PROFILE

Stimulus Man

 

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Ed DeSeve WG’71 controls the stimulus package purse-strings

Ethan Lipsitz C’06 leaves his customers in (one-of-a-kind) stitches

John Hanson C’83 and John Milner Ar’64 upgrade Biddle mansion

Sheena Iyengar W’92 C’92
analyzes the art of choosing

Todd Lieberman C’95 pitches his heart out to make movies he loves

Randy Snurr EAS’88 plays around with “molecular Tinkertoys”


 

 

Class of ’71 | When the American Reinvestment and Recovery Act—or stimulus bill—became law in February 2009, the Obama administration found itself with two distinct but related challenges. It had to distribute an unprecedented amount of money in a very short period of time, and it had to do so in a political environment where even a misplaced dime stood to generate days of blowback. That the White House turned to Ed DeSeve WG’71 to stage-manage the production testifies to the track record he developed over the course of four decades in and out of government service.

DeSeve’s reputation for fiscal rectitude developed early in his career. In 1974, as a 29-year-old deputy finance chief in Philadelphia, he resigned his post rather than go along with Mayor Frank Rizzo’s plan to balance the city’s budget by cooking its books. Since then he has held several lifetimes’ worth of positions in academe, the private sector, and at all levels of government—including a stint in the late 1990s as deputy director of the Office of Management and Budget, where he co-directed the national effort to avert the Y2K computer bug apocalypse.

At 63, DeSeve might have been ready to ease into a routine split between his appointment as a senior lecturer at the Fels Institute of Government and fly-fishing on the Delaware. Then in early March 2009 he got a call from the vice president’s office, asking him to come down to Washington for a chat.  A few weeks later he was officially announced as the new owner of the largest purse in the country.  

It is difficult to understate the scale of the challenge that awaited DeSeve.  With a cost of $787 billion spread across 28 federal agencies, the Recovery Act is 50 percent bigger than the inflation-adjusted cost of the entire New Deal, and is larger than the annual GDP of all but 15 countries in the world.

More to the point, the act requires that all the money be spent within three years, a particularly ambitious timetable given that the stimulus funds represent a multifold increase over the budget levels at which many programs had previously been operating. To take just one example, the $5 billion allocated for the weatherization of low-income homes is nearly equivalent to the cumulative budget for the program since it was created in 1976.  

DeSeve is well aware of the attention that comes with being in charge of so much money. The stimulus funds are officially the province of a 12-member transparency board, but the oversight hardly ends there.

“We have the Congressional Budget Office, the Government Accountability Office, the Council of Economic Advisors, as well as the relevant committees on the Hill all carefully monitoring what we’re doing,” says DeSeve. “When you know that that regime of transparency exists, then you design your programs in such a way that you can meet those requirements.”  

As the Recovery Act’s chief administrator, DeSeve sits in the pivot of a reporting network that he describes as more extensive than any he has ever seen in government.

“I can’t think of a government program of this size where the head of it can tell you every week how much was contracted for and how much was spent,” he says. The centerpiece of the system is a website, Recovery.gov, which serves as a reporting portal for grant recipients and a place where people can search by ZIP code to see, down to the dollar amount and street address, a list of organizations that have received stimulus funds in their areas.

The flipside of such transparency, of course, is that it provides critics more targets to shoot at. The first year of the Recovery Act was freckled with political disputes that ranged from a relatively insubstantial controversy about money being allocated to phantom congressional districts to flare-ups around dubious-sounding projects like a $54 million Napa Valley Wine Train and $3.4 million to build a turtle crossing beneath a Florida highway.  The fraught political environment in which he operates has led DeSeve to try to front-run the administration’s opponents.

“In some cases,” he says, “we design programs to anticipate people who are critical of us, and we build in fraud prevention and even the prevention of unwise projects wherever we can, to try to eliminate problems before they start.”    

With unemployment still hovering around 10 percent, the success of the stimulus—both in real terms and politically—will ultimately be determined by how many jobs can be credited to it. In February the White House put the number at 2 million, which is in line with an overall three-year goal of 3.5 million. Republicans responded that the number reflected jobs saved, not jobs created, and that the stimulus has been ineffective at spurring economic expansion.

DeSeve thinks it’s a false distinction: “I haven’t seen the macroeconomic model yet that is able to properly differentiate between jobs saved and created other than to say that there are 2 million jobs in the economy that we wouldn’t have had without the stimulus program.”

Much of the criticism directed at the Recovery Act, he suggests, is motivated by something other than a fair reckoning with the results the program has produced. DeSeve cites newly elected Republican governor Bob McDonnell of Virginia as one particularly outspoken critic who at the same time is pushing his state to take advantage of a bounty of education funds made available through the Race to the Top initiative.

“[Opponents] would be the first to tell you the number of teachers that were preserved in their state as a result of the stimulus program,” he says, “so a lot of the criticism that we hear is from people who didn’t support the stimulus in the first instance for their own political reasons.”    

This past February marked the one-year anniversary of the Recovery Act, and it was a busy time even by DeSeve’s standards. President Obama was out in public almost every day touting numbers that DeSeve was responsible for producing, and it was often DeSeve’s task to provide him with the right anecdotes to highlight in his speeches. At the end of the month the administration turned its attention back to healthcare—and DeSeve finally took a vacation.  

The pause gave him an opportunity to reflect on what he’d accomplished so far, and the evident pride in his response shows that even after 40 years at high levels of power, a good word from the boss still means a lot.

“I think the president and vice president have indicated that they’re really quite pleased not only with the effects that the stimulus is having but also with the way that it’s been administered,” says DeSeve. “So I take great heart from that.”—Kevin Hartnett

 

 
     
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