KOKOMO, Ind. - For Republican congressional candidate Jackie Walorski, this city is 2010’s version of the Normandy beaches on D-Day 1944.

Today’s senior citizens “fought for us” in World War II and “left bodies and blood on the beaches of Normandy,” Walorski said at a recent campaign stop in Kokomo, Ind. “Our fight of this generation is this ideological war that is brewing in this nation that is going to determine in November who we are as Americans.”

A state legislator and staunch anti-abortion conservative, Walorski won Tuesday’s Republican primary, defeating a political novice, former Eli Lilly executive Jack Jordan. Now she’ll face Democratic Rep. Joe Donnelly, whose vote for President Barack Obama’s health insurance bill surprised and angered many in his district.

It's a scene playing out in congressional races across the country: Incumbent Democrats, even locally popular ones, are facing stiff challenges from conservative Republicans hoping to ride a wave of anti-government fervor to victory.

If Walorski can beat Donnelly, it will vindicate the Republican strategy of finding hard-edged candidates who frame House races as part of national referendum on Obama’s policies. And it will signal that a majority of voters in districts such as this one have repudiated the president and his Democratic allies in Congress.

Obama was the first Democratic presidential candidate to carry Indiana since Lyndon Johnson’s 1964 landslide. He won the state's 2nd Congressional District with 54 percent of the vote. It was a complete reversal from 2004, when George W. Bush won the district with 56 percent.

A Donnelly loss in November wouldn’t necessarily mean that Obama had lost touch with the manufacturing Midwest, but it would be a danger sign for Democrats for 2012.

“This is our country. It is time we stand together and take it back,” said Walorski, the favored candidate of the Tea Party movement. “This Constitution that I have raised my right hand to defend is under direct assault and I will not stand for it.”

‘Best interests of the country’
Donnelly, one of three Democrats to take Republican House seats in Indiana in 2006, brushes off Walorski’s criticism.

“I didn’t make the easy decisions; I did what I thought was right for our district,” he said, alluding to his votes for the health insurance bill and the financial sector bailout in 2008.

“It’s easy ideologically to just say ‘no’ to everything, but there are realities, and the realities are you have families who are looking at you to make decisions in the best interests of the country and in their best interest,” Donnelly said.

He characterizes his district as one where “you have earn it every day,” but in fact he strolled to a second term in 2008, lifted by Obama-inspired turnout, but also carrying every county in the district, even the rural Republican ones that voted for John McCain. This year looks to be different.

In an anti-establishment year, Walorski will be forcing Donnelly to play a role he hasn’t had to play in his three prior campaigns: that of the beleaguered incumbent and defender of the party in control of the White House and Congress.

Now the question is whether the election will be a referendum on Walorski’s highly caffeinated polemics or on the Obama health insurance law, which conservatives see as the leading edge of socialism.

Walorski’s backers frame the election in terms just as apocalyptic as she does:

“I think he’s trying to turn the country into a communist nation,” Michigan City, Ind., insurance agent John Palman said about Obama. “And this is America. We’re not socialists; we’re not communists; this is America, we’re free, so far.”

His wife Patty, even though she’s unemployed and uninsured herself, said the uninsured people who support the president are deluded. “Of course they’re going to say, ‘Obama, our savior is there to help us again.’ But they don’t understand how much of their lives they are turning over to the government.”

Donnelly doesn't believe his votes in Congress represent socialism. Rather, he thinks Congress had to act to help save the economy.

“If they’d had their way, they would have liquidated Chrysler” and those jobs would not have come back, he said of the foes of last year’s auto industry bailout.

Donnelly said the bailout has led to some encouraging news for his area: Chrysler is increasing production at its plants in Kokomo, the city at the southern end of his district, and bringing back nearly 400 workers who’d been laid off.

Donnelly's district includes part of Elkhart County, one of the areas worst-hit during the recession. The jobless rate is currently around 15 percent, well above the national average, but below a high of nearly 19 percent a year ago.

The election in November “will be fought on who stood up for the people in this district, who is the independent voice for people in the district, who has fought for jobs for the people in this district,” he said at a delicatessen in Elkhart as he toured the district last Friday.

Walorski isn't buying it: “I’m not in favor of the government bailing anybody out."

‘Enemies of freedom’
Indiana talk radio host Peter Heck, Walorski’s warm-up speaker in Kokomo, and a man she calls “a kindred spirit,” said Hoosiers must “rise up and defend this country against all enemies. We have an excellent military that’s doing that job defending us against enemies that are foreign; it’s time that we defend the republic against the enemies of freedom that are domestic.”

For Heck, “enemies of freedom” means Obama, Pelosi and Donnelly. He vows: “Their day is over… We’re coming for them…We want our country back and we’re taking it back.”

Despite Walorski's rhetorical attacks on Obama’s policies, she says he's a man a resurgent GOP could do business with, because he'll be trying to save his own political skin.

Calling Obama “a brilliant politician,” she argues that “if he has a Republican Congress and if he is going to try to run for president in 2012, he’s going to be a man of compromise. He’s going to adjust. I think he’ll do what he needs to do to be elected president in 2012. I don’t put anything past him.”

Nonetheless, Jack Jordan, the man Walorski beat to win the GOP nomination, believes she is too much the ideological warrior to win centrist voters in November. It's a criticism facing many GOP candidates as Republicans try to take back the U.S. House.

“I do have issues with her political rhetoric,” Jordan said of Walorski the day before the primary. “She says over and over again, ‘I’m going to send Nancy Pelosi back to California.’ People are tired of that. She has no ability to do that. I do have problems with that kind of rhetoric.”

