Much in Obama stimulus bill won't hit economy soon

WASHINGTON: It will take years before an infrastructure spending program proposed by President-elect Barack Obama will boost the American economy, according to congressional economists.

The findings, released to lawmakers Sunday, call into question the effectiveness of congressional Democrats' efforts to pump up the economy through old-fashioned public works projects like roads, bridges and repairs of public housing.

Less than half of the $30 billion in highway construction funds detailed by Democrats in the House of Representatives would be released into the economy over the next four years, concludes the analysis by the Congressional Budget Office. Less than $4 billion in highway construction money would reach the economy by September 2010.

The US economy has been in recession for more than a year, but many economists believe a recovery may begin by the end of 2009. That would mean that most of the infrastructure money wouldn't hit the economy until it's already on the mend.

The analysis doesn't cover tax cuts or efforts by Democrats to provide relief to cash-strapped state governments. But it illustrates just how difficult it can be to use public investment to rush money into the economy. It usually takes bids and contracts to announce such developments, which invariably take time.

Overall, only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 per cent. Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

And other pieces, such as efforts to bring broadband Internet service to rural and underserved areas won't get started in earnest for years, while just one-fourth of clean drinking water projects can be completed by October of next year.

Still, other elements of Obama's $825 billion economic recovery plan, such as $275 billion worth of tax cuts to 95 per cent of filers and a huge infusion of help for state governments, will be distributed into the economy more quickly. But Republicans are poised to attack the bill for spending too much.

The Obama transition has stressed that a combination of old and new federal investments will help the economy recover, as well as tax cuts and other steps. Obama economic advisers and their allies have sought to identify federal programs that can deliver dollars fast, like food vouchers for the poor and a boost in unemployment benefits.

At the same time, defenders of brick-and-mortar projects such as federal building and school construction are poised to reap benefits from the big recovery package.