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CNN: SPECIAL INVESTIGATIONS UNIT
Watching Your Money
Aired May 9, 2009 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: ...project that will waste that money. I will not hesitate to call them out on it and put a stop to it.
Your money put to use. With transparency, accountability.
Every American will be able to go online and see where and how we are spending every dime.
(END VIDEO CLIP)
ANNOUNCER: Is that what's happening? tonight, we follow the money trail. CNN's SPECIAL INVESTIGATIONS UNIT.
ABBIE BOUDREAU, CO-HOST: Thanks for joining us. I'm Abbie Boudreau.
DREW GRIFFIN, CO-HOST: And I'm Drew Griffin.
Tonight, we are talking about cash, your cash. Massive amounts of it funding government projects. The administration says it's got to spend taxpayer dollars to get the economy going again.
BOUDREAU: Right. And we're told the money is supposed to jumpstart the economy, create or save millions of jobs, and rebuild America's infrastructure. But who is tracking how your money is being spent?
In the next hour, we'll show you where your dollars are going and which projects some people are calling a total waste of money.
GRIFFIN: Abbie, and one of those projects some are calling wasted money is a project proudly being held up as the nation's first stimulus project, out in Missouri, and I mean out in Missouri. As soon as the stimulus bill was signed, the "Show Me" state was showing the nation how quickly it could begin a shovel-ready project, signing a contract immediately to replace an old bridge.
And where is the bridge? That's a big part of why this stimulus project really caught our attention.
GRIFFIN (voice-over): We are headed to the nation's first project paid for by the nearly $800 billion stimulus bill. It's a bridge across the Osage River in Missouri. Where's that? Fair to say, that's part of the story. (on camera): Right, show where we're going now. We are here, right?
(voice-over): Drive 40 miles south of Jefferson City, then take a left 10 miles on a two-lane rural road and we find your stimulus dollars at work -- handful of truck drivers, a bulldozer, and a crumbling 70-year-old bridge near the tiny town of Tuscumbia, Missouri. It's about three hours from Missouri's second largest city, St. Louis, where the mayor is not happy about the bridge.
He says stimulus money in his state is going to rural, far-flung projects almost forgotten until stimulus money started flowing from Washington.
MAYOR FRANCIS SLAY, ST. LOUIS: This is an insult to the people of St. Louis. It's a violation of the federal law and I think that they are doing -- they're spending this money contrary to the intent of Congress.
GRIFFIN (on camera): Of more than $4 billion in stimulus money coming to the state of Missouri, $600 million will be spent on transportation projects. The mayor of St. Louis says most of that money should be spent in high unemployment areas like St. Louis, putting people back to work.
But the Department of Transportation in this state will spend just $2 million in this city. Only enough, says the mayor, to repave a road.
(voice-over): The Missouri Department of Transportation says $200 million will be spent around St. Louis and says the projects that are worst (ph) is first priority. Osage River Bridge tops that list, even though it's difficult to find on a map.
David Cochram (ph), the project manager here, says there's no doubt it needs replacing.
DAVID COCHRAM (ph), PROJECT MANAGER: So, they're getting a two-year jump. Whoa! There is the perfect example.
This is the stuff that will come down.
GRIFFIN (on camera): That?
COCHRAM (ph): That came down off there.
GRIFFIN (voice-over): Up the road at the Red Oak Inn owner, Wes Horton says Missouri has been promising a new bridge for years. It's only the federal money, the Obama money, he says, that has suddenly got things going.
WES HORTON, OWNER, RED OAK INN: I think they would spend all the money on things like instead of the bailing the bankers out.
GRIFFIN: There will be 30 jobs here directly connected to this $8.5 million project. But like the Obama administration, Cochram says this one project will be a jobs multiplier, steelworkers, concrete haulers, even the gas stations supplying fuel -- an estimated 245 jobs created or saved from this one rural bridge.
Bunk, says the University of Missouri economist Michael Sykuta.
MICHAEL SYKUTA, ECONOMIST, UNIVERSITY OF MISSIOURI: There's been a lot of research done on the Great Depression and public works projects of that era. And most of that research now and the general consensus among the economics historians is it didn't work. That there were a lot of people employed but it didn't create a net long-term growth of the economy.
GRIFFIN: St. Louis Mayor Francis Slay says the Osage River Bridge project is just plain wrong, in the middle of nowhere and nowhere on the road to recovery.
BOUDREAU: Wow. So, what's actually going on with that bridge project right now?
GRIFFIN: The bridge is going. They've got about 30 workers there. And they think they are going to have that bridge done by October, which could be the first stimulus project that actual finishes.
BOUDREAU: Wow. Well, good story.
GRIFFIN: Yes. Thanks.