For now, Walorski has staked just about everything on opposition to the health insurance bill.

“If you think the health care issue is over, wait until November and you will have the final word on the health care bill, not Joe Donnelly and not Nancy Pelosi,” she tells her supporters.

Walorski urges her campaign volunteers to stand up to Speaker of the House Pelosi and the Democrats. “I absolutely am not afraid of these people.”

Democrats and the Huffington Post mock her, she tells her loyalists, “not because they're afraid of me by myself, but they’re afraid of you.”

The so-called "RV Capital of the World" may soon be able to bill itself the "EV Capital of the World." What a difference a letter makes.

Elkhart, Ind., about 155 miles southwest of Detroit, will soon be the new U.S. production center for Think, the Norwegian-based manufacturer that hopes to charge into the emerging market for battery-electric vehicles. The first of the maker’s two-seat City, an urban commuter car, will begin rolling off the new assembly line a year from now. If demand meets Think’s expectation, the company hopes to be turning out as many as 20,000 battery-electric vehicles, or BEVs, annually by 2013.

The announcement, earlier this year, that Think would settle in Indiana puts the spotlight on the Midwestern state’s broader effort to position itself as a leader in a technology that many believe to be the future of the auto industry. Indeed, Gov. Mitch Daniels has declared it one of his goals to turn Indiana into “the electric vehicle state.”

Indiana isn’t the only state chasing that goal.

“I don’t know a state that isn’t aggressively trying to get this business,” including both California and Michigan, the latter of which is still considered the home of the U.S. auto industry, said David Cole, director of the Center for Automotive Research in Ann Arbor, Mich.

“Indiana does have some advantages” though, added Cole.

That includes cash the state is willing to spend to get a business such as Think. After emerging from bankruptcy protection last year, the one-time Ford Motor Co. subsidiary decided it needed to build its BEVs in the U.S., rather than importing them from Europe, which would make the cars costly due to an unfavorable exchange rate. Think looked at a number of possible manufacturing sites but a key draw for Indiana was what chief executive Richard Canny cautiously described as a “competitive” incentive package — reportedly about $43 million in government assistance.

Canny was quick to add, however, “You don’t choose a location just based on incentives.”

Setting up shop in northern Indiana gives Think access to an enormous pool of trained labor, including many workers familiar with automotive manufacturing. The region has long been home to the nation’s recreational vehicle industry. But the virtual collapse of the RV market has left it with one of the nation’s highest unemployment rates and given Think a chance to pick and choose employees.

“If you were to start an electric car company, I would tell you it’s a good place to start,” said Jerry Medlin, chief executive of LC3, a small producer of so-called neighborhood electric vehicles, modified golf carts based in Fort Wayne, Ind.

Indeed, a number of start-ups are heeding that advice, including Bright Automotive in Anderson, Ind., which, among other things, has a contract to provide electric vehicles to the U.S. Postal Service.

Yet another advantage to Indiana is its central position in the traditional automotive supplier corridor. Though foreign-based automakers, like Nissan, Hyundai and Toyota, have largely set up bases in the South, the Midwest is still the nexus of American automotive manufacturing. What Indiana doesn’t make often can be found nearby in Ohio or Michigan.

And what the Hoosier State does produce includes many of the key components specifically needed for electric vehicles: motors, power controllers and batteries.

It's often forgotten that Indiana was a power in the early days of the auto industry, home to a diverse collection of manufacturers such as Packard, Stutz and Studebaker, pointed out Paul Mitchell, president of Energy Systems Network, which promotes the development of alternative energy businesses in Indiana.

While those classic nameplates have long been abandoned, Mitchell noted that the state’s role in the auto industry has remained significant. It was a pioneer in the development of electric propulsion. The GM EV1, a widely heralded experiment General Motors tried to market in the 1990s, was developed at a skunk works the company set up on the north side of Indianapolis.

Many of EV1’s key components, including its motors and electronic technologies, were produced in the state by what were then several GM subsidiaries, such as Delco-Remy.

In recent years, GM has spun off a number of those operations, but they haven’t necessarily gone away. Delphi’s Indiana operations produce key electrical and electronic systems, Allison Transmission is a major supplier of transmissions and other components for hybrid and electric vehicles, and Remy turns out electric motors and hybrid transmission components.

Although GM may have ultimately crushed the last of the EV1s it produced, “it didn’t crush the spirit or the intellectual horsepower of the people who worked here,” said Mitchell of Energy Systems Network.

Quite the contrary. Many of the “brains” from the EV1 program have gone on to other battery car-related ventures in Indiana, such as EnerDel. That firm’s facility in Fishers, a suburb of Indianapolis, has been the only one in the U.S. capable of high-volume production of the lithium-ion batteries that are essential for modern electric vehicles.

EnerDel will provide the LIon cells for the new Think City, and its parent company, Ener1, is one of the investors that helped the Think emerge from bankruptcy last year. The battery maker will also supply Volvo, which recently announced plans to produce a battery-electric version of its compact C30.

EnerDel President Rick Stanley said his company could have moved from Indiana — it even had offers of financial assistance.

But "Indiana is becoming more and more of a Silicon Valley... if you consider how companies collaborate and how people move from one company to another,” Stanley said.

