Where's the stimulus?

By Allan Chernoff, CNN senior correspondent


NEW YORK (CNN) -- A bill to jump start the economy. That was the main idea behind the American Recovery and Reinvestment Act, better known as the "stimulus bill," which became law two years ago today.

However, the nation is still waiting for the bill's promised jolt.

"Over the next two years, this plan will save or create 3.5 million jobs," President Obama told a joint session of Congress, a week after signing the bill in 2009.

Economists have debated whether the plan actually accounted for that many jobs, but there's little doubt the economy did not get a "jump start." A stutter start would be more like it.

Whatever lift the stimulus may have provided -- and it did offer some support -- the national unemployment rate at 9.0% is still well above the 7.8% jobless level, when the President made his pledge.

There are many reasons why the stimulus has failed to raise the nation out of employment malaise. One of the simplest is that much of the stimulus money has yet to be spent -- yes, two years later.

Of the original $787 billion package, $275-billion is slated for actual government spending on projects that should create or at least save jobs. The remainder has gone to tax benefits and entitlements for those in need.

More than a third of the stimulus money for contracts, grants and loans -- about 35% -- has yet to be paid out, even though the money is available. And a far higher percentage of the money Washington disbursed hasn't been spent in some municipalities.

One city's stimulus plan Philadelphia County's unemployment rate was 10.7% in December, versus 9.1% for the nation. The data is a reflection of the fact that the stimulus did not deliver many "shovel ready" jobs for the city.

As of December 31, the latest data available, the city had yet to spend a whopping 77% of the money it was allocated under the stimulus.

That's because its stimulus spending wasn't done with the goal of pushing money out the door, as quickly as possible to jump start the local economy. Instead, Philadelphia is trying to balance the need to offset the recession's impact with long-term benefit for the city.

The city conducted intensive analysis and careful planning and caution to avoid waste and fraud. Rather than throwing the $268-million share of the stimulus bill at make-work jobs, Philadelphia plans to spend most of it on long-term projects.

"Public works takes time. There are valid reasons it takes time," explains Maari Porter, Philadelphia's Recovery Officer. "We had to identify providers in Philadelphia. It takes time to ramp up."

Among the city's goals for the stimulus money: improving energy efficiency, preventing and alleviating homelessness and improving public safety. Only the public safety effort will do much to create or save jobs.

  • Energy Efficiency. Towards its goal of becoming one the nation's more sustainable cities, Philadelphia is spending $14 million of its stimulus funds on efficiency grants -- which last through September 2012. Philadelphia purchased Light Emitting Diodes for its traffic lights, resulting in savings for the city's power bill, but the move did nothing to help unemployment. Existing city workers installed the LED's.
  • Homeless prevention. Philadelphia is using $21 million over three years to support six organizations, providing aid to those hardest hit by the recession.
  • Public safety. Philadelphia is spending $11 million to expand its police force, by graduating two classes of 50 police cadets over a three-year period. And an additional $13.5 million is funding court staff positions, that might otherwise have been cut.
  • Public works. More traditional public works, like street paving, is slated for funding through September 2013 -- more than four years into the stimulus act. In fact, a transportation grant of $17 million just arrived at the end of last year, according to Porter, which will go toward expanding a bike trail along the Schuylkill River.

While Philadelphia has spent only $61 million as of the end of last year, another $85 million is committed and locked up in contracts -- meaning that 55% of the city's stimulus money is spoken for.

"The timing was structured by the federal government," Porter said.

Indeed, Washington has spread federal stimulus spending as far out as 2016. To top of page

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