So, who is keeping track of the stimulus money? How it's used and how well it's used. You know there's a Congressional Oversight Panel, but that panel may have offered a lost interest in the nitty-gritty of tracking your money. The proof came just this week when the subcommittee met with only three of its 10 members even bothering to show up.
BOUDREAU: Oh, wow. You'd think it would be top priority right now, though, right?
GRIFFIN: You would think.
BOUDREAU: All right. Well, a different state, different debate, and another multimillion dollar bridge project that some are calling a total waste of money.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You could call it the damn bridge to nowhere.
(END VIDEO CLIP)
BOUDREAU: The most expensive and one of the most controversial bridge projects in Florida is about to get $128 million in stimulus money. Those who don't want this bridge in Martin County, Florida, are furious. The government is stepping in with all that money because they say that the bridge is a complete waste and it's not even shovel- ready.
BOUDREAU (on camera): See if you can see this picture, hundreds debate bridge. I mean, this is back in 2003.
(voice-over): In fact, the debate over the Indian Street Bridge between the communities of Palm City and Stuart in Martin County, Florida, hasn't died down for 20 years.
UNIDENTIFIED MALE: You could call it the damn bridge to nowhere.
BOUDREAU: In 2004, a D.C. watchdog group, Taxpayers for Common Sense, listed this bridge project as one of the most wasteful projects in the U.S. Odias Smith is suing the state to stop the bridge.
ODIAS SMITH, AGAINST THE BRIDGE PROJECT: The president should know this is a boondoggle and he's getting swindled.
BOUDREAU: The bridge Smith calls a boondoggle is expected to get $128 million in stimulus money -- topping the list of projects in Florida. But critics, like County Commissioner Sarah Heard, say there is one big problem.
(on camera): There's a bridge that already exists between these two communities. And so, where will the new bridge be?
SARAH HEARD, MARTIN COUNTY COMMISSIONER: The new bridge will be just about a quarter of a mile south of here.
BOUDREAU: Only a quarter of a mile?
(voice-over): This is the bridge used now -- four lanes and more than 1,000 feet long.
(on camera): Is there something wrong with this bridge? Structurally?
MIKE MORTELL, METROPOLITAN PLANNING ORGANIZATION: Absolutely not. The bridge is in fine shape. It simply doesn't have the capacity to move more cars over it.
BOUDREAU (voice-over): Mike Mortell, the chairman of the committee planning the bridge, says there's too much traffic congestion during rush hour, and a second bridge would fix the problem.
(on camera): We were told that the reason for the second bridge is because this bridge is so congested.
HEARD: Well, you can see how congested this bridge is. It is not.
BOUDREAU (voice-over): We wanted to see what it looked like during rush hour. You can see the traffic was a bit congested leading up to the bridge at this intersection.
(on camera): It's busy. And I'm interested to find out what it's like when we get to the bridge.
(voice-over): But at 5:45, the height of rush hour, we had no problem driving across the bridge.
Heard says not only is the new bridge a total waste of money but the project should not have even qualified for stimulus dollars.
HEARD: I'm flabbergasted to tell thank you truth, because my understanding of the stimulus money was that it was supposed to be for shovel-ready projects that could be completed in three years. This is not shovel-ready.
MORTELL: I think she probably misinterpreted what shovel-ready means. Shovel-ready doesn't mean it is finished, it means it's ready to begin.
BOUDREAU: But Heard points out that there are still a handful of homeowners, like this woman ...
UNIDENTIFIED FEMALE: I'm still praying that it won't happen.
BOUDREAU: ... who refused to give up their homes and properties to make way for the bridge. The county would have to declare eminent domain over the properties and that could take months or even longer. Still once that stimulus check arrives, this 20-year-long debate will be over.
(on camera): Does that debate matter?
HEARD: No, it's been taken out of our hands then.
GRIFFIN: You know, Abbie, what struck me about both of these bridge stories, in my bridge, my bridge in Missouri, your bridge in Florida -- these have been on the table for years and years and the states, good times and bad, didn't bother to pay for them or build them.
BOUDREAU: Right. I mean, no one saw this coming. The people that I talked to said, "My voice no longer counts now that the government is coming in with all of this money." They feel like the debate has been going on for 20-some years but their voices don't matter anymore. And that's the way they feel.
GRIFFIN: And getting the accounting angle, how many people did you say are going to be employed by this bridge they're putting before?
BOUDREAU: Thirty-five hundred people are supposed to be employed by this bridge.
GRIFFIN: Right. The bridge in Missouri, they said 30 people. So ...
GRIFFIN: We've got all kinds of accounting going on everywhere.
Now, on the other hand, we also know of cases where stimulus money seems to be helping quite a bit by saving jobs.
