Keep eye on stimulus money

Inter Lake editorial

So far, it appears that the only thing the American Recovery and Reinvestment Act has stimulated is government agencies and state Legislatures.

With the exception of modest tax credits, the historic $787 billion stimulus bill is percolating through state governments and dozens of federal bureaucracies with predictable results.

While 6.35 million people are receiving unemployment benefits, federal government employment is set to increase by 15.6 percent over the next fiscal year. Most of it is for temporary Census Bureau jobs, but discounting that, the federal job rolls will still increase by 2 percent over the next fiscal year.

Meanwhile, a whopping $135 billion of the stimulus bill was specifically directed to limit layoffs in state governments.

Much of the stimulus funding, it turns out, comes with some fairly stringent red tape to ensure accountability. But even on the oversight front, things are developing in a clunky government way.

"Details thin on stimulus contracts," said a USA Today headline last week. The paper went on to report that the federal "Recovery.gov" Web site provides no details on contracts that have been let so far, and agencies won't be reporting that data until Oct. 10. As of last week, only $72.2 billion in stimulus funding has been allocated for contracting purposes and only $15.4 billion has actually been spent.

To be sure, stimulus funding will eventually "hit the ground" to benefit the private sector - particularly with transportation projects - but one has to wonder whether it will make a necessary difference when it does. The Obama administration, after all, is projecting that the national economy will expand at a 3.5 percent rate by the end of the year. Considering that most stimulus spending won't occur until after then, will it really be necessary to carry on with it? Of course it is, because there is no way the country's political class will go into reverse on pork projects, despite the debt burden on future generations and the potential for unintended consequences, such as economy-stalling inflation, largely driven by the wave of stimulus funding washing across the country.

Yes, one hopes that stimulus spending does have the desired effect of creating jobs. But there is disturbing evidence that the most desperate parts of the country will not see substantial benefits. It appears that places like Lincoln County, with the highest unemployment rate in the state of Montana, will be on the short end of the stimulus stick compared to wealthier counties with more resources to pursue the money.

When the stimulus legislation was being quickly cobbled together and barely debated, we insisted that it would have had a more immediate and efficient impact on the economy had it been mostly delivered in the form of tax relief for employers and employees. So far, the evidence seems to confirm that.