During the February 5 edition of Fox News' On the Record, host Greta Van Susteren allowed Sen. Lindsey Graham (R-SC) to advance the myth that the economic recovery legislation would “reward ACORN.” In fact, neither the House version nor the proposed Senate version contains language mentioning the Association of Community Organizations for Reform Now (ACORN). The false claim is based on a misrepresentation of a provision that would appropriate $4.19 billion for neighborhood stabilization activities, but which would be distributed through competitive processes. Moreover, Van Susteren failed to challenge Graham's claim that “only 17 percent” of the economic recovery bill “gets spent in the first year.” In analyzing the House version of the bill and the proposed Senate version, the Congressional Budget Office (CBO) estimated that approximately 20 percent and 26 percent, respectively, of their budget effect would occur in the first fiscal year.

Discussing the legislation, Graham claimed, “The goal is to create jobs, not grow the government in the fourth and fifth year of spending. The goal is not to reward ACORN. The goal is to jump-start the economy.” Graham's unchallenged suggestion that the economic recovery bill would “reward ACORN” echoed a frequently asserted myth that $4.19 billion of the economic recovery plan would go to ACORN. In fact, the provision, which would appropriate $4.19 billion “for neighborhood stabilization activities related to emergency assistance for the redevelopment of abandoned and foreclosed homes as authorized under division B, title III of the Housing and Economic Recovery Act of 2008,” requires that money be distributed through competitive processes. It states that “not less than $3,440,000,000 shall be allocated by a competition” to “States, units of general local government, and nonprofit entities or consortia of nonprofit entities.” It also provides that “up to $750,000,000 shall be awarded by competition to nonprofit entities or consortia of nonprofit entities to provide community stabilization assistance.” In a January 28 press release and January 29 piece for The Huffington Post, ACORN CEO Bertha Lewis denied that ACORN is eligible for the “neighborhood stabilization funds” and stated that it does not intend to apply for them.

Moreover, Van Susteren failed to challenge Graham's claim that “only 17 percent” of the economic recovery bill -- which Graham characterized as a “a massive spending bill that will not stimulate the economy” -- “gets spent in the first year.” But in analyzing the proposed Senate version, CBO stated that it expects approximately 26 percent of the budgetary effect to occur in fiscal year 2009, and that approximately 20 percent of the budgetary effects of the House version would occur in the first fiscal year. Further, while the bills' budget effects would continue beyond fiscal year 2010, in January 27 testimony before the House Budget Committee, CBO director Douglas Elmendorf said that fiscal stimulus in 2011 or later would be effective in the current economic situation, in which economic output is projected to remain below its potential even after the beginning of the recovery

From the February 5 edition of Fox News' On the Record with Greta Van Susteren:

GRAHAM: And I'm telling the president and our Democratic colleagues, if you push through the Congress a massive spending bill that will not stimulate the economy -- only 17 percent gets spent in the first year -- you're going to lose the ability to go back to the public and spend money on housing.

VAN SUSTEREN: You know --

GRAHAM: The root cause of this problem economically, Greta, is housing. There's really nothing in this bill to fix the banking problem or the housing problem. It's just a massive spending bill without focus.

VAN SUSTEREN: Well, here's -- I mean, when I look at this, it seems so unwieldy to me and it looks like, you know, how can you possibly -- I mean --

GRAHAM: Looks like we made it up?

VAN SUSTEREN: It looks like you made it up. But I'm thinking --

GRAHAM: We are.

VAN SUSTEREN: You know, I look at the list of Democratic senators, some who I've known for years, and I think, you know, they're not insane.

GRAHAM: They're not.

VAN SUSTEREN: I mean -- I mean, what's their thinking on this?

GRAHAM: Well, what happened --

VAN SUSTEREN: You're a good lawyer. Tell me what --

GRAHAM: Well, here's what happened. It started in the House. The House produced a product that was -- Nancy Pelosi said, we won, we write the bill. They created a monstrosity of a bill. They couldn't get one Republican, lost 11 Democrats. Now the left is behind this bill, the hard left, so it comes to the Senate, and any Democrat that wants to be reasonable, like support the McCain amendment, is getting killed.

MoveOn.org has a phone tree, an email tree, so they're trying to protect this bill from reason. And what I'm trying to ask of my Democratic colleagues is, let's slow down, get in a room like Ronald Reagan and Tip O'Neill did, and spend a few days seeing if we can spend less and do more. The goal is to create jobs, not grow the government in the fourth and fifth year of spending. The goal is not to reward ACORN. The goal is to jump-start the economy.

VAN SUSTEREN: All right. We only have about 45 seconds left. Is this going to pass? I mean, the president has -- there are a lot of Democrats in the Senate and the House.

GRAHAM: I think --

VAN SUSTEREN: They own the two houses.