In March, President Obama flew to Columbus, Ohio, to show how the stimulus plan was making the country - awaken the country, I should say, from economic slumber. Only months earlier, Columbus had $13 million budget shortfall. Twenty-five police recruits -- we're told -- they're going to be laid off before they even have the chance to be sworn in as officers, but stimulus money changed all of that.
(BEGIN VIDEO CLIP)
PRES. BARACK OBAMA, UNITED STATES: I look at these young men and women and I look into their eyes and I see their badges today and I know that we did the right thing.
(END VIDEO CLIP)
GRIFFIN: The rookies' jobs now are only guaranteed through the end of the year, but, of course, we're all hoping the economy will improve by year's end, and allow them and to stay on the force and everybody else, too, on to keep some money.
BOUDREAU: Of course, I mean, that's what people are hoping for.
BOUDREAU: We'll just have to wait and see on that.
So, how are other cities using federal funds? Mayors around the country had some pretty long wish lists and some of their ideas got our attention.
GRIFFIN: Also, critics argue stimulus funds aren't doing anything to stimulate the economy. Instead, the money is shoring up city and state budgets. We'll look for answers and that and more.
GRIFFIN: How much does the $787 billion stimulus plan cost you?
BOUDREAU: Well, here's the math. The IRS says between 131 million to 132 million people have paid income taxes so far this year, and that breaks down to an average of just less than $6,000 per taxpayer.
GRIFFIN: According to what the president has said, tracking the benefits of this huge stimulus bill, the projects completed and the jobs created, would be easy for everybody. Recovery.gov is a White House-run Web site where the information would be easily accessible, constantly updated, with a proof of the recovery would be well- documented. But even that has become much more difficult.
BOUDREAU: Ellen Miller with the congressional spending watchdog group, The Sunlight Foundation, is one of those people trying to keep an eye on all of the spending.
And, Ellen, that hearing, that sure it said a lot about accountability, only three out of the 10 members showed up. And they're the ones in charge of tracking the money.
ELLEN MILLER, THE SUNLIGHT FOUNDATION: The answer to, you know, watching what's going on in terms of stimulus spending should not be relegated to the Congress or even to the oversight board for recovery spending. It ought to be in the hands of tens of millions of citizens who are online and looking for information, and looking for whatever they might regard as a boondoggle or misspending themselves. That's possible if you put that information on the Internet and in real-time. You know, public information these days means online. And real-time makes it really possible.
GRIFFIN: And, Ellen, you guys run a great Web site for a whole variety of watchdog kind of issues that I'm fascinated with. But I was really startled this week to find out we wouldn't have that data you're talking about -- the job creation, the money spent, the projects done, until maybe October.
MILLER: Yes, that's ...
GRIFFIN: Half the money will be spent by then.
MILLER: Yes, that's a little too late, isn't it? It's too little too late, in fact. I mean, we need to see this as it's happening. It has to -- you know, to be -- to hold the spending accountable, whether it's the federal government spending, giving it to the states who will then, you know, subcontracted to contractors, and the people that actually carry it out -- we need to be able to follow that money trail.
It's all possible from a technological point of view, but the administration has to decide to give us that kind of information. Now, this administration understands that technology can do that. They understand that the public information means being online. But they just haven't fulfilled the promise yet.
Now, some money has been spent but not the vast majority of it. But, in the next several months, this Web site has to improve in dramatic ways so that we can see the contracts that are being let -- the basic raw information is what's the most important to get up there. You know, we can do summaries later. They can do summaries later. But give us the data now and put it online in real-time.
GRIFFIN: All right. We'll be watching your site. Maybe you, guys, will get some leaks. In the meantime, we will get the data actually before the White House puts it up.
MILLER: Well, I wouldn't guarantee that. We're pretty dependent on what comes out of the government, unless we have someone who is in there scanning contracts for us. And we don't have that.
GRIFFIN: Thanks, Ellen.
MILLER: Thank you.
GRIFFIN: Well, it is over at the White House where we were promised transparency and accountability through their pretty slick Web site, I must add. And that's where we go now for answers as to why we're not going to get a lot of those answers until October.
Rob Nabors is with us now. He is the deputy director of the White House Office of Management and Budget.
Thanks for joining us, and maybe you can explain what's the delay. We thought we'd have this information real-time.
ROB NABORS, DEP. DIR., WHITE HOUSE OFFICE OF MANAGEMENT AND BUDGET: Well, I think the important thing to recognize here is that what we are trying to do with Recovery.gov in tracking these recovery dollars as it goes out is virtually unprecedented in federal history. What we are trying to do is something that no one has ever tried to do before. And what we are -- what people are referring to is the initial guidance that OMB put out originally suggested that contract and subcontract information wouldn't be available, wouldn't need to be available until October.
