Economy Alarm: Stimulus $$ for School Supplies = Cell Phone Accessories, Beer, Lotteries, Smokes?

Stimulus $$ for School Supplies = Cell Phone Accessories, Beer, Lotteries, Smokes?

Despite Accountability Promises, Taxpayers In New York Continue to Lose Out On Job Creation As Waste Mounts

Obama Asked the American People to Trust Their Government and Promised His Administration Would Provide ‘Unprecedented… Transparency and Accountability’

“We cannot overstate the importance of this effort. We are asking the American people to trust their government with an unprecedented level of funding to address the economic emergency. In return, we must prove to them that their dollars are being invested in initiatives and strategies that make a difference in their communities and across the country.” (Memorandum to Head of Departments and Agencies, www.Recovery.gov, February 9, 2009)

“The president also promised that his administration would provide ‘unprecedented … transparency and accountability.’” (Laura Meckler, “Obama Signs Stimulus Into Law,” 02/18/2009)

Credibility Crash: Money Meant for School Supplies Winds Up Meaning Luxury Items and Cash Instead

“Getting kids back to school with the clothes and supplies they need can strain the family budget. That’s why the Governor of New York decided to use federal stimulus funds for a back-to-school program. Needy families got a one-time payment of $200 dollars per child to buy school supplies. It adds up to $140 million of your tax dollars.

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While few argued with the concept of helping low-income families, nobody anticipated the chaos that would come next.

On August 11th, the state of New York deposited the $140 million in stimulus money into the individual food stamp and welfare accounts of people on public assistance. Some saw their balance shoot up by a thousand dollars all at once. The idea was they would use their regular welfare benefits card, which acts like a debit card, to buy the school supplies. There was just one problem. The letter from the state telling them what the money was for didn’t arrive until days later. By then, it was too late.

“No one questions the intention of this particular program. However there is an extraordinary distance between the good intention of the program and the implementation of the program,” Monroe County’s Commissioner of Health Services Kelly Reed said on Wednesday…

County Executive Maggie Brooks says social workers were flooded with calls from merchants who were afraid fraud was being committed.

“We had different retailers calling us and saying people were coming in with their benefit transaction card, and they are purchasing flat screen TV’s, iPods and video gaming systems,” Brooks told CBS News. Brooks doesn’t blame the recipients – she blames the state for not ensuring the funds were spent for school.

Businessman Josh Babin says the day stimulus money went into the welfare accounts, business at his Rochester cell phone store doubled. And he doesn’t sell school supplies. “Most of them came in, picked up most of their accessories, most of their products.”

Welfare recipients were also free to withdraw the money as cash. That led to an unexpected run on ATM’s across the state. Brenda Smith, manager of a Wilson Farms store in Monroe County, said most of her increase in sales when the stimulus funds were disbursed were not in school supplies, but in “pre-pay cell or credit cards.” She said her store’s ATM was wiped empty.

Managers of three Wilson Farms convenience stores in Rochester also reported empty ATM machines and increases in beer, lotto and cigarette sales.

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ATM’s were also wiped out in hours at many Wegman’s stores statewide and the owner of a Sunoco station described “scenes of panic” at her store, with public assistance customers flooding her ATM machine. Some of them, she says, immediately used the cash to buy cigarettes and beer.

Monroe County investigators sampled the accounts of more than 70 drug and alcohol rehabilitation clients and found more than half of them withdrew their back-to-stimulus funds entirely in cash.

New York Congressman Eric Massa (D-NY) supports the stimulus bill, but said this program is flawed. “It’s a matter of accountability,” Massa said. “Ensuring what’s happening with the funding. You and I both know where there’s crevices, the water will go through those crevices.” (CBS)

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Because debit cards don’t list what was bought, state officials say they’ll never know how much of the $140 million actually went for school supplies. Those who bought luxury items didn’t break any laws, because there were no strings attached to the money. Little consolation to taxpayers who were promised that they’d know how every dime of stimulus funds was spent.” (Sharyl, Attkisson, “Unplugged Exclusive: Stimulus Funds for School Supplies Misused,” CBS News, September 2, 2009)

To read the full article, click here: http://www.cbsnews.com/blogs/2009/09/02/politics/politicalhotsheet/entry5282199.shtml

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