In a highly symbolic event, President Obama came to Indiana in August to announce 48 advanced battery and electric drive projects that will receive $2.4 billion in funding under the American Recovery and Reinvestment Act. So far about $500 million of that money has actually gone to businesses in the state, Mitchell estimated. He believes Indiana could receive “hundreds of millions more” in federal money in the near future.

But analysts including Cole caution that Indiana by no means has a lock on the nascent electric vehicle market. Despite all its problems, California is in a particularly strong position because it is expected to be the biggest market for battery-electric vehicles, hybrids and other electric vehicles.

That’s led several aggressive start-ups to set up shop there, including Tesla Motors and Fisker Automotive. The former already is producing a high-performance battery-electric
sports car, dubbed the Roadster; the latter is planning a series of models, starting this year with the Karma plug-in hybrid.

Fisker’s biggest planned venture, code-named Project Nina, will be based in Maryland, using a former General Motors plant purchased with a federal loan.

Michigan, meanwhile, is reaping an array of investments by GM, which will build the Chevrolet Volt extended-range electric vehicle in the state. Ford plans to produce battery versions of its Focus and Transit Connect models in Michigan too.

But with its brain trust, supply base, trained work force and supportive government, university and private organizations all kicking in, Indiana may be in a powerful position to achieve  Daniels’ goal of becoming the electric vehicle state.

Nate Howell has approximately 76 days to adjust to his new reality. That is when he is due to become a parent with his girlfriend, Samantha Keith, who just turned 17.

"It scares the living hell out of me,” says Nate, 19, who is working at a pork-packing plant in his hometown, Elkhart, Ind. “I thought I’d be in college right now playing football.”

Nate is one of five members of the class of 2009 whom msnbc.com has been following as part of The Elkhart Project. After high school, Nate had hoped to go to college and play football but didn't get a financial scholarship.

Now, facing parenthood, he and Samantha are in a tough spot — one that tends to come with a high price. Research shows that people who have children in their teens are less likely to get a high school diploma or go on to college. They tend to earn less in the working world, and children born to these teens struggle to keep up with their peers. For many, beating back poverty becomes the overriding concern.

“The data is overwhelming that teen pregnancy has a negative impact on education and employment,” says James Wagoner, president of Advocates for Youth, a Washington, D.C.,-based nonprofit. “While that is a problem during any economic cycle, it becomes even more of a negative during a recession.”

After declining for 15 years, the teen pregnancy rate is now on the rise in the United States, which has by far the highest rate in the industrialized world. The number of pregnancies among girls age 15 to 19 increased 3 percent between 2005 and 2006, showed a study of the most recent data collected by the federal government and the Guttmacher Institute, the non-profit research group in New York that released the report last month.

Reasons behind the rise are debated, but some blame increasing poverty and an emphasis on abstinence-only sex education. The Guttmacher Institute notes that declining teen pregnancy rates first started to stall out about a decade ago when programs promoting abstinence, without offering education about birth control, became more widespread.

Samantha says that at school, she sees another reason. "Some girls as young as eighth grade who are so in love with their boyfriends and just think they'll be together forever, they just say 'Let's have a baby.'"

In her and Nate's case, she says, birth control failed. "I was very scared and shocked," she says about the moment she found out she was pregnant. "I'm still a little scared and nervous."

Struggles passed on to next generation
Not surprisingly, teens who have a baby are less likely to finish high school than their peers. Only 40 percent of teen moms who give birth at age 17 or earlier finish high school, according research compiled by the National Campaign to Prevent Teen and Unplanned Pregnancy. About 23 percent of the younger moms go on to earn a GED. The gap is even bigger when it comes to higher education.

That interrupted education often means teen parents will earn less money throughout the rest of their lives. Girls who have a baby at age 17 or younger can expect to earn $28,000 less in the subsequent 15 years after the birth than if they had delayed until 20 or 21, according to the National Campaign report. Fathers of children born to teen mothers who were 17 and under earn some $27,000 less over the subsequent 18 years than those who have children with women who were 20 or 21.

Those struggles are often passed on to the next generation. Daughters of teen mothers are three times more likely to become teen parents themselves than girls born to older moms, says the National Campaign, while sons born to young teens are significantly more likely to be incarcerated. And the research shows that children born to teen parents tend to struggle socially and academically to keep up with their peers.

Samantha says she hopes their daughter, who they've already named Alana, won't repeat the cycle of teen parenthood. "I don't want her to make the same mistakes as I did," she says.

One of her first goals is to graduate from high school, says Samantha, who is now a junior. "One of my biggest concerns is staying in school and getting up in the night [with the baby] and then staying up all day," she says.

She's taking parenting classes at school now and trying to prepare to be the best mother she can. "It's a little baby and it'll be my responsibility," she says. "I just don't want to do anything wrong."

'I'm going to own up to it'
Despite the obstacles, Nate says there’s no question of walking away.

“It’s my responsibility now and I’m going to own up to it,” says Nate, who is saving for a promise ring for Samantha, and says he intends to marry her. He’s been going with Samantha to doctor visits, and helping her with her homework in his spare time.

Nate is used to working hard. He’s had jobs since he was 15, helping to support his three siblings and his mother when she was diagnosed with cancer. Now he’s working full time, sometimes more, at a local meatpacking plant as well as filling in at a pizza joint.

But he’s doing the math, and it’s daunting.

Out of the $1,100-$1,200 he brings home every month, he pays $200 in rent for an apartment he shares with a buddy, $100 for his cell phone, about $300 a month for groceries and $200 a month for the fallout from a car accident that also cost him his driver’s license. He also gives gas money to the guy who drives him to work.

