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1 stimulus spending at standstill on Fri Jul 17, 2009 9:37 pm


Stimulus spending faces red tape bottlenecks
Sluggish flow of funds blunts economic benefit of $787 billion package
John Makely /
Jeff Taylor, manager for the Elkhart County highway department, says the extension of County Road 17 is a 'shovel-ready' project, but is being held back by bureaucracy.
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updated 5:02 a.m. PT, Fri., July 17, 2009

John W. Schoen
Senior producer

Sometimes the "shovel-ready" roads from the government's economic stimulus program lead straight to a pile of paperwork but not to the jobs they were supposed to create.

To find out how well increased federal spending is flowing through the economy, take a drive down Country Road 17 in Elkhart, Ind.

Traffic along this major thoroughfare heads south from the Interstate, bypasses downtown and then stops dead just outside of Goshen, the next town over. The plan to extend the road is approved and ready to go to bid within 60 days, according to county highway manager Jeff Taylor.

But instead of digging new bridge foundations, Taylor said his department is digging through a deluge of government forms.

“I’ve got an engineer full time and that’s just about all he’s doing is red tape every day — filling out forms, filling out forms,” he said. “You will not see stimulus used until next year because this year is going to be all red tape."

An approval process that usually takes his department five steps has now stretched to 50, Taylor said. Rights of way that have already been acquired, for example, have to be reviewed and re-approved.

“They’ve made it so rigorous that when you say ‘shovel ready,’ the lay person sitting at the bar having his beer wishing he could get back to work is thinking ‘Why don’t we get busy?,’” Taylor said. “And I’m telling you we’re not going to get busy any time soon because it takes a long, long time to get through the paperwork.”

Taylor is among thousands of front-line managers overseeing the planning and design of billions of dollars worth of projects that were supposed to get a jump-start from the $787 billion stimulus package enacted in February. The boost in spending was, in turn, supposed to help reverse the collapse in the economy and create new jobs.

So far, it doesn't seem to be working out that way. Though the rise in unemployment has slowed somewhat since the stimulus was enacted, the Obama administration concedes that job losses may not ease for some time, even with massive government spending designed to create new ones.

"How employment numbers are going to respond is not yet clear," President Barack Obama said earlier this week before heading to Michigan, where the unemployment rate is among the highest in the country. "My expectation is that we will probably continue to see unemployment tick up for several months."

Defenders of the stimulus package note that without the huge government response, the unemployment rate would be even higher. They also note that the loss of trillions of dollars in household wealth and the huge pile of bad debts choking the banking system have created an economic mess unlike any other economic downturn in memory.

“We are in a balance sheet recession,” said Laura Tyson, a former head of the Council of Economic Advisers during the Clinton Administration who is now one of President Obama's economic advisors. “We haven't gone through this kind of recession in most of the lifetimes of the forecasters. By the way, the models that forecasters use are the same models that missed the fact that we were going to have this recession. So let's admit a lot of uncertainty here.”

Fact file Sluggish Stimulus
An review of the latest federal spending data shows that the money is flowing at a trickle. (Funds paid out as of 6/19/2009)
Agency Available Paid Out Percent
Agency for Intl Dev $5.3M $109,078 2.1%
Community Service $118M $1.3M 1.2%
Agriculture $3.2B $2.1B 66.6%
Commerce $542.2B $241B 44.5%
Defense $965.7B $8M 0.8%
Education $44.7B $7.6B 16.9%
Energy $5.9B $140.9M 2.4%
Health & Human Services $29.8B $21.5B 72.2%
Homeland Security $526.2M $19.1M 3.6%
Housing & Urban Development $5.1B $708.7M 13.7%
Interior $93.2M $3M 3.2%
Justice $1.7B $364.9M 21.1%
Labor $20.5B $6.5B 32.0%
State $28.5M $6.2M 22.1%
Transportation $19B $369.5M 1.9%
VA $35.1M $1.7M 4.9%
EPA $4.4B $12.7M 0.3%
FCC $63.2M $1.7M 2.8%
Genl Svcs Admin $546.6M $2.8M 0.5%
NASA $5.7M $0 0.0%
NEA $19.8M $69,435 0.4%
NSF $517.3M $0 0.0%
RR Retirement Bd $129M $129M 99.9%
SBA $109.7M $23.1M 21.1%
Smithsonian Inst $17.5M $487,603 2.8%
Social Security $13B $13B 99.9%
Corps of Engineers $378.4M $42.8M 11.3%
Total 2009 spending $151.6B

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