Business - Fact Check Administration's stimulus assessments overly optimistic Rosy outlook ignores many challenges, pitfalls

By Frederic J. Frommer Associated Press Writer WASHINGTON (AP) -- The Obama administration claimed this week that $100 billion invested in innovative technologies under the economic stimulus law is "transforming the American economy" by putting the nation on track for technological breakthroughs in health care, energy and transportation. But an examination of details in the 50-page report unveiled Tuesday by Vice President Joe Biden reveals something a bit different: a collection of rosy projections that ignore many of the challenges, pitfalls and economic realities in all those areas. A look at how the administration's claims compare to the facts: Increasing renewable energy The claim: Thanks to the stimulus, the United States is on track to "doubling U.S. renewable energy generation capacity and U.S. renewable manufacturing capacity by 2012." The facts: While the Recovery Act has helped increase renewable energy, the fact that it is a one-time jolt makes it difficult to project that the growth will continue for the next couple of years. George Sterzinger, executive director of the Renewable Energy Policy Project, a Washington think tank that promotes renewable energy, said the Recovery Act's cash grant program for renewable energy projects "jump-started a lot of stuff. But there's nothing beyond that." Sterzinger added that it would be a mistake to link the growth in renewable energy generation to the growth in American-made renewable energy equipment. While the U.S. could probably meet the first goal, he said, it isn't likely to meet the second because much of the equipment is made overseas. Robert L. Nelson, a partner at the Akin Gump law firm who co-chairs its renewable energy group, said that the manufacturing claim reminded him of a story told in the old Soviet Union. A commissar, or government official, asks a farmer how good next year's crop will be. The farmer says it will be 10 times as good as last year's. The commissar thinks to himself, "Ten times zero is zero." Nelson said, "When you're looking at where the U.S. is starting from, doubling isn't all that meaningful a statistic." Cutting the cost of solar power The claim: Government stimulus money will lead to "cutting the cost of solar power in half by 2015, putting it on par with the cost of retail electricity from the grid." The facts: That projection assumes a huge payoff from stimulus spending on technology improvements in solar energy. Nelson, who has worked in renewable energy for 25 years, called the prediction "highly unlikely," unless there is a big increase in utility-scale solar power projects. Sterzinger said there was too much uncertainty in the world economy to make such a prediction. "Projecting from the last few years looks at the effects of a global recession that lowers material costs and a temporary glut of module manufacturing capacity," he said. "They have influenced cost but are not based on any technology innovation." Quicker, cheaper genetic mapping The claim: Stimulus funding is spurring National Institutes of Health research to make unraveling people's individual genetic codes, or genomes, easy and cheap enough that the number completed could "dwarf, by 50 times or so" the number so far finished. The facts: NIH research kicked off the revolution in human genome sequencing and continues to play a crucial role, but it has lots of help today from universities, international research foundations and even private companies jockeying to sell better gene-scanning machines. It cost about $3 billion and a decade of government research to come up with the first draft of a human genome in 2000. Last year, a Stanford University professor reported that he sequenced his genome in a week at a cost of $48,000, using a $1 million machine. Many specialists believe the price may drop to less than $1,000 in a few years. The more sequencing scientists do allows them to better explore variations that contribute to disease. As promising as personal gnome sequencing is, people need to understand that it's basically a first step. The bigger challenge, still in its infancy, is deciphering what the genetic variations mean and how that information might be harnessed for better care. High-speed rail The claim: "With $8 billion in funding, the Recovery Act is beginning to make high-speed rail a reality across the country." Projects selected for funds represent "strategic investments" that will yield high-speed service or lay the groundwork for future service. The facts: The largest project is one that would connect San Francisco with Los Angeles, using trains traveling up to 220 mph. But some of the projects getting stimulus money would primarily upgrade existing freight rail tracks so they could be used for faster passenger service, reaching speeds of up to 110 mph at least part of the time -- well short of the speeds in other developed countries. Not everyone shares the White House's optimism about the prospects for high-speed rail. A recent analysis by the Government Accountability Office concluded that building high-speed rail service in the U.S. "is a difficult, multiyear effort" that hinges on financing that goes "far beyond the funds provided by the Recovery Act in a time of continuing federal and state deficits." Another challenge for some projects will be meeting the 2017 deadline to spend Recovery Act funds, the GAO said. The capacity to manufacture passenger rail cars and other high-speed equipment exists in the U.S. But it may take years to design and test new rail cars that meet U.S. crashworthiness standards, which are different than much of the rest of the world. Health information technology The claim: Stimulus spending is "a significant boost" to goals of converting to electronic health records, computerized prescriptions and remote treatment of patients in hard-to-reach locations. The facts: The effort to get doctors' offices and hospitals using electronic medical records is in its earliest stages. Economic dividends from greater efficiency and fewer costly medical mistakes could be years away. And there's plenty of potential for glitches. People involved with the issue give the administration high marks for trying, but many do not expect Obama's goal of getting all of America's medical records computerized within five years to be met. For one thing, about 90 percent of roughly $20 billion the stimulus legislation allocated for this purpose has yet to be spent. Most of the stimulus money is to help doctors and hospitals defray the cost of installing computer systems, but the Health and Human Services Department only recently spelled out the capabilities that those systems will have to have in order to qualify for federal money. No systems have yet been certified as meeting the required capabilities. Electric vehicles The claim: The stimulus has helped produce "significant steps toward affordable electric cars that can drive 300 miles on a single charge, powered by $10 of clean electricity instead of $50 dollars of oil. Ultimately this means consumers may have the choice among a range of vehicles from a combustion vehicle with over 50 miles per gallon or an electric-drive vehicle for the same price." The facts: While strides are being made, this vision of the future rests on assumptions that many regard as overly optimistic. Even a White House task force on the auto industry's recovery said while General Motors' extended-range plug-in hybrid, the Volt, "holds promise, it will likely be too expensive to be commercially successful in the short term." At $41,000, the Volt is about twice the price of a conventional midsize car. The price of electric cars will drop, but automakers are years from being able to sell them at the same price as cars with internal combustion engines. Another hurdle is fuel prices, which are relatively low and provide little incentive to consumers to spend thousands of dollars extra for a hybrid or even more for a plug-in car; it would take years for the fuel savings to outweigh the higher price. And there are questions about whether the large lithium ion batteries needed for electric cars are durable, safe and affordable enough for widespread use. ---------- Associated Press writers Lauran Neergaard, Joan Lowy and Ricardo Alonso-Zaldivar in Washington and Tom Krisher in Detroit contributed to this report. Published: Fri, Aug 27, 2010

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