We've been working on the problem. We've been working on the issue of how we can get that information available more quickly and in our most recent set of guidance that we put out, we have found a way to ensure that some of that information starts to get out as early as July. So, we are continuing to make progress in terms of the processes that we are putting in place and the guidance that we are putting in place -- and every time, it's done with the notion that we need too get as much information out to the public as quickly as possible.
BOUDREAU: OK. But, what about right now? What's going to happen between now and October? Where's the accountability right now?
NABORS: I think where we are right now is the federal agencies are putting up weekly reports, tracking their spending activities, and as grant information and as sub-grant information comes in, we'll be making that information available through Recovery.gov. Part of the issue, though, that we are going to have is working with the states and the agencies on mechanisms to track information that they've never had to track before, but information that we think is important and relevant to the public.
We're not going to hold this information. As we develop the mechanisms to collect it, we're going to make the information available to the public.
GRIFFIN: How are you going to make sure that information is true and accurate without actually going out to these sites? Because I imagine, you're going to ask for the spending, you're also going to ask for how many jobs are created. That's one of the big parts of this, right?
NABORS: It is. And the key to this is going to start with the states and local governments and they are our eyes and ears on the ground. They are our partners in terms of ensuring that the recovery dollars are spent wisely and quickly. And a burden that's going to fall on the federal agencies to make sure that to the extent that they have transparency into what's going on with the dollars that the reports that are coming in are accurate.
And, at the end of the day, the White House and the Office of Management Budget will be looking at all the reports that are coming in to make sure that they are at least consistent with what we are hearing and what we expect to be seeing.
GRIFFIN: OK. Well, listen, thank you so much for joining us. Good luck. You're going to be very busy from now until July, I hope, when we see the numbers and then certainly by October. Thank you, sir.
NABORS: Thank you.
BOUDREAU: "Watching Your Money" reexamined 800 pages of stimulus ideas from mayors across the country. We saw a lot of interesting projects but one of them really stood out.'
(BEGIN VIDEO CLIP)
BOUDREAU: A new ride at a water park?
MAYOR MANNY DIAZ, PRES., U.S. CONF. OF MAYORS: Well, you know, again, I would have to -- I'd have to look at that particular project and try to understand why that city feels that it's an important project. But again, we are talking about 11,300 projects, not just one.
BOUDREAU: The new ride at the water park is in your city.
(END VIDEO CLIP)
GRIFFIN: Is the stimulus plan having an effect on unemployment? Well, experts say it is too soon to tell. But, new unemployment numbers released Friday show some promise. In April, 539,000 jobs disappeared. That is bad, but fewer than expected and fewer than in March, when 663,000 jobs disappeared.
BOUDREAU: But it's always good to get perspective. From the start, even before President Obama was president, we were told that the purpose of the stimulus package was to jumpstart the economy, create jobs, and rebuild America's crumbling infrastructure.
So, last December, mayors throughout the country came up with these long wish lists -- thousands of projects they were hoping the government would finance. But it didn't take long for critics to call some of the proposed spending a joke and a waste of taxpayer money.
Here's the report we first brought you when that 800-page wish list came out. (BEGIN VIDEOTAPE)
BOUDREAU (voice-over): You might not think in nearly $5 million polar bear exhibit in Rhode Island would help turn around the economy. But the U.S. Conference of Mayors sure thinks so. It's one of more than 11,000 ready-to-go infrastructure projects proposed by 427 cities, totaling $73 billion.
PETE SEPP, NATIONAL TAXPAYERS UNION: To the people supporting them, these proposals aren't a joke. But to the taxpayers' funding them -- yes, it will be a joke to them, only they won't be laughing.
BOUDREAU: This month, Miami mayor, Manny Diaz, president of the U.S. Conference of Mayors, and other city leaders went to Capitol Hill to make their cases.
DIAZ: Our plan calls for investments that will stimulate our economy and by quickly creating jobs.
BOUDREAU: Mayor Diaz even held up the report, saying that the projects aren't a bailout but a build-out -- to put Americans back to work.
(on camera): Did you have a chance to even read the report?
DIAZ: I read through -- I read through a lot of it. Obviously, I didn't sit there and look at all 11,300 projects that were submitted.
BOUDREAU: Why is that?
DIAZ: Why is that? I didn't have time.
BOUDREAU (voice-over): If he made the time, he would have found projects like a $20 million Minor League Baseball museum, $42 million for improvements to zoos, $3 million for murals, and even $1.5 million for a new water park ride.
DIAZ: You can't simply just say, but because something sounds like it isn't right, that it isn't, in fact, right.
BOUDREAU (on camera): A new ride at a water park?
DIAZ: Well, you know, again, I would have to -- I'd have to look at that particular project and try to understand why that city feels that it's an important project. But again, we are talking about 11,300 projects, not just one.
