NEW YORK (CNNMoney.com) -- The federal government has made available more than $75 billion for stimulus projects in the 10 weeks since President Obama signed the $787 billion recovery package into law.Source: CNN
Not all of that money has hit the streets, however. So far, $14.5 billion has been spent, nearly all of it to help states cope with rising Medicaid costs.
A CNNMoney.com analysis of the program's financial reports shows how difficult it is to quickly inject billions of dollars into the economy. Experts interviewed said they are not surprised by the pace of spending, though they had mixed views on whether the effort would boost the economy.
"There's a natural tension between using taxpayers' money in a prudent way and getting the money out the door quickly," said Isabel Sawhill, a Brookings Institution senior fellow.
The massive recovery package was designed to stimulate the economy and create jobs, as well as assist states and people suffering from the recession by providing funding for education, Medicaid and other public services.
0:00 /4:23Bill Clinton on stimulus
The federal government is now tasked with putting $499 billion to work in coming years. The remaining $288 billion consists of tax relief, the signature program of which, the Making Work Pay credit, began earlier this month.
The Obama administration says it is satisfied with the pace of spending and should meet its goal of making 70% of the funds available by September 2010. So far, about 15% has been committed.
"We're ahead of schedule and making steady progress," said Liz Oxhorn, a press secretary for Vice President Joe Biden, who is heading the recovery effort. "We're pleased."
Still, the funding must pass over several hurdles before the federal government considers it "spent."
Some dollars can flow relatively quickly through existing channels to the intended recipient, be it state and local governments, nonprofit agencies or private contractors. It's also easier to get funds for projects that were already in the works and just needed funding.
Other money, however, remains in federal agencies' hands waiting to be distributed. Many would-be recipients are still wading through all the recovery program's requirements or waiting for guidance from federal agencies before they put in requests.
Lastly, a significant amount of funding won't be made available until recipients either sign contracts or file grant applications. And in some cases, new programs must be created before the money can flow.
How one agency is spending the money
Take the Department of Health and Human Services, which is distributing $137 billion. It has made available nearly $29 billion to the states, who've claimed $13.3 billion as of April 17, according to an agency report.
Just under $13.2 billion has gone to states to help them pay for Medicaid services. That funding has been able to move so quickly because it was the first pool of money the federal government made available and it's being pumped through an established program. States have also received some funds for foster care and adoption assistance and for new community health centers.
But another $100 million for senior services -- such as nutrition programs at senior centers and Meals on Wheels -- is sitting unclaimed. States are in the process of requesting their share of the money as they figure out how to navigate the federal program and assess their needs back home.
And the $1 billion slated for prevention and wellness programs hasn't even been committed because the agency is still working out details, said spokesman Nick Papas. Specifics should be announced in early summer.
Meanwhile, the department is working to push more dollars out the door, Papas said.
"Recovery Act dollars are keeping community health centers open and helping care for more Americans in need," Papas said. "We continue to work quickly and carefully to distribute Recovery Act dollars in an open and transparent manner."
Does it need to be spent faster?
Handing out nearly $500 billion in a responsible manner is not easy, experts said.
"You can only spend so much money really fast," said Michael Ettlinger, vice president for economic policy at the left-leaning Center for American Progress.
He's expecting a flood of money to hit the streets once the states file their requests and grant applications. But that doesn't mean the recovery bill isn't having an effect. The economy is already being helped by the program's tax credits, though that spending is harder to measure, he said.
Because the weak economy is expected to linger, there's a benefit to doling out the recovery dollars slowly, said Sawhill, the Brookings economist. Though she's disappointed with the pace of spending so far, she understands why it takes time.
"The fact that the money is not being spent all in the beginning is not a bad thing, though you do want to stop the downward spiral," she said.
Other experts are skeptical as to whether the recovery program will help at all. Alan Viard, resident scholar at the conservative American Enterprise Institute, has questioned from the beginning whether constructing highways and bridges -- which the administration says will create lots of jobs -- will really stimulate the economy.
"I don't think the infrastructure spending is likely to spend out at a fast enough rate," Viard said.
Monday, April 27, 2009
Hey, here is a good article from CNN to check on on the stimulus money.