Video: Breakdown of the stimulus plan

By M. Alex Johnson Reporter
msnbc.com
updated 2/24/2009 6:06:55 AM ET 2009-02-24T11:06:55

President Barack Obama and Democratic congressional leaders promised that money from the $787 billion economic stimulus legislation would be spent quickly, and in central Missouri, they were proven right.

The state Transportation Department began construction on the Osage River Bridge on State Route 17 near Tuscumbia just a few minutes after Obama signed the bill into law a week ago. The $8.5 million project, which is projected to create or preserve about 250 jobs, represents roughly 0.001 percent of the overall stimulus package, but its impact is no less real for its small scope.

“Had we not had a stimulus bill passed by Congress, this project would not be on our construction plans,” said Pete Rahn, director of the state Transportation Department. “The stimulus bill is funding work in Missouri that would otherwise not be taking place.”

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That is precisely what lawmakers said they wanted to do — get money flowing through the financial system 14 months into a deepening recession.

More than a third of the package is directed to tax relief, but a good part of the rest — $111 billion — is dedicated to science and research and to road and building projects like the Osage River Bridge.

Eligible projects are what Obama memorably termed “shovel-ready” — planned out and ready to go. The emphasis is on speed: The program requires that half of that money be allocated within 180 days, pouring more than $55 billion directly into local and state programs before summer is over.

“We can be very direct and very bold with where we choose to invest the money,” North Carolina Gov. Beverly Perdue said.

That also means the money comes with few guidelines on where it should be spent, leaving states to create and manage huge and complex projects with not much time to do it. As a result, many local and state officials predict, Americans could will ultimately be disappointed by how little of the money actually makes it to their local communities.

Red tape, overhead confuse some
Acknowledging the “tremendous pressure” on government officials to get the money into the pipeline quickly, Perdue, like several several other governors, created a new government department , the Office of Economic Recovery and Investment, to handle the funding fire hose.

While she said she was confident that North Carolina was up to the task, officials elsewhere said they were not so sure everything would run smoothly.

Tom Niehaus, the Republican president pro tem of the Ohio state Senate, said there was already confusion over how the state’s stimulus money would be divided.

“I was getting quite a few calls — ‘How do I apply for this? What are the guidelines? Who decides if a project is better in Clermont County than Franklin County?’” Niehaus said.

David Wu, policy director for Indianapolis Mayor Greg Ballard, said the federal money was subject to a patchwork of regulations and oversight requirements at the state level. In Indiana, he said, it was likely to be allocated into “200 different pots, with all different rules.”

“We want to be aggressive and bring home to Indianapolis all the money we are entitled to,” Wu said. But “it is not immediately clear which programs we are entitled to.”

How big is the true impact?
Nor is it clear how much money Indianapolis and other localities will see. Most state  transportation departments plan to take a majority of the money off the top for statewide projects, leaving cities and counties to compete for whatever is left.

“It’s certainly not going to be as large an amount of money as people thought, in terms of impact,” Wu said. “It’s not going to be as big as people were hoping for.”

Daniel DiLeo, an associate political science professor at Pennsylvania State University, said the system appeared to give an edge to larger cities and counties, which were more likely to have lobbying programs and political connections in state capitals.

“The people who know what they want and know how to make a case for it” will get the most money, DiLeo said. “They have an advantage over people who are less organized and whose demands are less specific and harder to translate into a particular spending program.”

In Ohio, for example, about $460 million is available for roads, bridges, airports and the like. The state has 12 transportation districts, which led Jimmy Stewart, a Republican who represents the Marietta area in the state House, to project that each district should get about $15 million after the state took its cut.

Although the state’s allocations have not been finalized, preliminary estimates suggest that far less than that, perhaps as little as $5 million, will go to districts in southern Ohio like Stewart’s.

“What part of Ohio needs stimulated more than Appalachian Ohio?” Stewart asked. Saying the region had been “behind the curve in economic development” for years, he is pursuing legislation to redress what he sees as an unfair imbalance.

‘That doesn’t go very far’
Or consider Michigan, which is projected to get $880 million in road and highway funds.

The state Transportation Department plans to take three-quarters for its own projects, leaving $220 million for local governments. Meanwhile, the Michigan Municipal League, a coalition of local governments, has compiled a list of 1,200 requested projects totaling $3.3 billion — 16 times the available money.

Mary Gillis, manager of the Grand Traverse County Road Commission, said her agency alone had “a wish list with over $14 million in projects we would like to see funded.” But because of all that competition, she said, “I don’t think that much is going to trickle down.”

“We are looking at, realistically right now, somewhere in the area of $800,000 to $1 million in Grand Traverse County,” she said.

“That doesn’t go very far,” she said, estimating that the money would pay for “1 mile of road improvements — paving shoulders, crushing and shaping the road and repaving it.”

“About a mile,” she concluded.

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