(CNSNews.com) – Less than one-quarter -- 23 percent -- of the $787-billion stimulus package that President Obama signed Tuesday will be spent in fiscal year 2009, according to an analysis by the Congressional Budget Office (CBO).
The fiscal year runs through the end of September, with fiscal 2010 beginning on Oct. 1, 2009.
Many of the programs in bill signed on Tuesday will not take full effect for years, the CBO report finds, with some only entering into force beyond fiscal 2010, a time when many economists predict the recession will have ended.
Of the $787 billion total, $184.9 billion will be spent in the remaining months of fiscal year 2009, $399.4 billion will be spent in FY 2010, $134.4 billion in FY 2011, $36.1 billion in FY 2012, $27.6 billion in FY 2013, $22.4 billion in FY 2014, and $4.7 billion in FY 2015. After 2015, the tax cut provisions of the bill are projected to increase government revenue by a few billion each year until 2019.
Though just over 74 percent of the stimulus money is projected to be spent by the end of fiscal year 2010, data published by the Federal Reserve predicts the current recession will end in late 2009, or early 2010.
Some of the long-term spending proposals are the same ones Democratic congressional leaders have claimed would create jobs immediately and provide assistance to states and Americans hurt during the recession.
Spending proposals designed to create jobs and help turn the economy around – programs like road building and “green” construction projects – can take up to a decade to fully spend out. Others, like programs designed to prevent states from retracting services during the recession, are projected to last into 2014 and beyond.
According to the CBO, federally funded road construction, purported to be an immediate job creator, will still be spending billions of dollars in 2015. In fact, of the $27.5 billion allotted for road construction, only $9.6 billion will have been spent by 2010, with the rest going out in multi-billion allotments through 2015.
Another program said to be crucial to economic recovery -- the creation of “green” jobs -- will not be in force for years. The CBO analysis found that, of the $16.8 billion earmarked for energy efficiency and renewable energy, only $2.5 billion will be spent by 2010. These programs, like road construction, will continue to spend billions of dollars through 2015.
Refundable tax credits, which stimulus proponents say are aimed at assisting low-income Americans during the recession, are set to last through 2019, with over $35 billion in credits being paid out after 2010, including over $5 billion in the years after 2012.
In fact, only $145.5 billion of the bill’s appropriations will be spent by 2010. The appropriations section of the bill includes expenditures for energy efficiency, infrastructure, health information technology (IT) and aid to states, according to CBO.
Tad DeHaven, budget analyst at the libertarian Cato Institute, said that the reason these programs take so long to spend out is that governments, both federal and state, simply don’t have the ability to meet their spending goals, no matter how urgent they are perceived to be.
“They’re not equipped to spend all that money that fast,” DeHaven told CNSNews.com.
In fact, the rapid spending of some stimulus programs may not be ”a good thing,” DeHaven said, because when it comes to government, speed can often equal waste.
“The faster you get these guys to spend money, the more wastefully and stupidly they spend it. So you’re going to see some sort of ramp-up where state government and federal government employees shove this money out the door.”
“Oversight at the state level is worse than at the federal level,” DeHaven added. “I think you’re going to see absolute mass waste. You’re going to see marginal projects – that wouldn’t have otherwise been funded – be funded.”
DeHaven questioned the importance of some of the long-term projects, asking why these projects weren’t funded in years past, when state spending was on the rise.
“If these things are so critical, then why weren’t they spending money on them over the last five years, when states’ general fund spending was up over 6 percent per year?”
But Will Straw, associate director for economic growth at the liberal Center for American Progress, said DeHaven’s concerns were “much ado about nothing” -- because the bill’s long-term spending programs will provide more sustainable economic growth.
“It (the stimulus) makes some long-term investments necessary to ensure that living standards for all people can rise, as they did in the 1990’s,” Straw said. “To do that requires some investments in things like science and transportation that have a long-term dividend.”
“There is a trade-off,” Straw added, “between getting things out the door quickly and doing things that have a long term benefit for the American economy.”
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