Each week, he buys what baby gear he can afford for Samantha and the baby. Even now, he’s just scraping by.

“It’s scary … not having enough money, having no car, to where I feel like I won’t be able to provide for both,” says Nate. He spent his childhood watching his own mother — single and always struggling to make ends meet for her family — and he doesn’t want history to repeat itself. “I’m going to be a better father than I ever had … I didn’t know mine,” says Nate.

"I'm working for my baby's future now," he says. "I don't care if I have to work in a factory the rest of my life, as long as my baby will have everything it needs. I'm fine with a second-rate life."

If he sticks to his word, Nate will be an exception to the rule.

“What he’s doing is exceedingly rare,” says Bill Albert, spokesman for the National Campaign to Prevent Teen and Unplanned Pregnancy. “The notion that teen fathers are sticking around supporting their child, and supporting the mother simply doesn’t happen as much as we would like … I want to applaud this young man, but I wonder where the couple will be in two years.”

Eight of 10 teenage fathers do not marry the mothers of their first children, according to a study by the National Campaign to Prevent Teen and Unplanned Pregnancies in Washington, D.C. And, these absent fathers pay less than $800 annually for child support, it says, often because they are quite poor themselves.

Samantha says she's confident Nate is committed to her and their baby and that the couple have grown closer during her pregnancy. "I trust him," she says. "He's my boyfriend and the father of my daughter but he also my best friend and I can talk to him about anything."

Lower expectations
Even before news of the pregnancy, Nate was forced to scale back his expectations. A top athlete in high school, he had hoped to attend Ohio Wesleyan University and play football. But he didn’t get the scholarship he needed, and some of his earnings at the grocery store where he worked were going to help his family.

He started saving what he could for a community college program, with hopes of getting his grades up, and then pursuing a spot at Wesleyan.

Nate got his job at Plumrose, the meatpacking plant, earning $9.50 an hour plus health insurance, a step up from working at the grocery store. For now, Samantha’s prenatal care is covered by Indiana’s state health program.

Because of Samantha’s pregnancy, Nate has put community college on the back burner.

Now his plan is to move in with Samantha at her parents' place for a while after the baby is born, save money so they can rent a place of their own and get a car. He doesn’t want her to have to take the baby on the school bus.

Samantha is hoping to finish high school through a combination of summer and night school classes. After she graduates she plans to find a job. Maybe someday down the road she'll join the Navy, her dream before she became pregnant, she says. But she still worries about how the future will unfold.

"While I'm in school I'll have family support," she says. "After I graduate ... I'm still confused about what will happen."

A view from the ground
In Mishawaka, just down the road from Elkhart, a maternity residence for teens called Hannah’s House sees the hardship of teen parents up close. The home provides housing for seven pregnant teens at a time — as well as counseling, parenting classes and transitional assistance after giving birth. Last year, Hannah’s had to turn away 37 pregnant teens seeking a spot.

For about half of the girls who stay at Hannah’s House, the baby’s father initially is involved, says executive director Karen DeLucenay. The staff works with these young men as they can, and she is planning to start a support group for fathers-to-be.

“The risk is that the dads want to be good dads, but they haven’t thought through what that really means,” DeLucenay says, adding that most are focused on the tangible — like buying diapers, she says. “But how to bond with the baby, and meet the emotional needs of babies? Sometimes dads have no idea how to do that, and no idea how important it is.”

At Hannah’s House, residents are expected to work and try to save money but since the recession hit, few have found jobs. It’s also forced budget cuts in many public services. Among the casualties were child care programs throughout northern Indiana.

“It’s very hard for the young mom to stay in school,” says DeLucenay, “Which leads to more poverty situations.”

750,000 teens get pregnant each year
It remains to be seen if the uptick in the teen pregnancy rate is part of a larger trend, though preliminary data from 2007 and 2008 suggest it is still rising.

“The increase in the rate is one way to look at the issue — but look at the absolute numbers,” says Lawrence Finer, research director at the Guttmacher Institute. “We have far too many teen pregnancies to begin with. We have 750,000 teenagers getting pregnant every year.”

Like the teen pregnancy rate, the number of abortions is also on the rise after having been on the decline. In 2006, the rate rose 1 percent over the previous year. While 42 out of every 1,000 teen girls gave birth in 2006, 19 out of every 1,000 had abortions, according to the Guttmacher Institute's report.

Nate said abortion wasn't ever something he and Samantha considered. "It's not in my vocabulary," he said. The couple didn't want to put their baby up for adoption, either.

Not only do the teens who then go on to become parents often pay a high price, so does society.

U.S. taxpayers forked over at least $9.1 billion in 2004 for costs associated with teens having children, according to a report by the National Campaign to Prevent Teen and Unplanned Pregnancies. The report, which the authors say is a conservative estimate, compiled research estimating the cost of health care, housing assistance, food stamps, child welfare services, provided for teens and their children, and the lost revenue due to lower taxes paid by teen mothers.

'Sea-change' in prevention
A major shift in Washington, D.C., will broaden efforts to prevent teen pregnancy. The Obama administration and Congress have allocated more than $100 million in the 2010 and 2011 fiscal years for a wide array of approaches to preventing teen pregnancy, including instruction on contraceptives and sexually transmitted infections. Most of the money will be allotted to programs that have proven effective, with a smaller portion for others seen as promising.

The new policy eliminates the requirement that government funds go exclusively to programs that teach “abstinence only until marriage.”

