Stimulus Bill Spends Only Two-Thirds of Funds Through Fiscal 2010, Not 75 Percent Targeted by Pelosi
January 29, 2009House Speaker Nancy Pelosi says that 75 percent of the $819 billion stimulus will be doled out in the first 18 months after it becomes law, but the CBO says only two-thirds will be doled out in that time.
(CNSNews.com) – For nearly a week, House Speaker Nancy Pelosi has said that 75 percent of the $815.8 billion stimulus spending proposal currently before Congress would be doled out in the first 18 months after it becomes law. But a CBO analysis says only about 64 percent of the money in the bill will be spent by the end of fiscal year 2010, which comes 20 months from now.
Pelosi (D-Calif.) repeated that 75 percent would be spent in the next 18 months at her weekly news conference on Capitol Hill Thursday.
“The fact is that 75 percent of this bill will be spent out within the first 18 months,” Pelosi told CNSNews.com. On ABC's "This Week with George Stephanopoulos" on Sunday, Pelosi had cited a letter from the administration as the source for the 75 percent figure.
CNSNews.com asked the White House Office of Management and Budget for the source of the 75 percent figure cited by Speaker Pelosi. The OMB provided CNSNews.com with a January 27, 2009 letter from OMB Director Peter Orzag to House Appropriations Chairman David Obey (D.-Wis.). In the letter, Orzag said, "As you consider the American Recovery and Reinvestment Act this week, I wanted to lay out the principles that guide the President as he considers the type of plan that the country needs."
"First it is critical that we jump-start job creation with a direct fiscal boost that will lift the nation out of this deep recession," Orzag continued. "The plan must bolster economic activity sufficiently to save or create three to four million jobs by the end of 2010, off-setting the 2.5 million jobs lost in 2008."
The letter then said that President Obama wanted Congress to enact a bill that would spend at least 75 percent of its funds by the end of fiscal 2010, which runs to the end of September 2010--20 months from now. (The Orzag letter did not say that it had analyzed the bill before Congress and that this bill actually met this target.)
"To that end, the President urges you to pass a final bill that has at least 75 percent of the funds spending out over the next year and a half (the rest of fiscal year 2009 and fiscal year 2010)," Orzag wrote Obey.
A Congressional Budget Office analysis of the stimulus bill that passed the House, said the total cost of the bill (including both spending and tax cuts) was $815.8 billion. Of this $815.8 billion, according to CBO, $169.5 billion would go out in fiscal 2009, and $356 billion would go out in fiscal 2010. In other words, $525.5 billion of the $815.8 billion would be spent by the end of September 2010. That is 64.4 percent of the $815.8 billion total--not 75 percent. The other $290.3 billion will go out over the subsequent 9 fiscal years, according to CBO.
When pressed about the assertion that 75 percent of the funds in the bill that passed the House would be spent in the next 18 months, Speaker Pelosi told CNSNews.com that both the White House and Congress had agreed that only two-thirds of the funds would be spent in 18 months.
“The White House has stated, and we have consistently said that at least two-thirds of it is going to go in the first 18 months,” she said.
But when asked about the discrepancy between two-thirds and 75 percent -- a difference of approximately $73 billion -- Pelosi returned to the larger figure of 75 percent:
CNSNews.com: “So is it 75 percent or two-thirds?”
House Speaker Nancy Pelosi: “75 percent.”
CNSNews.com: “So it’s three-fourths, not two-thirds?”
House Speaker Nancy Pelosi: “75 percent in the first 18 months.”
Pelosi first said it would be 75 percent on ABC’s “This Week” on Jan. 25.
“We have a letter from the administration that says 75 percent of the investments will be paid out in the first 18 months,” Pelosi told “This Week” host George Stephanopoulos
OMB spokesman Kenneth Baer explained the difference in the two figures as the difference between CBO’s calculations and the Obama administration’s goal.
“The administration’s desire to see a 75 percent spend-out rate over the next 18 months is based on historic outlay rates used by CBO and OMB, combined with efforts being made in the construction of the final bill to make sure that funds go out the door quickly and wisely,” Baer said in an e-mail response to CNSNews.com.
When asked to explain the discrepancy between the two-thirds spend out cited by CBO and the 75 percent the Speaker cited, Pelosi spokesman Nadeam Elshami responded in an email.
"CBO said 2/3 in 18 months. OMB said 75 percent in 18 months," said Elshami. "The President said he wants to spend 75 in 18 and Speaker shares his views. And don't forget, the package is still working its way through Congress. So, once again, the spend out rate we want to do is 75 percent in 18 months."