Tuesday, April 28, 2009

$1 billion a day for stimulus

The Obama administration has committed $75 billion in stimulus money in 10 weeks. So far $14.5 billion has been spent, mostly for Medicaid.

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.

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.

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.

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