BOUDREAU: The new ride at the water park is in your city.
BOUDREAU: So -- what is your response? I mean, I'm asking you as mayor. I'm surprised that you didn't know about the new ride at the water park.
DIAZ: Well, we have a number of projects, and I don't know which one you are referring to. But we just built a new water park and it may be related to that water park, or it maybe outside the city. I'm not sure.
BOUDREAU: A million and a half dollars for a new ride at the water park.
DIAZ: But the point is, that part of the investing in infrastructure also includes parks.
BOUDREAU (voice-over): There are plenty of roads, bridges and water treatment projects, but also, skateboard parks, museum and zoo renovations, aquatic centers, bike and horse paths, a dog park, and programs beyond infrastructure, to help prostitutes to get off the streets and divide thousands of Tasers for police departments. The total cost: More than $300 million.
And get this -- many of the projects wouldn't even create jobs.
SEPP: It's impossible for any normal tax-paying American to read this and not come away scratching your head and saying, "Wait a minute, this isn't about infrastructure. This is about political power grabs, money grabs."
BOUDREAU (on camera): To the average American, doesn't this sound like pork?
DIAZ: I don't know. You have to ask the average American.
BOUDREAU: After our story aired, we checked and it turns out the polar bear exhibit will not be getting any stimulus money as they'd hoped, and neither will that water park ride in Miami. We should also point out that the publicity over these kinds of projects prompted a lot of debate that led to restrictions in the stimulus bill over who could and could not qualify for the money. For example, casinos don't qualify and neither do zoos.
GRIFFIN: Good. Well, in the couple of towns sacked by Hurricane Katrina, the mayors have plenty of solid projects in need of stimulus funds -- if they can get passed the red tape.
(BEGIN VIDEO CLIP)
GRIFFIN: Wait a minute. They wanted to see if there was a pirate ship or something down in there. But you just look down.
(END VIDEO CLIP)
LEMON: Hello everyone. Don Lemon here live at the CNN World Headquarters. More of WATCHING YOUR MONEY, a CNN Special Investigation. But first I want to give you some headlines. Washington goes Hollywood. A parade of stars from TV, music, movies are turning tonight's White House correspondents' dinner. President Obama is scheduled to speak and offer up the traditional one-liners. You can see his remarks here on CNN tonight at 10:00 p.m. Eastern live during our broadcast. I'm Don Lemon, will see you back here at 10:00. P.M. Eastern. CNN, SIU, WATCHING YOUR MONEY returns in just a moment.
BOUDREAU: Welcome back to this special hour of CNN SPECIAL INVESTIGATIONS UNIT, WATCHING YOUR MONEY.
Mayors across the country are trying to come up with ideas for so called shovel-ready projects. Mayors on the Mississippi gulf coast are having a much different problem with money from Washington. It is coming with too much red tape.
(BEGIN VIDEO CLIP)
DREW GRIFFIN, SPECIAL INVESTIGATION UNIT: In Moss Point, Mississippi Mayor Xavier Bishop has worked in this battered trailer ever since hurricane Katrina wiped out city hall.
MAYOR XAVIER BISHOP, MOSS POINT, MISSISSIPPI: This is not too unlike the experience of homeowners who were displaced after the storm.
GRIFFIN: He thought he had money to rebuild, $20 million from FEMA. He had a plan. Just can't cut through the bureaucracy. The latest issue, $70 million already spent on emergency road repair. FEMA, officials say, it is no longer their problem. Moss Point must reapply to the State Department of Transportation.
BISHOP: Oh and there is no guarantee that they have that $70 million. You can very well be left out in the cold.
GRIFFIN: Drive 15 minutes west of the Mississippi gulf coast, Ocean Springs Mayor Connie Moran is tangled in red tape, too.
MAYOR CONNIE MORAN, OCEAN SPRINGS, MISSISSIPPI: Approved several years ago but just going into the red tape that's holding us up.
GRIFFIN: Ocean Springs wants to turn this old railroad depot parking lot into green space. Simple? Hardly. Burying utilities took a year and a half to approve. Now both mayors still trying to spend Katrina money are being asked to submit new ideas for President Obama's stimulus money. But projects need to be shovel-ready.
When you hear the term shovel-ready, what do you think? Honest.
MORAN: I get out of my way.
GRIFFIN: Mississippi has been shovel-ready since Katrina struck but $1.6 billion in disaster relief is still unspent. You wouldn't think that would be hard for towns like Ocean Springs, but just to build this peer took years. The final federal hurdle, a sonar test to make a 17th century French ship wasn't underneath. Wait. They wanted to see if there was a pirate ship or something down in there? Couldn't just look down? So when Mayor Moran applied for a new federal stimulus money, she picked easy stuff. Tear down this fence and clear up this drainage ditch. When is the shovel coming here?
