How Quickly Can Congress Really Get the Stimulus Money Out the Door?
Tuesday, February 10, 2009
7:00 PM

Today's Senate passage of an $838 billion economic stimulus bill has moved the legislation one step closer to enactment. House and Senate conferees must now reconcile their versions and hammer out a final bill -- with regular input from the Obama administration. Both versions share several goals such as extended unemployment insurance and billions of dollars in spending for infrastructure projects such as road and bridge repairs. These overlapping provisions are expected to find their way into the final bill.

Once an economic stimulus bill is enacted, how quickly can the federal government really get the money out the door to stimulate economic growth? It depends, according to the Congressional Budget Office, the go-to think tank that both Republican and Democratic lawmakers rely upon for objective economic and budgetary analysis.

"Some kinds of federal expenditures can be undertaken much more rapidly than others," CBO said in a recent letter to Senate Budget Committee Chairman Kent Conrad (D-ND). While additional spending for programs such as food stamps and unemployment benefits will reach recipients quickly, infrastructure projects such as road and bridge repairs can take months to begin due to lengthy contracting and environmental review processes. In addition, certain construction projects can be further delayed due to their seasonal nature. For example, school repairs are usually scheduled for the summer so classes are not disrupted.

Implementing new programs such as President Obama's proposed health IT initiative can also take time. Once a new program is enacted into law, the agency in charge of implementing it must develop procedures and regulations, a process that would run counter to the goal of dispersing dollars quickly.

"Throughout the federal government, spending for new programs has frequently been slower than expected and rarely been faster," CBO asserted. However, CBO did provide lawmakers with some possible options to accelerate economic stimulus spending, including:

• Offering financial incentives for work completed within one to two years of the bill's enactment

• Setting deadlines for obligating funds

• Providing agencies with the authority to "pre-award" contracts

CBO goes on to warn that efforts to accelerate spending could have unintended consequences such as poor performing contracts, legal challenges, cost overruns, negative environmental impacts, and "the undertaking of projects that are of little value but that can be started up quickly."