“It is about as timely and encouraging an investment as I can imagine,” says Albert of the National Campaign to Prevent Teen and Unplanned Pregnancy. “’Sea change’ is the term I would use.”

Proponents hope it will not only halt the increase in teen pregnancies, but restore the previous decline.

For Nate, already heading into parenthood, that struggle is distant and academic compared to the one he faces now.

“I never planned on having a kid at the age of 19. I always planned to have one later on down the road when I got my values and everything settled out and got a degree,” says Nate. “Now to find out that the baby’s due in (May) and I’m in the same predicament my mom was in. I’m trying to get myself out of that now. And I don’t care if I have to work six days in a row, if I can find a job that will let me, I will.”

ELKHART, Ind. - If there were a report card for the promises President Barack Obama made a year ago in this struggling city in northern Indiana, he would probably get a C. It’s a passing grade, but it’s not the strong performance that people might have hoped for in a town with one of the highest jobless rates in the country.

One year ago, on Feb. 9, 2009, Obama went to Concord High School in Elkhart to promise jobs for the city and for the nation. He argued the case for the $862 billion American Recovery and Reinvestment Act (ARRA) which Congress would pass just four days later.

Now, a year later, some statements he made in that speech have proven true and a few have proven to be dubious. For several others, it’s too soon to judge.

Like the president himself, the Recovery Act and the economic recovery itself haven’t yet fully met expectations.

So, with unemployment near 10 percent and elections eight months away, congressional Democrats are reacting. House Democrats passed a second stimulus, dubbed the “Jobs for Main Street Act.” At about $159 billion, it’s less than one-fifth the size of the stimulus enacted last February.

The Senate is set to begin action on its own job creation bill this week.

Rep. Joe Donnelly, D-Ind., whose district includes most of the city of Elkhart, voted for the first stimulus bill in 2009, but against the second bill last December.

"We still have a lot of ARRA funds to spend," Donnelly said. "We’re working non-stop to create jobs, but I want to make sure that we give the stimulus funds the opportunity to get out there, and be felt, and create jobs. I said, ‘Why don’t we just let the stimulus work its way through, rather than adding on even more debt?’”

Some argue the reason to not wait is the 14.8 million unemployed Americans as of January. The Labor Department reported on Friday that the unemployment rate dipped from 10 percent to 9.7 percent last month, but businesses shed 20,000 jobs.

Here are some of the statements Obama made in that speech, and how they're working so far.

Since the president spoke on that day, more than 3 million jobs have been lost, according to the Bureau of Labor Statistics.

Job losses are no longer running at a pace of nearly 700,000 per month, as they were when Obama spoke in February, however.

“The Recovery Act has already funded about 2 million jobs across the country, and remains on track to meet the President’s goal of 3.5 million jobs by the end of this year,” said Jim Gilio, White House spokesman for the Recovery Act.

Gilio said that direct stimulus spending (as opposed to tax cuts) for projects overall are expected to double in the first two quarters of 2010 and thus “there is even more employment bang for the buck to come.”

In Elkhart County, meanwhile, the unemployment rate has declined from 18 percent last February to 14.8 percent in December, the last month for which the BLS has local data.

But the labor force has shrunk in Elkhart, and around the nation, too. There were 4,365 fewer jobless in Elkhart County in December than there were when Obama spoke last February — a drop of 24 percent in the number of unemployed. But there were also 4,017 fewer people with jobs, a decline of 5 percent in the number employed.

The president has delivered on this promise.

According to the Congressional Budget Office, by the end of September, the Recovery Act will have paid out $58 billion in unemployment benefits, 17 percent of the total stimulus outlays.

It will take until February 2011 to determine if the president was correct in his claims.

His own Council of Economic Advisors, in its Jan. 13 report, estimated that 48,000 jobs had been created in Indiana due to the Recovery Act. The CEA said the stimulus had “raised employment relative to what it would otherwise have been” by 1.5 million to 2 million nationwide.

The Obama administration’s view is that the stimulus dollars are rippling through the economy: the public school teacher kept on the job due to Recovery Act money will spend her paychecks on groceries, car repairs, a new deck for her house — so the grocer, the car repair shop, and the carpenter all benefit from stimulus money. They will in turn spend their income on buying goods and services.

But Jackie Walorski, the Republican state representative whose district includes part of the city of Elkhart and southern Elkhart County, dismisses the stimulus effect.

“Nobody was going to say ‘don’t bring money here if it’s available’ but it was a short infusion of cash,” she said. “It’s not a long-term fix and it hasn’t really produced a lot of sustainable, long-term tangible, counted jobs.”

Walorski is trying to unseat Donnelly in this November's election.

Donnelly defended the stimulus by pointing to
a $689,000 grant to the Heart City Health Center as stimulus money that had an immediate impact, allowing the clinic to hire a doctor and to serve more patients, and to a $39 million grant to Navistar to manufacture electric trucks in Wakarusa, a town just south of Elkhart.

He was somewhat wide of the mark.

Whatever the merits of Recovery.gov may be, it does not make the case that Obama and his aides are trying to make: that the combination of direct and indirect spending — the multiplier effect — has caused 1.5 million to 2 million jobs to be "created or saved."

Here's why: Congress requires private-sector recipients of Recovery Act grants, contracts, and loans to submit their own estimates of the number of jobs created or retained by their funding.

But, as the Government Accountability Office (GAO), the independent auditing arm of Congress, explained, “neither individuals nor recipients receiving funds through entitlement programs, such as Medicaid, or through tax programs are required to report.”

