Stimulus Funds Not Being Spent as Promised.

It seems that stimulus funding is not happening at the rate it was originally projected. An article at The American discusses the breakdown in the stimulus spending:

The administration recently announced that stimulus spending totaled $113 billion by the end of fiscal 2009 (which ended September 30). While this top-line number was consistent with what the Congressional Budget Office (CBO) projected when the bill passed, the composition of spending differs significantly from the original estimates. Transfer payments to states and individuals for unemployment insurance and education have far exceeded initial projections, while spending for construction and infrastructure projects, designed to fuel job creation, is far below the original plan.

So rather than funding the kinds of projects that create jobs and get people employed, most of the stimulus money is going to unemployment benefits and education as a stop-gap measure while projects are tied up.

A closer look at the implementation of the stimulus bill reveals why it is not surprising that the bill has failed to meet its objective of stimulating the economy.

The Departments of Commerce, Defense, Energy, Homeland Security, Interior, and Transportation have spent less than 10 percent of their stimulus funds, far less than what was originally anticipated.Federal departments and agencies tasked with spending money on infrastructure and construction have overwhelmingly failed to get the money out the door. The Departments of Commerce, Defense, Energy, Homeland Security, Interior, and Transportation have spent less than 10 percent of their stimulus funds, far less than what was originally anticipated. In the case of the Department of Energy, the stimulus bill provided $38.7 billion to promote energy efficiency and develop renewable energy sources, yet only $779 million, or 2 percent, of the money was spent by September 30, less than half of what was expected. The Department of Transportation, with its particular emphasis on shovel-ready projects, spent 8 percent of its stimulus funds—only three-fourths of what it was expected to have spent thus far. Other agencies have done far worse—National Institutes for Health and the National Science Foundation spent only 1 percent of their stimulus funds in the first seven months. At that rate, those agencies would take 58 years to exhaust their stimulus money.

This is another example of red tape delaying real progress, or as my grandfather used to say, “This is a nickel holding up a quarter.” What I have noticed is that in my own city and elsewhere (I’ve been out of Louisville twice in the last month) there are a lot of basic road projects being done. Unfortunately this isn’t forward-looking infrastructure improvements, but rather just maintenance on existing roads. Traffic has been a bear (in relative terms) for the last month here in the ‘Ville as roads are resurfaced across the city.

The unfortunate narrative for the first stimulus package (I expect a second to follow) is that it will mostly be used for unemployment, providing a band-aid when surgery is needed. It’s a stop-gap measure and at the rate of current spending there will be nothing left for anything else.

The CBO originally estimated that some of the money provided in American Recovery and Reinvestment Act for infrastructure would not be spent until 2019. Meanwhile, spending for transfer programs, especially for unemployment insurance benefits, and new and existing federal education spending, is proceeding much faster than anticipated. States received $6.5 billion more than CBO estimated for education through the Department of Education’s new State Fiscal Stabilization Fund. Spending for student financial assistance at the Department of Education also outstripped CBO’s original estimate by about the same amount. Altogether, the Department of Education spent $20.6 billion by the end of fiscal 2009, $11.7 billion more than anticipated. The Department of Labor spent $27.5 billion, an amount that exceeded CBO’s original estimate by nearly $10 billion, because total unemployment benefits were substantially more than expected. The Department of Health and Human Services was the biggest spender by department, with nearly $33 billion in outlays…

I had dreams when this money was first promised, of a WPA for the 21st century. I had hoped we could put young people to work doing important and necessary projects while also equipping them with the skills needed for a lifetime of income earning. Now it seems this is tied up in a government that cannot move fast enough on even are most pressing needs.