!!Flashback to February, 2010!!
WASHINGTON—The Obama administration's economic-stimulus program has delivered about a third of its total $787 billion budget during its first year, much of that to maintain social services and government jobs and to provide tax cuts for workers. Now, the pace and direction of stimulus spending are about to change.
Infrastructure spending is set to step up in the second year of the stimulus program, which should mean more money flowing to private-sector employers. Still, economists say that won't likely have a big effect on the unemployment rate, which most say is likely to continue a slow decline as the broader economy recovers.
The shift could be significant politically, though, because Republicans have criticized the relative lack of private business hiring directly attributed to the stimulus.
Most of the money allocated to specific projects hasn't been paid out yet, and there are still an additional $195 billion in tax cuts on the way.
Proponents of the stimulus program focused attention on infrastructure projects during the fight to win approval for it last year. But the bulk of the money proposed for projects like new rail lines and water projects—about $180 billion in all—is likely to be spent this year at the earliest. During year one of the stimulus, only about $20 billion of money was handed out for infrastructure projects.
"I think we'll see a lot more stimulus money get into actual contracts and actual hiring in 2010 than we did in 2009," said Kenneth Simonson, chief economist of the Associated General Contractors of America.
The ramped-up stimulus spending in 2010 will contribute 1.4 percentage points to gross domestic product growth this year, said Brian Bethune, chief U.S. financial economist for IHS Global Insight.
The "shovel ready" projects administration officials pointed to as a source of new jobs have taken months to get organized. Agencies have been holding competitions to decide which projects should get stimulus grants, vetting applications for grants for initiatives such as high-speed rail construction or electric-vehicle projects. In some cases, federal agencies have had to set up entirely new programs.
Many signature projects—including $20 billion for doctors to create electronic medical records, $4.5 billion for an energy Smart Grid and $7.2 billion for broadband networks—are still in their very early stages.
Vice President Joe Biden will announce his own projections of the stimulus plan's progress in a meeting with the president Wednesday. A senior administration official said ahead of the release of Mr. Biden's report that the increase in the pace of infrastructure projects was expected to cause stimulus spending to "shift more towards private sector job growth."
Of the $179 billion in stimulus funds paid out last year, $112 billion has gone out in the form of large checks to state governments to plug holes in school, Medicaid and unemployment-benefits budgets, or to increase funding for established programs, such as food stamps, according to a Wall Street Journal analysis.
An additional $700 million was spent on administration, and about $47 billion has left Washington in transfer payments, such as $250 checks for Social Security recipients. Social spending totaling $70 billion is also in the pipeline already, including grants for local organizations carrying out jobs-training programs.
To bring you back to the NOW:
President Barack Obama called Monday for Congress to approve a $50 billion plan to begin upgrading the nation's crumbling infrastructure, saying such an investment is vital to creating much-needed construction jobs and keeping the nation competitive in the global economy.
In a Rose Garden statement at the White House, Obama called for bipartisan support when Congress returns after the November 2 mid-term elections so that the first phase of a proposed six-year infrastructure development plan can begin.
"We've always had the best infrastructure," Obama said, noting that one in five construction workers are unemployed right now. "This is work that needs to be done. There are workers ready to do it. All we need is political will."
The president first announced the plan on Labor Day, and present and former Cabinet members as well as some governors and mayors around the nation joined him to support the initiative.
Despite their call, it remains uncertain if the issue can overcome the deep partisan divide in Congress, especially after an election expected to erode Democratic majorities in both chambers or even return Republicans to control.
The main Republican campaign theme for the upcoming election has been excessive government spending under Obama and the Democratic-controlled Congress that has failed to lower the unemployment rate below 9 percent. In particular, Republicans say the $787 billion economic stimulus bill passed last year has failed to bring promised jobs and other economic benefits.
Obama and Democrats say the stimulus bill prevented the recession that began in the previous administration from worsening into a full economic depression.
Transportation Secretary Ray LaHood responded sharply on that topic when questioned by reporters Monday about whether new infrastructure spending would provide better results than the stimulus bill.
Noting that the $48 billion in stimulus money for the transportation sector funded 14,000 projects that employed thousands of people, LaHood said that Americans know the bill worked "because they see their friends and neighbors working on roads and bridges and transit systems."
There must be a black-hole D.C....or maybe the black hole is D.C.