Of the $173 billion in funds paid out by the end of last October, only 25 percent were covered by the Recovery Act’s reporting requirement.

That’s one reason why there’s a discrepancy between the 48,000 Indiana jobs that Obama’s economic advisors claim have been created or saved by the stimulus, and the figure for jobs created or saved in Indiana on the Obama administration’s Recovery.gov Web site: 15,278.

The Recovery Act has delivered on that pledge.

Although they aren’t as visible as the $10 million, ARRA-funded project to widen U.S. highway 33 in Elkhart, for example, the tax cuts in the Recovery Act last fiscal year and this fiscal year are 14 times larger than the transportation projects funded by stimulus money.

According to the Congressional Budget Office, 44 percent of the stimulus in FY 2009 and FY 2010 is in the form of tax cuts, ranging from a tax break for first-time home buyers to an $800 tax credit for married couples.

That appears to be in some doubt, at least for now, as a chunk of the stimulus went to state and local governments that used some of the funds to save employees' jobs.

According to GAO, by Dec. 31, 2009, more than $78 billion in Recovery Act funds had gone to states and localities. More than three quarters of that was matching funds to the states to help pay for Medicaid, the insurance program for the indigent, and to the State Fiscal Stabilization Fund which helps states keep public school employees on the payroll.

The GAO said the Recovery Act’s Medicaid and education funds freed up money that the states otherwise would have had to spend from their own coffers. This allowed state and local governments to retain some employees that they otherwise would have let go.

States “most commonly reported using or planning to use these freed-up funds in fiscal year 2010 to cover increased Medicaid caseloads, maintain Medicaid eligibility levels, and finance general state budget needs,” the GAO said in a report last December.

Elkhart city officials estimate that to date $41 million in direct and indirect stimulus funding has created or saved 385 jobs in Elkhart, with the biggest single amount being the $14.3 million going to the Elkhart public schools.

Elkhart applied for stimulus money under the U.S. Department of Transportation's TIGER (Transportation Investment Generating Economic Recovery) grants program. The department will announce the winners of the grants in the next few weeks.

He returned to Elkhart last August to tout a $39 million grant to Navistar, which produces commercial and military trucks and designs and manufactures diesel engines for pickup trucks, vans and SUVs, among other things.

Navistar spokesman Roy Wiley said he could not estimate how many jobs the project would create since it “will depend upon initial daily production rates, among other things."

"When the grant was announced, we stated that our electric truck production would initially create 700 jobs, but not necessarily all in Elkhart County. And some will be suppliers,” he said.

Another vehicle manufacturer, the Norwegian firm THINK, is planning to make electric cars in Elkhart, with Recovery Act help.

According to company spokesman Brendan Prebo, THINK received a tax credit of $16.9 million under the Advanced Energy Manufacturing program. The firm has also applied for a loan under the Advanced Technology Vehicle Manufacturing (ATVM) loan program. THINK expects to create 415 manufacturing jobs in Elkhart by 2013. The plant begins operations in the first quarter of next year.

The Obama administration has pointed to the THINK tax break as a prime example of what the president meant when he said in Elkhart last year, “I think it's important for us to give tax breaks to companies that are investing right here in Elkhart.”

Prebo noted that THINK was looking at the United States as a manufacturing location prior to the announcement of the Recovery Act's incentives, but the ATVM program encouraged the company to build more vehicles in the U.S. sooner than it would have otherwise.

However, the Recovery Act “had very little impact on the selection of Elkhart specifically. I would attribute our decision to select Indiana almost wholly to the efforts of the state,” he said.

Public school construction is one place where Obama had hoped the Recovery Act would create jobs but where it hasn’t — at least not directly.

Obama referred three more times in the speech to what he saw as the need for stimulus money to pay for building and rehabilitating public schools.

The House version of the stimulus bill included $20 billion for school construction. But the Senate deleted those funds. This was done largely at the urging of Sen. Susan Collins of Maine, a Republican whose vote was needed to get the 60 to pass the bill.

Collins’ decisive role last February was an early indicator that even with large Democratic majorities in Congress, Obama’s agenda for Elkhart and the rest of America would hinge on a few Republican senators. From health insurance reform to a second stimulus bill, they remain as crucial today as they were last February.

Toyota's sweeping auto recall hit home in Elkhart this week as a local manufacturing heavyweight was identified as the maker of the problematic gas pedal used in some 2.4 million vehicles.
Elkhart-based CTS Corp. made its best effort at damage control in the wake of the revelation, noting that the faulty parts have not been linked to any accidents or injuries.
As The Elkhart Truth reported, CTS CEO Vinod Khilnani told analysts on an earnings call Thursday that CTS has been working with Toyota to redesign the pedal part to meet tougher standards and that "three or four" CTS plants are already producing the newer pedals.
Khilnani also tried to downplay news that Ford Motor Co. has stopped producing a commercial van that it makes in a venture with Jiangling Motors Corp. in China because the vehicle uses a pedal of a different design produced by CTS.
CTS was suffering from the harsh economy before the recall, along with most of the auto industry. Revenues for 2009 were down 28 percent compared to 2008, to $499 million, the company reported on Wednesday.
(Click here for the full report.)
Khilnani focused his comments on the "momentum" of the third and fourth quarter, achieved in part because of salary and benefit reductions in 2009. As the recession eases, CTS management projected full-year 2010 sales to increase 10 percent to 15 percent over 2009.
As for the recall, Khilnani said that he did not believe that "when the dust settles" it would hurt the company's results in 2010.
CTS has 19 manufacturing facilities in the United States, Canada, China, Mexico and the Czech Republic, producing automotive parts as well as components used in telecommunication systems, medical devices and military equipment.

