News
Stimulus Aid Trickles Out, but States Seek Quicker Relief
By Michael Cooper
New York Times
May 12, 2009
Nearly three months after President Obama approved a $787 billion economic stimulus package, intended to create or save jobs, the federal government has paid out less than 6 percent of the money, largely in the form of social service payments to states.
Although administration officials say the program is right on schedule, they have actually spent relatively little so far.
The stimulus bill has directly injected around $45.6 billion into the economy, mostly to help states cover the costs of Medicaid and unemployment benefits, one-time $250 checks that were mailed to Social Security recipients last week, and income tax cuts that began to take effect this spring.
Although states around the country are beginning roadwork projects, the Department of Transportation had spent only about $11 million on highway projects through the first week of May.
The intent of the stimulus program was to pump money into the economy quickly, and many members of Congress said at the time of its passage that speed was of the essence. But the huge program has been a challenge to administer for both a new administration and for states and local governments grappling with their own fiscal problems.
Some states and cities are beginning to complain that the money has yet to reach them. Others have been slow to get their paperwork to Washington; Virginia has yet to send the Transportation Department its list of road projects.
At the same time, some economists have questioned the administration’s claims that the bill has saved or created 150,000 jobs.
Obama administration officials, however, say the pace of the stimulus program is on schedule, and even if the federal checks are not yet in the mail the effects of the stimulus are beginning to reverberate: the promise of the federal money has been enough to get states to start construction work and to retain some jobs that were in jeopardy.
Vice President Joseph R. Biden Jr., who writes in a report on the stimulus bill to be released this week that it remains “ahead of schedule in most programs,” said in a telephone interview Tuesday that the bill was helping people grapple with the recession, getting money to the states and into the economy, and laying a foundation for long-term aspirations like high-speed rail.
“We’re 85 days into a two-year program here — we’re trying to get the money out as quickly as we can, but not too quickly, so we don’t end up really screwing up here,” Mr. Biden said. “Because we’re talking about big dollars here, these are big numbers, this is unprecedented. And in 85 days we’ve gotten tens of billions of dollars out the door, and so far — knock on wood — no real big problems, no real big glitches.”
The Transportation Department has committed to pay for more than $10.5 billion worth of projects across the country, which an official there likened to signing the paperwork for a new car before the check has cleared.
Those commitments have spurred at least 20 states to award contracts and begin paying road crews; some contractors are staffing up, or postponing layoffs, in the hopes of winning some of that work.
And the federal I.O.U.’s — the government has made $88 billion worth of commitments so far — have saved jobs in many areas.
Columbus, Ohio, which sent layoff notices to its entire class of 26 police recruits in January, decided to rehire the class in February when it learned it would get a Justice Department grant.
Alabama plans to keep 3,800 teachers whose jobs were in jeopardy, knowing that education stimulus money will soon be on its way.
Utah is planning to rehire or retain about 45 probation and parole agents, court clerks, crime lab technicians, investigators and counselors on the promise of expected stimulus aid.
Nonetheless, to the frustration of some local governments, the federal spigot has been more trickle than flood, and states are facing such fiscal pressure that many are cutting jobs anyway.
When the Senate recently held a hearing on the spending of the stimulus money, Ray Scheppach, the executive director of the National Governors Association, told lawmakers that “to one extent this hearing is premature.” He reminded them that most of the stimulus funds “remain in the hands of the federal government.”
When the bill was still in Congress, the need for speed was so important that the Obama administration agreed to funnel much of the money through existing programs to accelerate the process. The bill’s Republican opponents questioned the bill’s short-term effects, seizing on a Congressional Budget Office report that found that much of the spending would be pushed into later years.
Now, a federal government that has often been caricatured as profligate has begun trying to spend money as quickly as possible and has become fixated, to use the new Washington catch phrase, with “getting money out the door.”
The Obama administration has committed to spending 70 percent of the money, or $550.9 billion, within the first two years. By that benchmark, an administration official said, the government is 8 percent toward its goal.
There has been skepticism of the administration’s claim of creating or saving 150,000 jobs. While it can be difficult to count jobs that were saved, as opposed to those that were created, Peter Morici, an economist at the University of Maryland, said that trends in state and local government employment “just do not support that claim.” Other economists have been more supportive of the administration.
Mr. Biden said the stimulus had created some public works jobs, generated work at factories that expect to benefit from the work and kept many state and local governments from laying off workers, since stimulus aid will help them balance their budgets.
But getting the money out can be a cumbersome process at times. Virginia, the last state to submit a list of transportation projects, is trying to get the work done as its Transportation Department is shedding 1,000 positions. Jeffrey Caldwell, a State Transportation Department spokesman, said that the agency had sought bids on some of the jobs anyway, so work could begin quickly when the list was done.
Last week, the government reported spending more than $10 billion in stimulus money, and officials said that the speed would increase as the program grows.
“In baseball terms, I think there’s going to be real pace on the ball here,” Mr. Biden said in the interview. “I think that what you’re going to see happen here is the velocity of this will increase not just arithmetically, but geometrically here. At least, we’ve got to make that happen.”
Source: http://www.nytimes.com/2009/05/13/us/politics/13stimulus.html?_r=1&emc=eta1
