Spending the stimulus won’t be easy

Passing the economic recovery bill may turn out to have been the easy part: The sheer size of spending increases in the $787 billion measure threatens to overwhelm the agencies that administer the money and the government watchdogs who keep the agencies in line.

Two chief examples are the Transportation Department, whose 2008 budget of $68 billion will be augmented by an additional $43 billion over the life of the bill, and the Energy Department, with an annual budget of $25 billion, which is slated to disburse $42 billion for grants, loans and other programs under its jurisdiction.

“This is a lot of money going out, and we want to make sure the money it’s going out for are projects that have economic merit,” said David M. Walker, who was the nation’s comptroller general for a decade before leaving last year to become president of the Peter G. Peterson Foundation. “It’s going to be challenging for them to be able to do that, especially in the procurement area.”

President Obama on Tuesday signed the stimulus bill in Denver, calling it the “beginning of the end” of rough economic times while saying more work remains on stemming the tide of housing foreclosures and shoring up financial institutions. Mr. Obama’s spokesman even left the door open for still more emergency spending to pump money into the economy, though he said there aren’t specific plans right now.

Some federal agencies have only begun to determine how they will spend their windfalls. The National Aeronautics and Space Administration will be getting $1 billion in extra spending under the stimulus bill, including a $2 million boost in the inspector general’s office.

“The bill provides funding for science, exploration, aeronautics and other agency needs,” said NASA spokesman Michael Cabbage. “We are working to decide how best to apply the money and will report back to Congress within 60 days.”

Energy Department spokesman Tom Reynolds said Secretary Steven Chu is looking to streamline the grant and loan guarantee process to get money out the door.

“He is personally reviewing the process and has committed to cutting unnecessary paperwork and reducing the bureaucratic process so these investments can move quickly and begin creating jobs and rejuvenating the economy,” Mr. Reynolds said.

New Transportation Department Secretary Ray LaHood has created a cross-agency “Transportation Investment-Generating Economic Recovery” (TIGER) Team just to handle the new stimulus workload, identify projects that can be funded quickly, and track how the money is spent and how many jobs are created.

All of the spending puts an added burden on federal inspectors general, the in-house watchdogs for government agencies, and on the Government Accountability Office, Congress’ investigative arm, which Mr. Walker used to oversee as comptroller general.

The watchdogs are seeing their own windfall: a total of $214.5 million was included in the stimulus bill for 22 IGs, just to track the bill’s spending, according to a summary by the Web-based watchdog group Pro Publica.

Congress also allocated another $109 million to boost the oversight powers of the GAO and to create a Recovery Act Accountability and Transparency Board to monitor stimulus dollars.

But Mr. Walker said those watchdogs only step in after the money has been spent. The bigger problem, he said, is “what kind of protections we’ve got to make sure before the money flows it’s for projects that have economic merit and we’ve got appropriate criteria to determine that.”

Mr. Walker also said too much of the stimulus bill is backloaded to later years, but that there’s an odd silver lining to that because it gives agencies more time to ramp up their spending.

“If you look at this bill on one hand, not enough of it is truly stimulus, meaning it’s not going to hit the economy quickly enough. That’s bad news,” he said. “On the other hand it means they’ve got more time.”

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