MORAN: In September. Six months. That's how long it will take to get all the contracts.
GRIFFIN: At Moss Point Mayor Bishop is using the shovel-ready criteria and setting his stimulus sites low, too. He has come up with a small repaving job.
BISHOP: I feel like I'm going to miss out if I don't do something and yet, what I do is not going to hit the mark.
GRIFFIN: On a perfect example, it is the difference between fixing a pothole and fixing a problem. Moss Point has open ditches on the side of the road. The mayor would like to cover them up and put in actual sidewalks. But that would take too long. For the politics, he says. Sounds like what you are telling me is what qualifies as what can you do to show me a guy with an orange vest and a broom tomorrow?
GRIFFIN: Whether he is sweeping the right street or not.
BISHOP: I fear that a certain amount of this stimulus package and - I hesitate to say how much. A small amount has to do with the appearances and certainly given the appearance that people are being put back to work.
GRIFFIN: After years of working in a trailer, Mayor Bishop says he's just tired of Washington's red tape. He wants his city put back together. The shovels are ready.
You got the shovel and it is -- it is ready. They have been ready, he says, for 3 1/2 years.
(END VIDEO CLIP)
GRIFFIN: It has been a few weeks since we interviewed Moss Point Mayor Xavier Bishop. He's on the phone right now. And Mr. Mayor, I think people would stunned to learn that you are still trying to spend that Katrina money and now you are under the gun to get that done.
BISHOP (via telephone): Yes. It is amazing. I mean, to the outside world, it certainly would be embarrassing to say that we have funds that are yet unspent. But in reality, and on the ground, it is not that unusual. That the circumstances that got us here are rather complex. But to -- the governor has given us a mandate to get the projects under way by September 1. So we are working even more feverishly to get that accomplished.
GRIFFIN: Run us through very quickly, you are not even talking about stimulus funds yet. You are trying to get some, right?
BISHOP: Oh, absolutely. Yes. The stimulus funds are, you know, well within our radar screen. But the Katrina money, first of all, we were encouraged to think big and come up with grand ideas to rebuild the cities. All well intentioned and certainly, you know, well within the realm of possibility. The challenge, the problem was that, you know, as small cities, we simply lack the resources and expertise and to make those dreams a reality.
From the designs and planning to actual architects and engineers. We had to go out to the open market and bring people in and try to develop plans in the first order. The only problem was there are 11 cities on the coast and we are trying do the same thing.
GRIFFIN: Right. Very quickly, you are still working out of that trailer; you are trying to get a new city hall for the next mayor. I say that because you are pretty much had enough with this, haven't you?
BISHOP: I'm exhausted. I really am. The frustration is high but the fatigue and exhaustion, I think are overwhelming. And I would love to stick around ask see this through but I'm hoping some one else can take the baton and continue the race.
GRIFFIN: All right. Mayor, thank you so much for joining us. Mayor Xavier Bishop we just want to wish you the best.
BISHOP: Thank you.
BOUDREAU: Our next investigation may have you firing off nasty letter to the head of the U.S. postal service. The organization asked Congress for bailout money and yet somehow the post office is bailing out million dollar homeowners.
GRIFFIN: Welcome back. It has been two months since the housing stabilization plan went into effect. We are beginning to see some progress there. Chase Mortgage has issued more than 15,000 loan modifications for troubled homeowners. Bank of America has sent out letters to 100,000 homeowners says they may qualify for relief too. If you want to look into loans modification, the government's Website is makinghomeaffordable.gov.
BOUDREAU: All hour we have been following you on stimulus money is being spent. Lately we also have been tracking all kinds of other stuff. When we got a tip that the postal service was buying million dollar homes at a time when millions of Americans can't sell theirs, we wondered what was going on.
(BEGIN VIDEO CLIP)
BOUDREAU: Where are you showing me?
BILLIE BIERIER, NEIGHBOR: This is the house that the post office took over as a relocation package for an employee that transferred to Texas.
BIERIER: It is huge.
BOUDREAU: It is huge.
BIERIER: Look at this.
It is an 8400-square foot home in rural South Carolina. One of the largest on the lake, six bedrooms, four bathrooms, two more half baths.
Indoor swimming pool.
BOUDREAU: I saw the pictures online.
BOUDREAU: Pretty gorgeous.
BIERIER: Quite a house.
BOUDREAU: Here's the listing online. A huge living room, gourmet kitchen, hard wood floors, here's that indoor swimming pool and spa. A CNN Investigation found U.S. postal service bought this estate for $1.2 million from an employee who was being relocated. In fact, the post office purchased more than one thousand employee homes in just two years. The average cost of those homes, $257,000. Billy Bierier owns the lot next door.
