The Democratic stimulus package the US Congress will weigh falls billions of dollars short of President Barack Obama's goal to pump most of the money into the economy quickly, a report showed.
The $816 billion package will pour some $525.5 billion, or 64%, via spending and tax cuts into the ailing economy within 19 months, according to the report issued late on Monday by the non-partisan Congressional Budget Office.
Last week, Obama's budget director, Peter Orszag, told lawmakers the administration's goal was to pump at least 75% of the money from the stimulus package into the economy by September 30, 2010.
The report expands on another from the same office Republicans had touted last week as showing that less than 40% of the stimulus money would filter into the economy over the 19-month period. Democrats complained report was a partial review and CBO on Monday concurred.
The legislation “provides immediate stimulus to help create jobs and makes long-term, targeted, and responsible investments to keep our nation's economy growing for years to come,” House of Representatives Speaker Nancy Pelosi said in a statement.
Republicans seized on the report as evidence the Democrats' spending plan would take too long to help the economy.
“Once again, it highlights the fact that a huge chunk of the Democrats' so-called stimulus plan comes way too late to make any real difference in fixing the economy,” said Kevin Smith, a spokesman for House Minority Leader John Boehner.
And, another CBO report released by Republicans showed only 49% of a $362.6 billion stimulus spending measure that the Senate Appropriations Committee will consider on Tuesday would be spent by the end of fiscal 2010.
The House will begin debate on its measure on Tuesday as Obama visits Capitol Hill to meet with skeptical House and Senate Republicans, who want more than the $275 billion in tax cuts and incentives in the package while reducing the $550 billion in government spending.
New CBO Director Douglas Elmendorf noted that direct payments to individuals and cutting federal taxes would have the fastest impact while spending could take longer for a number of reasons, including time required for contracting procedures and other planning needs.
In the past for federal programs, there has been a “noticeable lag” between big funding increases and spending, he said on the agency's blog.
“Based on such experiences, CBO expects that federal agencies, states and other recipients of funding would find it difficult to properly manage and oversee a rapid expansion of existing programs so as to spend added funds quickly as they expend their normal resources,” Elmendorf said.
Another concern among lawmakers is the impact on the record budget deficit, which is expected to soar to $1.2 trillion without the stimulus in the fiscal year that ends September 30. CBO estimated that the House measure would add $169.5 billion in fiscal 2009 and $356 billion in fiscal 2010.
But both Democrats and Republicans have said the dismal economic outlook demands they approve a huge influx of money and they expect to deliver a stimulus measure to Obama's desk by mid-February, as he has sought.
The government later this week reports economic output for the fourth quarter of 2008 and it is expected to be the biggest annualized drop in more than a quarter century. Meanwhile unemployment is soaring and expected to continue that trend. (Reuters)