Monday, November 22nd, 2010 - 7:30
Thursday, November 18, 2010 - 13:42
Intriguing articles, reports and commentary about the Recovery Act.
President Obama recently said that most stimulus projects have come in under budget and ahead of schedule, in large part because the weak economy has provided plenty of relatively inexpensive labor. ProPublica and Politifact examine the claim, giving it a qualified “Half True” evaluation. Unfortunately, there is no comprehensive federal database that tracks on-time and on-budget projects. Read the pieces for the details, but here’s our two cents: It seems to us that the federal government should be able to easily track whether projects it funds come in on budget. Without that data, how can it expect to promote real efficiency?
Private infrastructure investors are putting their money into projects overseas, rather than into U.S. projects. According to this piece by DealBook’s Heidi N. Moore, much infrastructure investment is heading overseas, in part due to the tangle of federal, state, and local government reviews that delays projects here — a form of sclerosis that may have been exacerbated by the Recovery Act (the recent back and forth between the states and federal DOT over high speed rail projects is cited as an example). Furthermore, Moore suggests that the relative lack of tax inducements to build in the U.S. may contribute to the problem. On that score, writes Moore, the stimulus package’s Build America Bonds have been a salutary exception.
When some elected officials in the states wanted to turn down stimulus funds, they argued that the one-time federal money would create burdensome ongoing expenditures that would haunt states over the long term. Does the claim hold water? Old Dominion Watchdog points to research by Professor Russell Sobel of West Virginia University suggesting that about half of one-time federal dollars end up as a long-term obligation of the state. However, Nick Johnson, director of the State Fiscal Project for the nonprofit Center on Budget and Policy Priorities, argues that conclusions about the stimulus shouldn’t be based on boom-era data, as he says Sobel’s study is.
In any event, the coming end of stimulus dollars will be painful for states. Witness New York. There, state budget director Robert Megna estimates that the state could be on the hook for an additional $4 billion in Medicaid spending and $1 billlion in education spending when the stimulus runs out, according to the Albany Times-Union.