By John W. Schoen Senior producer
updated 6/29/2009 11:56:38 AM ET 2009-06-29T15:56:38

When the government enacted a $787 billion package of tax cuts and new spending this spring, there was much talk about how all that money would help pull the economy out of a deep recession. But readers are asking: Just how much of this money has been actually spent? Turns out the answer is not much.

Confidence in the stimulus money is beginning to wane. People are still waiting for billions of dollars to reenergize the economy. … How much of the stimulus money has actually been doled out as of this week? What percentage of the total stimulus package and how many billions is that?
Christine, Address withheld

The idea behind the government's economic stimulus package was to get money flowing through the system, boost economic activity and create jobs. But an review of the latest federal spending data shows that the money is flowing at a trickle.

One reason is that although Congress approved all this spending, the money has to go through the appropriations process before checks can be written. To help spread out the impact, the stimulus package is a 10-year program — with almost all the spending the first three years. But most of the money won’t be available until next year. Of the $478 billion in direct spending (the rest is mostly tax cuts), the Congressional Budget Office figures only about $150 billion will be available this year.

Of that money, some agencies have done at lot better than others at writing checks. The Social Security Administration — which knows a thing or two about writing checks — has spent all $13 billion of its stimulus budget for this year. About three-quarters of the $21.5 billion allocated to Health and Human Services has been spent. And the Agriculture Department has processed about two-thirds of the $3.2 billion it has available this year.

But it seems that other agencies are having a harder time getting the money out the door. As of mid-June, for example, spending by the Transportation Deptartment for so-called "shovel ready" projects represented barely 2 percent of available funds. The EPA has barely touched its $4.4 billion in stimulus spending. Same for the Defense Department.

According to our calculations, roughly $53 billion or one-third of the $150 billion in fiscal stimulus money available for this year has been spent as of June 19. As a percentage of the $479 billion in total stimulus funds, that represents only 11.1 percent.

That’s not necessarily a bad thing. As we recently learned from the rapid, massive spending that accompanied the early months of the war in Iraq, when government spends too much money in a hurry some of that cash has a way of ending up in places Congress never intended. It’s pretty hard for any company, institution or government to spend close to half a trillion dollars in a matter of months and make sure it all ends up where it’s supposed to.

Still, some of the economists, financial analysts and government officials pointing to “green shoots” in the economy may be overstating the impact of the spending portion of the stimulus package. Tax cuts certainly have helped. So have increased benefits like extended unemployment insurance. Anytime you can put money in someone’s hands to pay their bills, those dollars have an immediate, positive impact on consumer spending. Even in this recession, consumer spending remains the biggest driver of economic activity.

But despite all the talk about all the new jobs we’re going to create by rebuilding roads and bridges, it looks like it’s going to be awhile before we see road crews rolling out a lot of new steel and asphalt.

I don't understand how $300 million in Medicare savings is going to help finance health care reform for the uninsured. I would have thought that Medicare taxes are only to pay for Medicare, especially since it is going to run out of money in the near future.
— Bill, Atlanta

A lot of members of Congress, among others, are asking the same question.

Unlike previous attempts to tame the relentless rise in health care spending, there’s pretty widespread agreement this time around that something has to be done. There’s not a lot of time left before my generation of boomers hit our peak health care spending years — with every expectation that much of that cost will be picked up by Medicare.

But health care reformers face the same “chicken and egg” problem that has stymied past efforts to heal the system. Expanding the pool of people with health insurance will create a number of important improvements, beyond the obvious benefit of helping care for sick people who can’t afford insurance.

For one thing, many of the 50 million people who are uninsured are young and relatively healthy, so the cost per person probably won’t be as high as the current average. Making sure everyone is covered will help eliminate the problem that people with “pre-existing conditions” face when they can’t switch insurers. Perhaps the biggest benefit could come from providing people with health care early in their lives so they don’t face chronic, costly illnesses when they turn 65 and begin getting government-funded care for the first time.

Spending by regionPart of the discussion has focused on research that indicates that paying more for health care may not necessarily result in better care . Researchers looking at big differences in spending in different regions of the country argue that the outcomes in high-spending areas are no better than in low-spending areas. If they can better understand why — and try to encourage big-spending providers to adopt more frugal practices that don’t compromise care — the potential savings could be enormous.

The problem is that those savings many not come for decades. That means the hundreds of billions of dollars required now to expand coverage to millions more people would represent an upfront investment at exactly the moment the government can ill-afford to borrow the money it will need to pay for that investment.

That leaves Congress and the White House with some tough choices. One is to scale back the plan, making smaller changes that may not do much to slow spending. Another is to borrow the money to expand coverage and hope the savings materialize soon enough that health care won’t sink the federal budget. Another would be to expand coverage but simply force cuts on Medicare and other federal health care spending and let providers figure out how to maintain the same level of care with less money.

There are no easy answers to this one. If there were, they would have been implemented a long time ago.

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