BIERIER: This should not be allowed. In any company, in this economy. Things need to change.
BOUDREAU: Bierier wonders how the postal service can afford to buy a house like this. Considering postmaster general John Potter recently told Congress that the times were so bad that they had already cut travel and frozen executive salaries.
JOHN POTTER, POSTMASTER GENERAL: If volume continues to decline beyond what our expectations are, we might be forced to, you know, reduce the number of days we deliver.
BOUDREAU: Just last month, the postal service told CNN that it also made changes to its relocation policies. To cut back costs and reduce the risk of not reselling the homes it buys. The spokesperson said that it will now pay no more than $1 million to purchase an employee's home. But prior to that, the postal service had no limit on how much it would pay. The most expensive home it purchased cost $2.8 million.
PETE SEPP, NATIONAL TAXPAYERS UNION: At a time when the postal service is considering cutting back on delivery, raising stamp prices, perhaps even going to the federal government for a taxpayer bailout, this sends the wrong signal.
BOUDREAU: The postal service declined our request for an on-camera interview but in an e-mail the spokesperson said when qualified employees relocate the postal service can purchase their homes through a company called Cartus Relocation a government contractor. He wrote that only 15 of the 1,022 homes bought in the last two years remain on the market.
All the houses that cost $1 million or more had sold, except for this one. Which it just bought last month. Real estate records show that the postal service's relocation company purchased this five-acre property from the former postmaster in Lexington, South Carolina, and his wife. In a brief phone call he told CNN that the postal service was not making him move. He said that he wanted to move to Carrollton, Texas to become the customer service manager there. A lateral move, not a promotion.
He would not discuss their former house. So in October, they put their house on the market. But it didn't sell for three months. That's when the post office through its relocation contractor had the house appraised and went on to buy it. In this down market South Carolina realtor Dave Richter (ph) says that no one is buying right now. Do you think a $1.2 million house would sell right now?
DAVE RICHTER (ph): That would be very tough.
BOUDREAU: The postal service says the goal is to sell all the houses purchased without losing money. But that doesn't always happen. On average, it costs $58,000 on each sale, including commissions and closing costs.
SEN. CHUCK GRASSLEY, (R) IOWA: When you talk about a million dollars that sounds outrageous.
BOUDREAU: We showed Senator Chuck Grassley a long time critic of the relocation policy what the $1.2 million house looks like.
GRASSLEY: I'm going to write a letter to the inspector general. We are going to get this policy nailed down. We need to know that the postal service through the patrons of the postal service, the people that are buying stamps and the people that are supporting it, that they are getting their money worth.
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BOUDREAU: As I said the postal service would not go on camera. That's until we set up a hearing in Washington.
Excuse me, Mr. Potter.
GRIFFIN: The U.S. postal service is cutting jobs, closing offices, and operate offering early retire tomorrow workers. Expect to lose $6 billion this year.
BOUDREAU: So why is it buying million dollar homes so its employees can move? We went to Capitol Hill to get some answers.
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BOUDREAU: Excuse me, Mr. Potter. Hi. I'm my Adrian with CNN. Postmaster general John Potter was in no mood to talk. We had been asking to interview him for weeks but were turned down. We caught up with him in the hallway after the hearing. You have been talking about cutting back. But then on a dime, he stopped dead in his tracks, pushed me aside and slipped into a side door. Slamming the door. Just moments before that, Potter was before the House of Oversight Committee talking about the postal service's financial crises. And his idea to cut back delivery from six days to five.
JOHN POTTER, POSTMASTER GENERAL: Based on current volume projections, we will come up approximately $6 billion short of breaking even this year.
BOUDREAU: Committee members and the postal service inspector general also responded to CNN's recent investigation into the postal service's relocation policy.
DAVID WILLIAMS, USPS INSPECTOR GENERAL: When CNN first broke this story and we began Senator Grassley called us and we worked out a request for an audit.
REP. JASON CHAFFETZ, (R) UTAH: Seems like it is too lucrative and too expensive. Questions about giving out bonuses to an organization that is operating in the red. It doesn't pass the basic test.
BOUDREAU: Earlier this month CNN reported the postal service through Cartus Relocation, a government contractor, purchased more than 1,000 employee homes in just two years. The average cost of those homes, $257,000. The postal service also bought 14 homes that were $1 million or more. A postal service spokesman said all but one of those houses, six bedroom lakefront mansions with an indoor swimming pool and spa, were sold.
On average, the postal service says it lost about $58 thousand for each home purchased and later resold. But when we asked the postal service about how much it lost on those million dollar homes, we learned the average loss was a whopping $582,000 per house. A spokesman blames that high number on a house purchased at the height of the Florida real estate bubble which skewed the average. A few hours after our brief hallway encounter, Potter changed his mind and wanted to talk.
