AUGUST 14, 2010, 1:27 P.M. ET.
Slow Progress on Some Big Stimulus Projects
By LOUISE RADNOFSKY
A year and a half after Congress passed the economic-stimulus plan, the state aid and tax cuts in the package have nearly ended, but some of the big infrastructure projects touted by the Obama administration are still months from visible development.
Critics of the stimulus have seized on the slow progress as evidence that the plan has been a costly failure. And amid a continued high jobless rate, that argument appears to be resonating with voters.
Associated Press
A train makes its way along a newly laid track in Brunswick, Maine on Aug. 2, 2010, during a ceremony. The rail line that will connect Brunswick to Portland, Maine, is scheduled to be completed by 2012, said Gov. John Baldacci.
The administration said stimulus spending was always intended to roll out in stages, over a period of two years, and that the pace of outlays for infrastructure would be slower than for other parts of the package. But recent opinion polls suggested the White House has struggled to communicate that message, particularly after its emphasis on "shovel-ready" projects during the debate over the plan's passage in early 2009.
In a Wall Street Journal/NBC News poll in May, just 18% of respondents said the plan was already helping to improve the economy, and just 20% said they thought it would help in the future. Confidence appears to have slipped from July 2009, when 48% of respondents said the plan was helping the economy already or would help it in the future.
Tracking Stimulus Dollars :
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President Barack Obama's stimulus package had three main elements. The largest chunk was allocated to tax breaks and other help for individuals and businesses. Most of those tax provisions, which have an estimated price tag of $336 billion, have been paid out.
A second portion, projected to cost about $296 billion, was allocated to pay for unemployment benefits and food stamps, and to plug holes in states' school and Medicaid budgets. Most of that money has also been spent, prompting the Congressional efforts to extend the funding for state budgets. The legislation was signed into law Tuesday, providing another $10 billion for schools and $16 billion for Medicaid, offset by cuts to food stamps.
The third piece of the package offered $230 billion to fund an array of projects ranging from road repaving to modernizing the electricity grid to launching new high-speed rail services. Administration officials said when pushing for the program that the money would be targeted at projects that could create jobs quickly.
So far, $182 billion of the infrastructure money has been awarded, though the government has paid out only $66 billion of the total.
The biggest projects have been the slowest to start. None of the $17.5 billion for incentive payments for doctors and hospitals to start using electronic health records has been spent yet, because regulations for the payments were only finalized in July.
A few recipients of $7.2 billion in grants allocated to the expansion of broadband Internet services have started laying cables, but the rest are still busy with pre-construction work, such as environmental assessments, local approvals to attach fiber to utility poles, permits for rights of way and hiring subcontractors.
Groundbreaking for the first major high-speed rail project took place this month, when steel rails were delivered to Brunswick, Maine, for upgrades to a 30-mile stretch of track running to Portland. The ceremony came seven months after the administration announced the recipients of $8 billion in grants for the work. The administration is still finalizing the grant agreements and most of the money hasn't formally been made available yet.
Associated Press
New ties are put into place along the rail track in Brunswick, Maine.
Efforts to award the remaining $48 billion in infrastructure funds have been hampered in some cases because government agencies have had to respond to protests from vendors who didn't win contracts in the bidding process. In other cases, federal agencies have discovered that bids for certain projects were coming in lower than expected.
White House economist Jared Bernstein says the pace of stimulus spending is appropriate and that even the major investments are moving relatively rapidly. "I think anyone familiar with this kind of economic evolution would view these projects as coming online especially quickly," said Mr. Bernstein.
The state of the stimulus became the focus of Congressional sparring this month as Democrats and Republicans debated whether to extend the plan's aid provisions. Democrats argued that the additional help for cash-strapped states was essential to preserve the jobs of teachers and other public-sector employees.
The stimulus has saved or created about three million jobs and is on track to save an additional 500,000 by the end of the year, according to a new report by Mr. Obama's Council of Economic Advisers.
Republicans said the need for the extension was proof that the plan was not working and that the remaining stimulus spending should be canceled.
"Washington Democrats are doubling down on the same failing policies that have led to fewer jobs and more debt," House Minority Leader John Boehner of Ohio said in a statement ahead of the House vote on the aid extension last week.
William Eggers, global director for Deloitte's public-sector industry-research program, said that rushing implementation, especially on large investments, would make it more likely that the projects would fail or that funds could be misused. Mr. Eggers has studied federal projects going back to the 1960s and said the stimulus was progressing about as quickly as such a large initiative could go.
"I would have been shocked if they'd been able to go a lot faster," he said.
Republicans, meanwhile, are using the slow progress as a tool in the broader debate with Democrats over the widening federal deficit. Rep. Tom Price (R., Ga.) has introduced a bill in the House to cancel all infrastructure spending which hasn't been awarded, with the funds going toward paying down the deficit.
The bill has little chance of success, however. "That die is cast," said Mr. Price. "The die that will need to be cast to reverse it is the votes that will be cast in November," when mid-term elections are held.
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