House Plan Offers 'Noticeable Impact'

By Lori Montgomery
Washington Post Staff Writer
Tuesday, January 27, 2009

Approximately two-thirds of the spending and tax cuts contained in an economic stimulus package crafted by House Democrats would flow into the economy by the end of fiscal 2010, producing a "noticeable impact on economic growth and employment," congressional budget analysts said yesterday.

In an eagerly awaited analysis of the stimulus package, which is set for a vote in the House tomorrow, the nonpartisan Congressional Budget Office concluded that the measure would cost the federal government about $816 billion over the next 10 years and that approximately $526 billion, or about 65 percent, would be spent by the end of September 2010.

That would fall short of President Obama's goal of pushing at least 75 percent of the cash out the door over the next 19 months to create millions of jobs and ease the effects of what many economists say will be the longest, deepest and most painful recession since the Great Depression.

The total package -- including tax cuts and direct aid to the poor and unemployed -- won significantly better marks for speed than the portion of the package devoted to highways, schools and other infrastructure projects, which are among the Democrats' top priorities. The CBO report predicts that only about 40 percent of the $356 billion dedicated to those projects would be spent by the end of 2010.

Of $30 billion set aside for highways, for example, only about $10.5 billion would be spent in that time period. Of $18.5 billion dedicated to renewable energy projects, less than $4 billion would flow by the end of 2010. And of $20 billion proposed for school modernization and repair, only about $8.5 billion would be spent over the next 19 months.

The final analysis is only slightly different from a preliminary CBO cost estimate that drew wide attention after it was released last week by congressional Republicans. GOP lawmakers seized on the earlier numbers, with House Minority Leader John A. Boehner (R-Ohio) saying they proved that "slow-moving government spending programs" would do little to revive the economy compared with tax cuts, which the GOP prefers.

Democrats and their allies in the transportation industry shot back that, in the case of highway spending, state officials had assured them that dozens of projects were ready to go. Yesterday, House Speaker Nancy Pelosi (D-Calif.) hailed the new CBO report as the "first analysis of the entire House recovery bill," saying it proves the measure "provides immediate stimulus to help create jobs."

In defending its projections, CBO analysts wrote that the rate of spending for many programs is likely to be slowed by a number of factors. For example, "some programs would receive funding that is significantly above (double, triple, or more) the amounts provided for existing or similar programs in recent years," the report says. "Frequently in the past, in all types of federal programs, a noticeable lag has occurred between sharp increases in budget authority and the resulting increases in" spending.

Spending can also be delayed "because some activities are by their nature seasonal," the report says. "For example, major school repairs are generally scheduled during the summer to avoid disrupting classes, and construction and highway work are difficult to carry out during the winter months in many parts of the country."

New programs are even more difficult to implement quickly, the report says, noting that a loan program created last summer to help domestic automakers produce energy-efficient vehicles has yet to make "any disbursements" of cash.

"Throughout the federal government, spending for new programs has frequently been slower than expected and rarely been faster," the report says.

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