Stimulus Bucks to Start Flying

What started as a trickle of money into the private sector could soon be a gusher, an analysis of the status of President Obama's $787 billion stimulus plan reveals.

A roughly $200 billion chunk of stimulus money – much of it earmarked specifically for projects ranging from highway repairs to alternative energy initiatives – is only just now beginning to wind its way from government agency coffers and into the economy, and will continue to do so over the next year. Warmer weather approaching in many parts of the country, meanwhile, brings the onset of construction season, another leading factor in what appears to be a looming deluge of federal outlay.

ABC News video of Vice President Joe Biden speaking in Saginaw, Michigan.
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"The stimulus did not really impact the private sector economy during its first year," said Michael Balsam, chief strategy officer for Onvia, Inc., a Seattle-based database company which operates the Recovery.org Web site that tracks the flow of stimulus dollars. "We're now, at last, seeing the money start to hit local economies," Balsam added. "The good news is, this phase has only just begun."

However, critics of the stimulus remain steadfast that the spending measures, while perhaps well intentioned, still amount to little more than a glancing blow in the steel-cage match that is America's ongoing economic struggle.

"Sure, spending a trillion dollars won't hurt the economy," said Rep. Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform. "But even if you accept that a million jobs will result, that's still a drop in the bucket compared to the tens of millions of jobs that could have been created had we employed targeted investment tax breaks for the industries that most needed it. We could have, for example, completely retooled our auto industry. It's not too late to take that approach."

Passed last February, the American Recovery and Reinvestment Act, more commonly known as the Obama stimulus package, involved three distinct categories of spending measures: tax relief ($288 billion); entitlements, such as Medicaid and Medicare, ($224 billion); and a third, catch-all category – contracts, grants and loans ($275 billion).

Private Sector Spree

It's this third category, Balsam stressed, which can most tangibly impact local economies because the money will, finally, flow from local government entities directly into private sector industries, such as construction and information technology. So far, while around 60 percent of the entire $787 billion stimulus has been spent, only about one-fourth of that $275 billion catch-all bucket had been spent as of the end of 2009.

Actual cash outlays, however, should not be confused with stimulus obligations which set up a chain of reimbursement, allowing for government contracts to be put to bid, and for workers to be hired and supplies procured. About one-half of the $275 billion has been obligated.

Meanwhile, a sizable portion of the spent chunk of grant/loan/contract money, around $80 billion, wound up going toward shoring up public sector payrolls, not job-creating projects. Among the most common uses of grant money, for example, was for education programs, including salaries of teachers in public school systems, a job-saving measure perhaps, but not necessarily the badly needed private-sector booster shot stimulus proponents have been touting.

But Onvia's analysis suggests this is all about to change.

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