A Project of The Annenberg Public Policy Center

The Stimulus Bill and ACORN


Q: Does the stimulus bill include a $5.2 billion payoff for ACORN?

A: The bill does include funds for which ACORN would be eligible to compete – against hundreds of other groups. But most is for a housing rehabilitation program ACORN says it never applied for in the past and won’t in the future.

FULL QUESTION

I would appreciate having FactCheck.org look into whether ACORN will receive $5.23 billion from the Obama stimulus package under the guise of “stabilizing neighborhoods.” I have been bombarded by e-mails from an acquaintance about this. What can you find about this? Thank you.

FULL ANSWER

For the past two weeks, Republicans have been raising a new charge against a familiar enemy, claiming that the Democrats’ stimulus bill includes as much as $5.2 billion in "goodies" for the Association of Community Organization for Reform Now (ACORN). Last fall, Republicans accused ACORN of "massive voter fraud," a claim which we said was exaggerated. The group has since become a favorite target of Republicans, so it understandably raises a few hackles when House Republican leader John Boehner’s Web site proclaims that the bill provides "a taxpayer-funded bonanza" for ACORN. And Republican Sen. David Vitter goes even further, telling Newsmax TV that the provisions amount to "a political payoff." Also, the National Republican Trust PAC has taken up the issue in fundraising pitches. But these claims are wildly exaggerated and rely upon faulty logic.

Let’s start with the (very few) claims that critics get right. The House version of the stimulus bill does indeed include about $1 billion in funding for the Community Development Block Grants (CDBG) program and another $4.2 billion ($2.2 billion in the Senate’s version) in funding for the Neighborhood Stabilization Program (NSP). Neither program is new: CDBG has been around since President Ford (a Republican) signed it into law in 1974, while the NSP was authorized in 2008 as part of the Housing and Economic Recovery Act signed into law by President Bush.

On its Web site, the U.S. Department of Housing and Urban Development, which runs both programs, describes CDBG as "a flexible program that provides communities with resources to address a wide range of unique community development needs." But those funds cannot be used for anything resembling ACORN’s controversial voter registration programs. HUD has very strict rules for projects that can be funded through CDBG grants, including promotion of home ownership and micro-enterprise assistance. ACORN has long been eligible for CDBG funds, and Boehner’s Web site points out that the group has received almost $1.6 million (not billion) in CDBG grants over a four-year span.

NSP’s mission is more limited: Its funds are used to purchase foreclosed or abandoned homes, redevelop and then resell them, with the aim of stabilizing home prices. Boehner and Vitter claimed to smell a rat in the stimulus package’s language that allows nonprofit entities to compete directly for NSP funds. When the NSP was created last year, only state and local governments were eligible to participate in the program. The new language in the stimulus bill, Republicans argue, is a way to funnel money to ACORN.

We make no judgments about the wisdom of allowing nonprofits to compete with state and local governments for NSP funds. Is this a "payoff" or "goodies" for liberal allies, or for ACORN specifically? Actually, both programs hand out grants only on a competitive basis. ACORN – and any other nonprofit entity – would be eligible to compete for NSP funds (as it already does for CDBG funds), but the key words here are "eligible" and "compete."

Competition would likely be stiff. In 2008, NSP’s first year, states handed out funds to a total of 308 grantees. The NSP rules would require ACORN to show that it would spend the money to renovate and resell foreclosed homes more efficiently than other applicants.

Moreover, ACORN is already indirectly eligible for NSP money; current law permits state and local governments to subcontract work, and ACORN would be eligible to compete for funds at the local level. However, ACORN didn’t get any NSP money last year and says it doesn’t plan to apply for NSP money in the future. Indeed, renovating foreclosed properties is not something the group has done in the past; its efforts in the home-buying industry focus mainly on developing new affordable housing and eliminating what it calls "predatory financial practices" by mortgage lenders. The group’s chief organizer, Bertha Lewis, writes:

Lewis: We have not received neighborhood stabilization funds, have no plans to apply for such funds, and didn’t weigh in on the pending rule changes.

Faulty Logic

Boehner and Vitter commit two logical fallacies. Their argument has the form:

  1. The stimulus bill provides funding for redeveloping neighborhoods.
  2. ACORN does work in redeveloping neighborhoods.
  3. Therefore the stimulus bill provides funding for ACORN.

That’s an example of what philosophers call the undistributed middle fallacy. It’s a common mistake; in May 2008, we caught Sen. John McCain making a similar logical blunder. But Boehner and Vitter compound their error by treating different terms as if they had the same meaning. ACORN does indeed work in redeveloping neighborhoods, but the work that it does is not the same sort of work for which NSP provides funding. By pretending as if the two are the same, Boehner and Vitter commit the fallacy of equivocation.

We’re accustomed to seeing logical fallacies in political arguments. But working two of them into a single argument is unusually bad logic.

-Joe Miller

Sources

ACORN Could Get Billions from Democrats’ Trillion Dollar Spending Plan." 23 January 2009. House Republican Leader John Boehner. 5 February 2009.

"Community Development Block Grant Program – CDBG." 9 December 2008. U.S. Department of Housing and Urban Development. 5 February 2009.

H.R.1: American Recovery and Reinvestment Act of 2009. 5 February 2009.

"Neighborhood Stabilization Program Grants." 3 February 2009. U.S. Department of Housing and Urban Development. 5 February 2009.

S.1: American Recovery and Reinvestment Act of 2009. 5 February 2009.

"Sen. Vitter: ACORN Getting ‘Political Payoff’." 29 January 2009. Newsmax.com. 6 February 2009.

"Statement from ACORN Chief Organizer Bertha Lewis in Response to Statement from U.S. Rep. John Boehner." 28 January 2009. ACORN.org. 5 February 2009.