About two-thirds of the total stimulus money so far has been used for short-term projects rather than long-term job creation, according to a new report by the Government Accountability Office.
However, Obama administration officials report that the rate of stimulus spending will increase substantially in the months to come.
"It is clear from the data that there needs to be more fiscal stimulus in the second half of the year than there was in the first half of the year," White House economic adviser Lawrence H. Summers said this week. "Fortunately, the stimulus program designed by the president and passed by Congress provides exactly that."
"We said all along … we weren't putting an emphasis on helping small businesses create jobs and being able to weather the current economy," said Kurt Bardella, spokesman for House Oversight and Government Reform Committee ranking member Darrell Issa, R-Calif. "Unfortunately there were not enough mechanisms to ensure that the money goes to where it was promised and there's nothing to safeguard against how stimulus funding is used once it's disseminated in localities."
States, school districts and housing authorities were supposed to submit reports by July 10 on their use of stimulus funds and the number of jobs created, but the White House Office of Management and Budget pushed the deadline back three months. Tracking funds, even through Recovery.gov, is not an easy process.
"There really isn't a good way to know, despite what administration or critics say," said Tom Schatz, president of Citizens Against Government Waste. "It's not all that clear because they haven't tracked it effectively."
Schatz predicted that not enough information will have been compiled on the federal Web site until the fall.
He also questions how many jobs are actually being created. The nation's unemployment rate last month rose to 9.5 percent, with 6.5 million losing their jobs since the recession began, and isn't showing signs of easing.
"States are going to have to determine how the money can create or not create jobs," Schatz said. "The government likes to talk about creating jobs -- they think it's their job to create jobs. If the money isn't going to the states that have the highest level of unemployment, it's not going to create enough jobs to really help."
States are instructed to implement stimulus funds quickly, but -- according to the GAO -- as a result, often do not have the time or infrastructure to realize the projects needed in economically distressed areas.
"State bureaucracies are used to spending considerably less money, in some cases they have 10 to 20 times more than what they're used to spending," said Tad DeHaven, budget analyst with the Cato Institute. "They're told to go out and spend it as quickly as possible. At the same time, states have also been waiting for more direction from the federal government on reporting requirements, accounting jobs … there's a lag."
States are also struggling with how to fit stimulus money into their budgets, knowing that the funding won't be there in future years. Just about every state in the nation faced massive budget deficits this year thanks to declining income and sales taxes. The stimulus money helped plug some of those holes, but if revenues don't increase next year, states will face a structural deficit.