John Brecher / msnbc.com

Thomas Clark cuts the top from one of hundreds of aluminum cans while constructing a solar air heater in his brother's garage in Goshen, Indiana. Standing behind his nephew Alex, 13, is a prototype of the unit, which works by circulating indoor air through black-painted pop cans heated by the sun. Similar models and do-it-yourself plans are widely available online.

When gas prices spiked in 2008, Thomas Clark, a cabinet maker from Goshen, saw an opportunity.

He started a side business making make solar air heaters from scrap and recycled material. His design and materials are basic and cheap: he gets aluminum cans at 55 cents a pound, and 2 x 4 foot plywood sheets scrapped by the RV industry for $2 each. After starting out at a woodworkers' guild, Clark moved the growing operation to his brother's garage.

Clark's project represents tinkering, innovation and entrepreneurship that this area has long boasted of--the traits that helped turn it into a manufacturing center.

As the RV industry tanked with the economy, and Clark's hours were cut by a third in 2009, he had extra time on his hands--and added motivation to supplement his income. Through eBay, Clark has sold about 25 of the 2000 BTU units for $150 each.

"People say 'oh, 2,000 BTU, that's not a whole lot'," said Clark, "but it runs continuously."

It's a modest supplement in terms of heat, and in terms of income, but steady, so long as the sun is shining.

Of all the tea-leave readings, economic projections, and number crunching, this could be the gloomiest assessment for Elkhart area so far: A new report released by U.S. Conference of Mayors predicts that for Elkhart-Goshen to return to peak, pre-recession employment levels could take 30 years.
The report, "U.S. Metro Economies: Rate of Recovery," released at the annual meeting of American mayors in Washington, D.C., says labor markets will pick up steam in 2011-2013. But half of all metro areas—185—will not achieve pre-recession peak employment levels until 2013 and beyond, according to the report, prepared by IHS Global Insight.
Of the 350 cities included in the survey, 15, including Elkhart-Goshen, will not get back to the low jobless rates of their boom times until 2039, reports Josh Weinhold, who is covering the 3-day event for The Elkhart Truth.
Despite positive signs in the economy emerging at the end of 2009, the mayors' statement said most cities are "far away from recovery—especially in their labor markets."

The mayors are calling for the federal government to provide more direct support for cities, including fiscal help for local governments in especially hard-hit areas, more block grants for communities to undertake conservation projects, neighborhood revitalization and community policing. They call for renewal of federal stimulus money for youth summer jobs. And they want federal dollars for transportation to target urban areas more than they currently do, helping cities address congestion and joblessness.
"This data is solid proof that we need the Senate to pass a MainStreet jobs package now,” said Elizabeth Kautz, president of the organization and mayor of Burnsville, Minn. “We are in the middle of a jobs emergency that demands decisive and swift action.”
The mayors’ urgent appeal for jobs was underscored by a major economic report also released Wednesday forecasting job recovery and unemployment rates in the nation's 363 metropolitan areas, where 85% of the people in this country live. The report indicated that over 105 metros will still have unemployment rates above 10 percent; and 214 metros will have unemployment rates higher than 8 percent by the end of 2011, the mayors said in a statement.
On Thursday, the mayors’ took their case to the White House in a meeting with President Obama and his Economic Advisory Team.
The full "Metro Economies" report can be viewed in pdf format on the U.S. Conference of Mayors Web site.

The man who arguably sparked all the excitement about producing green vehicles in Elkhart has lost his position at the head of his company, Electric Motors Corp, The Elkhart Truth reported. Wil Cashen -- who enthused to msnbc.com last July about the "unimaginable potential" for new green tech production in Elkhart's empty factories -- was removed from his position as CEO of the Malibu-based company, EMC announced on Thursday.

What Cashen's departure means for EMC's Elkhart initiative has not been spelled out, but it certainly could be positive if results in the company nailing down its plan and sticking to it.

The company had suffered "a problem of focus" said chief financial officer Ralph King. Cashen, who came to Elkhart in early 2009 trumpeting the idea of building hybrid pick-up trucks and electric drive trains--projecting that the operation would generate 1,600 jobs--but the vision kept shifting while producing few concrete results.

So, while Cashen led the charge to build green-technology vehicles here, EMC lags behind two other companies that have entered the green vehicle arena here.

Unlike Navistar, and the Norwegian company Think, which just announced its plans to produce in Elkhart, EMC has not received any public money to get its operation started. The company was turned down in the opening round of applications to the U.S. Department of Energy. Then it was seeking $500 million.

This time, it will set a more realistic goal--maybe $20 million, says King.

King insisted that the company was still viable, and committed remaining in Elkhart to develop its products, while running the operation with a "stringent, old-fashioned management style."

This change may not have the romance of Cashen's grandiose vision, but old-fashioned management might be what it takes to produce old-fashioned results.

Elkhart is hardly alone in its suffering in this recession, as many Elkhart Project readers have pointed out.

"Elkhart, Schmelkhart!" grumbled a reader called ‘withoutadoubt’ after my last post on the Norwegian carmaker Think deciding to locate a new facility in the northern Indiana town. “What is this place, the center of the universe?”

Answer: No. But the Think deal presents a good opportunity to restate the purpose of The Elkhart Project, which is to report on the recession and the recovery through the lens of a single community and individuals as a way of showing what is happening throughout the United States.

