Stimulus is Costing $32 Billion Dollars a Month
The pace of stimulus spending should pick up in coming months, according to administration officials.
The federal government expects to distribute $32 billion in Recovery Act funds per month, up from an average $27 billion a month over the past year, according to Vice President Joe Biden, who will release his annual stimulus progress report on Wednesday.
“…the year ahead will see a capitalizing on an inventory of work that is awarded and “ready to go”,” according to the report.
The report comes on the one-year anniversary of the largest economic stimulus program in the nation’s history. The controversial $787 billion program has elicited both praise and scorn from many sectors of the country.
Supporters say that spending has stemmed job losses and boosted economic growth, while detractors counter that the it has been a waste of money and produced few jobs.
Through the end of January, some $334 billion in spending has been approved, of which $179 billion has actually left federal coffers. Another $119 billion has gone to tax cuts.
Now that the economy is no longer in freefall, the mix of spending will change, senior administration officials said. Until this point, the bulk of the spending has been on tax relief and direct aid — such as unemployment benefits.
To date, only $31 billion has been spent on projects — such as infrastructure, high-speed rail, broadband and health technology. But in the second phase of the act, the amount of money going to these initiatives will more than double to $7 billion a month as work on these initiatives ramps up. The administration views this spending as setting the stage for a lasting expansion.
“Many projects are just now getting underway, and will be creating jobs throughout 2010 and beyond,” said Biden, noting that the administration will announce an additional $1.5 billion of surface transportation projects Wednesday. “Work on many Recovery Act projects will accelerate in the spring and summer months as weather conditions permit work on roads, bridges, water projects, and Superfund site clean ups.”
Payments to states and individuals will fall to $11 billion, from $14 billion, per month. Much of this spending — such as Medicaid funding and additional unemployment benefits — was meant to stabilize the economy during the recession.
The administration will reach its goal to disburse 70% of the Recovery Act funds, or $551 billion, by Sept. 30, senior administration officials said.
The Congressional Budget Office recently hiked the cost estimate of the Recovery Act to $862 billion, though the administration still uses the original $787 billion figure.
Republicans, however, were quick to point out stimulus’ shortcomings.
“The American people took on record amounts of debt to fund Washington Democrats’ trillion-dollar ‘stimulus’ and a year later the nation’s unemployment rate is near 10%,” said Rep. John Boehner, R-Ohio, the House’s top Republican. “Taxpayers aren’t getting their money’s worth from the trillion-dollar ‘stimulus’ and struggling families and small businesses are rightly asking, ‘Where are the jobs?'”
Republican Whip Rep. Eric Cantor, R-Va., said states have lost a total of 2.9 million jobs between the bill’s enactment last February through December, though the administration projected stimulus would save or create 3.5 million positions.
In the final quarter of last year, the Recovery Act funded 595,263 direct jobs, according to Recovery.gov. The figure is based on about 160,000 reports from state, local and corporate recipients who have spent $57.9 billion in stimulus money.
It does not tally jobs created indirectly through companies buying supplies for stimulus projects, people spending their tax cuts, increased unemployment benefits and the like.
In total, the economic stimulus program has boosted employment by 1.5 million to 2 million jobs, the president’s chief economic adviser said in mid-January. That number is derived from a mathematical formula based on how much money has flowed out the federal door.
A week ago, the president’s top economic adviser praised the Recovery Act, calling it the “great unsung hero of the past year.” Council of Economic Advisers Chair Christina Romer reiterated that the program has funded up to 2 million jobs and helped turn the economy around.