Flow of stimulus funds still only a trickle

John W. Schoen Senior producer • Profile • E-mail

When the government enacted a $787 billion package of tax cuts and new spending this spring, there was much talk about how all that money would help pull the economy out of a deep recession. But readers are asking: Just how much of this money has been actually spent? Turns out the answer is not much.

Confidence in the stimulus money is beginning to wane. People are still waiting for billions of dollars to reenergize the economy. … How much of the stimulus money has actually been doled out as of this week? What percentage of the total stimulus package and how many billions is that?
— Christine, Address withheld

The idea behind the government's economic stimulus package was to get money flowing through the system, boost economic activity and create jobs. But an msnbc.com review of the latest federal spending data shows that the money is flowing at a trickle.

One reason is that although Congress approved all this spending, the money has to go through the appropriations process before checks can be written. To help spread out the impact, the stimulus package is a 10-year program — with almost all the spending the first three years. But most of the money won’t be available until next year. Of the $478 billion in direct spending (the rest is mostly tax cuts), the Congressional Budget Office figures only about $150 billion will be available this year.

Of that money, some agencies have done at lot better than others at writing checks. The Social Security Administration — which knows a thing or two about writing checks — has spent all $13 billion of its stimulus budget for this year. About three-quarters of the $21.5 billion allocated to Health and Human Services has been spent. And the Agriculture Department has processed about two-thirds of the $3.2 billion it has available this year.

But it seems that other agencies are having a harder time getting the money out the door. As of mid-June, for example, spending by the Transportation Deptartment for so-called "shovel ready" projects represented barely 2 percent of available funds. The EPA has barely touched its $4.4 billion in stimulus spending. Same for the Defense Department.

According to our calculations, roughly $53 billion or one-third of the $150 billion in fiscal stimulus money available for this year has been spent as of June 19. As a percentage of the $479 billion in total stimulus funds, that represents only 11.1 percent.

That’s not necessarily a bad thing. As we recently learned from the rapid, massive spending that accompanied the early months of the war in Iraq, when government spends too much money in a hurry some of that cash has a way of ending up in places Congress never intended. It’s pretty hard for any company, institution or government to spend close to half a trillion dollars in a matter of months and make sure it all ends up where it’s supposed to.

Still, some of the economists, financial analysts and government officials pointing to “green shoots” in the economy may be overstating the impact of the spending portion of the stimulus package. Tax cuts certainly have helped. So have increased benefits like extended unemployment insurance. Anytime you can put money in someone’s hands to pay their bills, those dollars have an immediate, positive impact on consumer spending. Even in this recession, consumer spending remains the biggest driver of economic activity.

But despite all the talk about all the new jobs we’re going to create by rebuilding roads and bridges, it looks like it’s going to be awhile before we see road crews rolling out a lot of new steel and asphalt.

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