Much of the spending on rebuilding roads, bridges and other infrastructure contained in Barack Obama’s US$825 billion stimulus plan won’t hit the economy for years, an analysis by congressional economists said.
Less than half of the US$30 billion in highway construction funds detailed by House Democrats would be released into the economy over the next four years, the analysis by the Congressional Budget Office (CBO) concluded.
Less than US$4 billion in highway construction money would reach the economy by September next year, it said.
The CBO analysis doesn’t cover tax cuts or efforts by Democrats to rush aid to cash-strapped state governments. But it illustrates just how difficult it can be to use public investment to rush money into the economy. It usually takes bids and contracts to announce such developments, which invariably takes time.
Overall, only US$26 billion out of US$274 billion in infrastructure spending would be delivered in the economy by the Sept. 30 end of the budget year, just 7 percent.
Just one in US$7 of a huge US$18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year-and-an-half.
The findings, released to lawmakers on Sunday, call into question the effectiveness of congressional Democrats’ efforts to pump up the economy through old-fashioned public works projects like roads, bridges and repairs of public housing.
And other pieces, like efforts to bring broadband Internet service to rural and underserved areas won’t get started in earnest for years, while just one-fourth of clean drinking water projects can be completed by October of next year.
Still, other elements of Obama’s US$825 billion economic recovery plan, such as $275 billion in tax cuts to 95 percent of filers and a huge infusion of help for state governments, will be distributed into the economy more quickly. However, Republicans are poised to attack the bill for spending too much.
The Obama transition has stressed that a combination of old and new federal investments will help the economy recover, as well as tax cuts and other steps.
Obama economic advisers and their allies on Capitol Hill have sought to identify federal programs that can deliver dollars fast, like food stamps and a boost in unemployment benefits.