One year later, administration touts stimulus impact

On the first anniversary of the signing of the American Recovery and Reinvestment Act, President Obama touted the $787 billion stimulus as the most transparent and efficient program of its kind.

While acknowledging steep unemployment is preventing many Americans from enjoying the fruits of the economic recovery, Obama argued on Wednesday that the stimulus has saved millions of jobs and prevented an economic catastrophe.

"It is largely thanks to the Recovery Act that a second depression is no longer a possibility," the president said during a morning speech at the Eisenhower Executive Office Building.

The Recovery Act -- which the Congressional Budget Office now calculates will cost $862 billion -- was divided into three relatively even categories: tax cuts; direct aid to states and individuals; and projects funded through contracts, grants and loans.

As of the end of January, $334 billion in recovery spending was obligated while $179 billion was outlayed, or actually paid out, according to a new report by Vice President Joe Biden. An additional $119 billion in tax relief was spent, the report said. Fifty-seven percent of the total Recovery Act funds were put to work in the economy, according to the document.

"Agencies have worked diligently to move funds out the door as fast as possible, while not sacrificing the careful selection processes, monitoring and oversight necessary to make sure that Recovery Act funds are being used in a prudent manner," the report stated.

The administration noted that to speed up spending, agencies such as the Defense Department shifted funds away from projects that could not be executed quickly. Other agencies rolled over savings from lower-than-expected bids for new projects. For example, in August 2009, the Homeland Security Department reallocated $240 million in bid savings from stimulus projects to new baggage screening initiatives at 10 airports nationwide.

While funds are rapidly being directed for private sector projects, the government is not necessarily cutting checks at the same pace. More than $140 billion in project spending has been obligated thus far but only $31 billion has been paid out, the report said.

Project outlays are expected to increase in 2010 from about $3 billion to $7 billion monthly as many ongoing efforts are completed and other major initiatives, such as high-speed rail, health information technology and broadband go into effect, a senior administration official said on Tuesday.

Contracts also are expected to play a bigger role in 2010. Onvia, a Seattle-based IT firm that follows stimulus spending through its Recovery.org Web site, found that 536,500 jobs have been funded by contract spending in the past year. The company forecast a bigger uptick in 2010, with 1.1 million jobs coming directly and indirectly from stimulus contract spending alone.

The White House this week dispatched senior administration officials and Cabinet members to 35 communities nationwide on a campaign-style blitz to promote accomplishments funded through the Recovery Act and to highlight future initiatives.

On Wednesday, for example, Labor Secretary Hilda Solis was in Phoenix; Karen Mills, head of the Small Business Administration, was in Arkansas; and the General Services Administration's new administrator, Martha Johnson, was in Denver.

The tour, however, has not quieted critics who continue to question the Recovery Act's impact.

"Since President Obama signed it into law, more than 3 million Americans have lost their jobs, unemployment is near 10 percent, and the deficit is set to hit a record $1.6 trillion," said House Minority Leader John Boehner, R-Ohio, who released a report on Wednesday that was critical of the stimulus. "Americans are asking 'Where are the jobs?' but all they are getting from Democrats who control Washington is more spending and more debt piled on the backs of our kids and grandkids."

Job creation remains the most debated point of the stimulus. CBO estimates the Recovery Act is responsible for between 800,000 and 2.4 million jobs through the end of 2009. The White House Council of Economic Advisers, meanwhile, puts the number of direct, indirect and induced jobs at 1.5 million to 2 million. Those figures are drawn from a macroeconomic model based upon the percentage of funds spent.

Supporters of the Recovery Act say unemployment would be much higher without it.

"With unemployment at 9.7 percent today, it's hard to appreciate how much more damage the stimulus investments prevented," said Ross Eisenbrey, vice president of the left-leaning Economic Policy Institute. "Without the more than 2 million jobs generated by the Recovery Act, the unemployment rate would now exceed 11 percent."

But, even direct reports of stimulus job creation have been mired in controversy as multiple reports of over and undercounting have surfaced.

The White House recently asked recipients to change the way they track job growth, dropping the much-maligned "saved or created" formula and relying solely on jobs funded for quarterly reports. Observers suggest that while the new job numbers will be more precise, they also will include a number of positions that were never in any danger of being lost.

The administration continues to use the saved or created methodology for its jobs totals and its one-year progress report.

"CEA, CBO and others' methodology is entirely independent from recipient reporting," said Liz Oxhorn, a White House spokeswoman for the Recovery Act. "Saved or created jobs that exist that would not have in absence of [the Recovery Act] -- and they all agree that number is about 2 million."