What Happened to the Stimulus?

The Administration's $787 billion booster shot is not the magic bullet some had expected. Inside the White House operation to fix that

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Greg Ruffing / Redux for TIME

Construction workers on the site of an infrastructure project at the junction of Interstates 490 and 77 in Cleveland, Tuesday 30 June 2009. The project is being funded by government stimulus money as part of the American Recovery and Reinvestment Act.

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What really haunts the White House is the fear that much of the money might be spent less efficiently than it could have been. For example, studies have shown that more jobs are created when cities and states repair existing roads than when they build new ones. Highway-maintenance projects not only put more people to work more quickly than building new roads does but also keep costs down in the future. But according to one recent study by a nonprofit smart-growth advocacy group, roughly 31% of the state-certified first-round transportation funding in one $27 billion highway fund will go not to maintaining existing roads but to building new highways or adding lanes to old ones. Kentucky, where 38% of roads are in poor condition, is spending 88% of its stimulus money on new additions. Then there is the sheer scale of the challenge. In many of these same states, the biggest concern is not the type of stimulus spending but the amount of it. "Of course it's not creating enough jobs," Senator Sherrod Brown, an Ohio Democrat, says of the stimulus. "We're not going to have enough [jobs] because we lost so many."

Hanging over all these concerns is the prospect that a second stimulus bill may be needed to bail out states in late 2010 or 2011. State budgets have been drowning in red ink as jobless claims and Medicaid bills have skyrocketed; few expect those trends to ease soon. In June, White House counselor David Axelrod left open the possibility that a second stimulus may be needed. The White House is confronted with the prospect of having to ask for more money early next year--even as a group of voters is ready to dump the first stimulus right now.

That helps explain why managing the stimulus story has become a full-time White House preoccupation. On a typical day recently, Treasury Secretary Timothy Geithner appeared in the Bronx to announce $90 million in inner-city financing; Michelle Obama revealed $851 million in new health-center grants; and the President, in the Grand Foyer, hailed stimulus jobs "building wind turbines and solar panels." Biden announced plans to fly to Pennsylvania, where he will "highlight Recovery Act broadband investments," while other agencies rolled out press releases regarding new dump-truck engines in Montana, North Dakota school grants and diesel tractors in Utah.

Meanwhile, behind the scenes, Biden has ordered his staff to return any call or e-mail from states and localities seeking guidance within 24 hours. "It's so important you make sure--don't get mad at me--that there are no water parks, golf courses or anything that doesn't pass not only the test of the law but the smell test," Biden tells the mayors during the conference call. "Because we've got to do this thing really well."

STIMULUS SPENDING IS SET TO ACCELERATE...

Over the next two years, more federal dollars will flow to "hard hat" construction projects and fewer to tax cuts

[The following text appears within a chart. Please see hardcopy or PDF for actual chart.]

• Spending • State government • Tax cuts

... WITH $152 BILLION GOING TO INFRASTRUCTURE

About 19% of the Recovery Act funds will go to shoring up the U.S.'s backbone

[This article contains a table. Please see hardcopy of magazine or PDF.]

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