Nice to see you again. Why did you avoid my questions today in the hallway?
POTTER: I wasn't avoiding your questions. I was being ushered out of the Congress by my staff.
BOUDREAU: Surprisingly Potter said he had no idea about the million dollar houses.
POTTER: When you brought it to our attention I was amazed and we spent time to look into that policy and we found out that we did have an uncapped value on the price of the house that could participate and we have since gone back and reviewed that entire policy.
(END VIDEO CLIP) BOUDREAU: We have been asking for weeks for the names and addresses of all of the million dollar homes that the post office purchased. We finally just this week, we finally got the list. Which happens to include two prominent former chief financial officers on postal service. Obviously we will be looking into that. We didn't get everything that we asked for. They didn't give us the addresses I'm wondering if that's -- is that because they didn't want us to see what the houses looked like.
GRIFFIN: Unbelievable. I'm asking for it. Get the money back. You write a letter and complain. The stamps are going up next week. It is going to cost us more. Incredible.
High-speed rail, the transportation of the future, or is it?
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(UNIDENTIFIED MALE): If this was a good idea it would already exist
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BOUDREAU: They accepted billions in bailout money and GM and Chrysler are now trying to bring in the buyers. GM is offering 0 percent financing and a five-year warranty and they will even make your payments for nine months if you lose your job. Chrysler is offering cash back on bonuses and as much as $4,000 on some models. They are also offering bonuses cash if you are in the military or if you finance through your credit union.
GRIFFIN: Well Abbie, if you don't buy a car, you could hold out for a very fast train. At least that's the idea behind spending $13 billion trying to once again develop high-speed rail in the U.S. The president calls it the transportation of the future. Critics call it a huge waste of money from the past.
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GRIFFIN (voice over): It is all riding the on the rail according to transportation secretary Ray Lahood. Futuristic America and a president about to make it come true.
RAY LAHOOD, TRANSPORTATION SECRETARY: President Obama will have as his transportation legacy to development of high-speed rail in America.
GRIFFIN: The president wants to spend $8 billion in stimulus money up front. Then another $1 billion a year for the next five years on high-speed rail. You think we have been down this track before, we have. And it is going nowhere.
JIM MOORE, INDUSTRIAL AND SYSTEMS ENGINEER: I don't think that he wants to be known as the high-speed rail president. That would be the equivalent of being the failure president. GRIFFIN: Why such pessimism about the future? University of Southern California engineering professor Jim Moore says look to the past. 1965 was the year Congress passed the high-speed ground transportation act. To date, the federal railroad administration estimates $8 billion has already been spent on high-speed rail projects and to date, not a single true high-speed rail has worked. There are Amtrak trains in the northeast corridor. They do go fast. Some lines average speeds over 100 miles an hour. Nowhere near European or Japanese speeds. And most Amtrak trains do not run fast. And for 40 years, they have run in the red.
It will cost billions, maybe tens of billions, to build it. And in the end, critics say all we'll have is a government-run railroad losing money going a little faster. Want an example? In Illinois Senator Dick Durbin and the Gov. announced their plan for the stimulus money. Upgrade the current lines; increase the speeds to 110 miles an hour. And hopefully a baseball rail trip by one hour.
GOV. PAT QUINN, (D) ILLINOIS: Chicago Cub fans, you get to St. Louis a lot quicker with high-speed rail. Same way with Cardinal fans.
GRIFFIN: In New York, Congressman Jerry Nadlor admits the stretch to think the U.S. will have bullet train-type high-speed rail any time soon.
REP. JERRY NADLER, (D) NEW YORK: I don't know where it is feasible to build a bullet train. I do know where I would like to put the first major rail money. That would be improving the current track, more or less -- wouldn't be a bullet train. If this was good idea it would already exist.
GRIFFIN: Professor Moore who directs the transportation engineering program at the U.S. C. has studied all the ideas and concludes they are all too expensive. Would never be as fast as planes and would never attract enough riders to make them pay for themselves.
MOORE: Fundamental problem is that high-speed rail is not a cost- effective alternative. Where we get into trouble is when we let our emotions get in the way of our decisions.
GRIFFIN: And the decision is to spend another $13 billion on the futuristic idea of high speed rail he says is really just a return trip on a track record of waste.
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GRIFFIN: The one thing we can't yet determine is if this stimulus bill will actually do what it is designed to do. Jump start and restore a battered economy. It is just too early to tell but we are going to keep watching to see how the government is spending your money.
BOUDREAU: In the meantime, let us know if there are stimulus projects that you think we should look into or other stories you think should be investigated. Thanks for joining us tonight.
GRIFFIN: The news continues here on CNN.