(CNSNews.com) – The $787-billion economic stimulus bill was signed into law in February 2009, a federal spending measure that President Barack Obama said was urgently needed to “to jolt our economy back to life.” Fourteen months later, however, only 50 percent of the recovery funds have actually been injected into the economy.
Another 20 percent is supposed to be paid out between now and the end of September, and the balance -- $236.1 billion, or 30 percent – apparently will be paid some time next fall and into next year.
The unemployment rate currently is 9.7 percent. In May of last year, it was 9.4 percent.
The recovery.gov Web site, launched by the Obama administration to track the distribution of the $787 billion slated for distribution through the American Recovery and Reinvestment Act of 2009, shows that $398.7 billion has been paid out as of May 21. That means 50.6 percent of the funds has actually been injected into the economy through grants, loans, contracts, entitlements and tax benefits.
Staff at the White House Recovery Office, however, told CNSNews.com that the measurement it uses to come up with the total output includes the amount of dollars already “obligated” for future projects.
According to the Recovery Office, as of May 18, $391 billion, or about 78 percent of the $499 billion in the stimulus plan for grants, contracts, loans and entitlements, had been “obligated,” but only 47 percent, or $233 billion, had been paid out.
In the tax benefits category, as of March 30, $162 billion (56 percent) of the $288 billion allotted through the law had been paid out, according to Recovery Office numbers.
That totals $395 billion paid out for the three Recovery categories: tax benefits; contracts, grants, loans; and entitlements.
Thus, with the data available so far, between $395 billion and $398.7 billion of the $787 billion taxpayer-funded stimulus package has actually been spent or injected back into the economy.
A spokeswoman with the Recovery Office told CNSNews.com that the Obama administration was “on-track” for reaching its goal of spending the majority of the stimulus funds by the end of September.
“From the beginning, we committed to spend 70 percent of Recovery Act funds by the end of September 2010 and we remain right on-track to meet that target,” Liz Oxhorn, the Recovery Act communications director, told CNSNews.com.
Estimates by the Recovery Office also claim that all but $2 billion of the $787 billion are already “spoken for” and that obligated funds are merely awaiting logistical clearance, which varies according to the nature of the project, so that payment can be made.
According to recovery.gov, if 70 percent of the $787 billion is paid out by the end of September, it would leave $236.1 billion that has not actually been put into the economy yet. All but $2 billion of that money may be “obligated” or “spoken for,” but that does not mean that any of it ($236.1 billion) will have been paid out at the end of September.
Instead, $550.9 billion will apparently have been spent by the end of September 2010, and when the remaining $236.1 billion will be paid out has yet to be disclosed.
Critics of the stimulus package, signed into law 15 months ago by President Barack Obama, say unused funds should be used to cover the cost of new legislation that is adding to the federal deficit.
Sen. Jim Bunting (R-Ky.), for example, tried to block H.R. 4691, which, among other things, extended unemployment benefits and was not paid for, despite the Democrats’ passage of PAYGO, which requires Congress to only pass legislation, in many cases, that is already funded.
“It’s really hypocritical of the Democratic side of this aisle, passing a PAYGO bill,” Bunning said on the Senate floor in March. “What does PAYGO mean? It means you pay for the bills as they appear on the floor of the U.S. Senate. And then, to present a bill that not only is not paid for, but just paid for a little bit.”
Bunning suggested getting the $10 billion shortfall for H.R. 4691 from the stimulus fund, which still has billions of unspent dollars, according to recovery.gov.
Brian Riedl, the Grover Hermann Fellow in federal budgetary affairs at the conservative Heritage Foundation, said that the nature of stimulating the economy through an infusion of government funding, based on the economic model developed by economist John Maynard Keynes, is always slow.
“Of the many problems with Keynesian stimulus bills, one of them is that money is never spent on time and usually it’s not spent until after the recession has ended,” Riedl told CNSNews.com. “I think this is another classic case of the government mis-timing stimulus bills, which has a history going back decades.”
Riedl said that even if cash could be infused into the economy at a more rapid rate, where the money comes from makes it impossible for it to have a positive impact.
“Government spending never works because every dollar Congress injects into the economy must first be taxed or borrowed out of the economy,” Riedl said. “It’s not new spending.”
“Before Congress can give $100 billion in food stamps, they have to borrow $100 billion from somebody else,” Riedl said. “You’re not increasing the amount of money spent in the economy, you’re just redistributing it. You’re borrowing it from Person A and giving it to Person B.”
“That doesn’t make the economy bigger,” Riedl said.
The Obama administration sees the summer as the “peak Recovery Act season,” with the pace of projects going from the “obligated” to “paid out” column accelerating over the next several months, according to Recovery Office staff.