we would subject every dollar of Recovery Act spending to the highest standards, and we’ve already proactively spotted and killed hundreds of dubious Recovery Act projects,” said Liz Oxhorn, a White House spokeswoman for the federal stimulus effort. “We'll look into each of their claims and take action if any have merit, but with more than 70,000 Recovery Act projects underway, any misguided project is just a small fraction of tens of thousands coast to coast that are rebuilding America and putting people to work.”

"We used to have a good lunch business, but with the construction going on during the day, it actually killed our lunch business." -Owner, Archery Bistro, Todd McKittrick

Three small business owners across the country tell the tale of how stimulus spending has upset their livelihoods.

Todd McKittrick, owner of Archery Bistro in Washington State’s Normandy Park, said he’s down to about half the staff he began with as the result of a stimulus funded road construction project he said is blocking access to his property.

“We used to have a good lunch business, but with the construction going on during the day, it actually killed our lunch business,” McKittrick told CNBC. “We’ve also shut down two more days to help stop the bleeding of the cost of the construction.”

According to the Coburn-McCain report, the project that’s causing problems for Archery Bistro came after the U.S. Department of Transportation provided the city of Normandy Park, Washington, with $3.8 million to spruce up eight blocks of the town’s 1st Avenue with the addition of “bike lanes, street lights, landscaping and a sidewalk.”

The construction, which began in the summer of 2009, is expected to be complete by late August.

Other businesses affected ...

It’s a similar story in Twin Lakes, Wisconsin, where a Jane Bodi, owner of Bodi’s Bake Shop, says she’s had trouble selling her confections ever since a construction project blocked access to her business.

“I've had to cut my help back. I've had girls on usually in the afternoon hours from 11 ‘til 8 (o'clock), and now they leave by 4 o' clock,” Bodi told CNBC. “And some girls we're not even using to help us out because there just isn't the hours or the income to keep paying them.”

And in Lancaster, Virginia, restaurateur Ron Edwards found that the dock in front of his waterfront Upper Deck restaurant was suddenly mired in a sandbar – the result, he said, of a stimulus-funded Army Corps of Engineers dredging project gone awry. Now, boat traffic to his eatery, located at the confluence of Greenvale Creek and the Rappahannock River in Virginia, is severely restricted.

The Army Corps of Engineers said that’s because of unusual storm activity. “After the material was placed in July 2009, a major Northeaster in November and persistent bad weather during the winter of 2009-2010 may have contributed to the recent shoaling patterns around Mr. Edwards' pier,” the Corps said in a statement.

As for those cocaine-snorting monkeys? The Coburn-McCain report found that the Department of Health and Human Services has sent $71,623 to researchers at Wake Forest University to see how monkeys react under the influence of cocaine.

Here are some other projects that the GOP senators called into question:

  • The U.S. Forest Service is spending more than $554,000 to replace windows at a visitors center for Mt. St. Helens that has been closed.
  • The University of North Carolina at Charlotte received more than $750,000 to help develop a computerized choreography program that its creators believe could lead to a YouTube-like “Dance Tube” online application.
  • The Port Authority of Allegheny County, PA, will spend $62 million extend the city’s light rail under the Allegheny River to the new Rivers Casino, as well as to its two professional sports arenas, PNC Park (home of the Pirates) and Heinz Field (home of the Steelers).
  • The town of Boynton, Oklahoma was awarded nearly $90,000 to replace a quarter-mile stretch of sidewalk that was replaced only five years ago.
  • The Mohegan Tribe of Indians of Connecticut will get $54 million in rural development loans from the United States Department of Agriculture for a tribal government building that will also hold a practice facility for the WNBA’s Connecticut Sun women’s professional basketball team.
  • Researchers at Wake Forest University have received nearly $300,000 to study whether Integral Yoga “can be an effective method to reduce the frequency and/or severity of hot flashes” in menopausal women.
  • The National Science Foundation shelled out nearly $60,000 in stimulus dollars to study people’s perceptions of federal stimulus spending.

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