The Think investment in Elkhart illustrates, among other things, the tough decisions that communities have to make as they try to create jobs for local workers. That includes deciding just how much they are willing to offer in the way of tax incentives to make their location more attractive than others.

Local governments across the nation are struggling with the notion of tax abatement to lure companies — a strategy that has risks — as reported in the The Elkhart Project in November.

The financial incentives the local governments offered Think were not the only factor the Norwegian company considered in its choice of Elkhart as a site, but they were an essential part of it, reported Josh Weinhold of The Elkhart Truth.

The Elkhart City Council gave initial approval to a 10-year tax phase-in for Think at a Monday meeting, which also allowed significant state tax benefits to kick in. The Truth report says that "Think is expected to save about $2.92 million in taxes over the life of the phase-in, but pay almost $2 million in actual taxes. The jobs it brings in are estimated to generate $705,000 in new city income taxes." The investment could also receive a federal loan through the U.S. Energy Department, which has allocated $25 billion to spark development of electric cars and trucks.

Not only was Elkhart weighing the financial costs and benefits of the deal, but the less tangible impacts – whether the presence of another "green" company could help change it from the "RV capital" to a center for development of next-generation vehicles and new technology.

In this case, even local officials who profess to be against tax abatements in principle seemed to support substantial perks for Think.

"When you have a good project, there's not much that can stand in the way," Elkhart City Council member Rod Roberson, told The Truth. "In no way was the council going to be an obstruction to it. I think that we all wanted this to be successful."

For more detail on the deal, the vehicle, and the company behind it, see the series of articles in The Elkhart Truth:
Elkhart becomes an electric car center
Think City car: No gas required
In eleventh-hour negotiation, Elkhart City becomes Think's U.S. home
Think had been eyeing Elkhart County for a year

Uff-dah! It's been a long road, but after many months of consideration, a Norwegian automaker apparently has chosen Elkhart as the site for its new electric car production site--a $43.5 million dollar investment that the company says will create 415 much-needed jobs in the recession-battered area.

According to a report by The Elkhart Truth, the Elkhart City Council was to meet Monday evening to vote on a proposed tax abatement package to assist Think, which had also considered production sites in Michigan and Oregon for the production facility.

A press conference is slated for Tuesday, including the economic development body for the county and Indiana Governor Mitch Daniels, is expected to make the official announcement. Coming nearly a year after President Barack Obama visited this northern Indiana county to unveil his economic stimulus plans--choosing the area to illustrate the depth of the economic crisis--Elkhart will have a moment in the spotlight for a positive development.

Think is to become the third electric vehicle manufacturer in the area. Navistar International Corp. plans to build all-electric delivery trucks starting next year with help from a $39 million federal grant. And Startup Electric Motors Corp. intends to make electric-hybrid drive trains to be installed in various vehicles, starting with a joint venture with Gulf Stream that would make light-duty electric trucks.

Elkhart has the manufacturing base, transport links and workers to do the job--thanks to the once-thriving recreational vehicle industry. Now the town needs only learn the toast to ring in some good fortune. As the Norwegians say: Skal!

As Elkhart moves into the New Year, it sips a bittersweet cocktail of hope, painful transition, and economic setbacks.

On one hand, national economic indicators that allow for cautious optimism are playing out in some tangible change on the ground in Elkhart--much needed signs for a resilient but battered community.

Wholesale shipments of motorhomes had finally outpaced 2008, The Elkhart Truth reported on the final day of 2009, citing national numbers from the Recreation Vehicle Industry Association. According to Mac Bryan, vice president of the RVIA the numbers reflect two positive trends: easing of financing, and growing confidence among RV dealers. With each month he says, there is "less likelihood of a double dip"--or potential second slump in demand.

Meantime, The Truth also reported that a local company producing doors for a variety of motor vehicles had purchased one of the many RV facilities that has been standing empty since August 2008. The shut down of the old Monaco Coach plant in Nappanees resulted in lay-offs for hundreds of workers, and the company that made the purchase, Challenger Door isn't likely to replace those jobs any time soon.

But the purchase of the 143,000 square foot facility signalled potential, and marked a step away from the trauma of the factory closure. Nappanee Mayor Larry Thompson told The Truth it was "very encouraging" to see a local company like Challenger invest in the community.

Of course, every few steps forward are punctuated by a step backward--including the Christmas Eve announcent by Mishawaka Humvee producer AM General Corp that it would lay off 250 workers because it hadn't received enough new orders to maintain the current workforce.

With unemployment still running around 15 percent in the area, the Elkhart Salvation Army reports that demand for food, utility assistance, and other services remains extremely high--some 20-30 percent higher than in 2008. And raising the funds to meet those needs remains a challenge, according to Major Steve Woodard of the Elkhart Salvation Army. The organization has raised about $300,000 of its $400,000 goal for the holiday fundraising season, which ends Jan. 31. Woodard said the general public has pitched in to make the bell-ringer campaign a success, and more than meet a goal for in-kind giving of household goods and food, while the mail-in campaign has lagged.

An anonymous Elkhart donor put up two major gifts during the holiday season--$100,000 to Church Community Services, and $200,000 to the United Way of Elkhart--in a challenge to other wealthy residents to give more. Perhaps the move will help philanthropy turn a corner here too, though that remains to be seen in 2010.

"It is bittersweet--a lot of people are still hurting out there," says Woodard, looking to 2010. "A lot of people are optimistic (about economic recovery) but it will take awhile."