Stimulus Money Goes To Ground.

Under the banner of saving jobs, kick-starting the economy and keeping small businesses and organizations afloat through tough economic times, the US government has handed out more than $840 Billion in federal stimulus money since 2009. Of that, more than $33 Billion went to California.

Some of the largest and most recognized companies in Silicon Valleynearly all of which are flush with cash—were awarded $94 million as either prime recipients or sub-recipients.

Google got $686,681 as a sub-recipient on a contract to reach 14 additional different language audiences for the 2010 Census Integrated Communications Campaign. HUH?

McAfee was awarded $1,579,271 as a sub-recipient on five different contracts from 2009 through the first quarter of 2012. For ???

eBay received more than $4,447,000 on three different grants including a $2.5 million grant to the Office of the Governor of Arizona for the Government Services Fund. For the WHAT?

Applied Materials took over $10 Million to develop and demonstrate an advanced epitaxial growth system for high-brightness LED manufacturers. Somehow, this doesn’t sound like it is going to save jobs, lives or cure cancer.

Scott Amey, General Counsel at POGO, is critical of some of the outcomes of the stimulus bill.

“There are a lot of large contractors that received stimulus money, and it makes you scratch your head and wonder, ‘Were they really in need of receiving that money?’” Amey said. “A lot of people would say no.”

He went on to say, “When it comes to competition in federal contract, you always have a fear that the usual suspects, that the larger contractors, are always going to get the bigger piece of the pie. And then you have the small and mid-sized businesses that are fighting for the scraps.”

Yahoo! got almost $10 Million to build a clean-energy data center in upstate New York. According to federal data, the project created all of 25 jobs. Why can’t Yahoo! build its own data center?

Yeah sure. These guys really need all the stimulus help they can get. Are you kidding me?

Of all the recipients, more than half didn’t create any more than four jobs with the funds.

One of the biggest jokes was PG&E who received  $47,387,955. Twenty-five million dollars of that goes to design and test an underground compressed energy storage system. On our tax dollars? Come On, Man.

Why can’t a huge utility company do these things on their own?  PG&E made $332 Million in NET PROFIT even after absorbing the $550 Million costs of the pipeline explosions in 2010. “That is the whole purpose of the stimulus money.” A PG&E spokesman said, “to encourage innovation and testing new technologies.”

Sam Rosen-Amy, fiscal policy analyst for OMB Watch in the nation’s capital, said there was a tension between getting the stimulus cash “out as fast as possible to people who need it most,” and ensuring the money is being spent in “an effective and responsible way.” And, he admits that some of the smaller companies that should have received money did not.

Among these were two local applications for stimulus dollars that were denied back in 2009. Linda Crowe applied for stimulus funding, twice, so her organization Califa, which represents public libraries, could buy laptops and provide training for unemployed residents.

“It was all connected toward job assistance and for helping people find work,” she said.

“How much did you get?” Stock asked Crowe.

“Nothing,” she said.

Debarag Banerjee and his three business partners at WiViu Technology applied for $1.5 million to hire 13 people and build a video conference system to serve rural hospitals.

“If we got stimulus, funding had come at the right time,” Banerjee said, “we would have been in a much, much different state.”

Banerjee’s company has downsized significantly, and now it’s essentially out of business.

All of the other Silicon Valley companies who received funds wouldn’t agree to an interview with reporters about their stimulus projects or why their corporations needed the money.

If we simply gave the money to Kickstarter, and let them fund projects through the next few years with that $33 Billion, we would create tons of jobs and a lot of wealth. As one simple example, Pebble Watch Co., which just closed its Kickstarter round after raising $7 Million in three weeks has already created 6 new jobs and expects to create another 15 by year-end and they haven’t even begun to manufacture the watches yet. And, when you think about how this all works, it isn’t just the jobs created directly, its the indirect jobs that really count. Microsoft used to create 6 service jobs for every one new hire.

I don’t know whether Banerjee’s video conferencing system to serve rural hospitals makes any sense, but it only would have cost $1.5 Million to find out. That’s a rounding error on $33 Billion.  Or, how about a few bucks for laptops and training for the unemployed?

Instead we have PG&E throwing almost $50 Million into the ground for compressed energy? Really?


About Steve King

iPeopleFINANCE™ Chief Operating Officer. Former CEO of Endymion Systems, Inc. a $36m Information Systems Services company. Co-founder of the Cambridge Systems Group, the creator of ACF2, the leading IBM Mainframe Data Center Security product; acquired by Computer Associates. IBM, seeCommerce, marchFIRST, Connectandsell alumni. UC Berkeley alumni. View all posts by Steve King

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