The Slow and Steady Stimulus Package is Moving Down the Track, Or: It’s a Local, Not an Express

At the start of my professional career, I worked for the United States Environmental Protection Agency (EPA) and, like many,

At the start of my professional career, I worked for the United States Environmental Protection Agency (EPA) and, like many, I found the federal government to be a source of both inspiration and frustration. It was frustrating because getting it in motion was like turning around a huge cruise ship (no, not the Titanic!). It was inspiring because when it did get moving it represented this entire great nation and could do amazing things. The symbols of our country-The White House, the Capitol Dome, the monuments to Washington, Lincoln, Jefferson, FDR and our veterans-still move me. This nation transformed the world and remains this planet’s best and brightest hope for the future. While that big, cumbersome federal government always moves slowly, it is finally in motion, and building momentum in a way we have not seen in decades. The source of that motion? The much-maligned American Recovery and Reinvestment Act of 2009, signed into law by President Obama on February 17, 2009.  You know it better as the stimulus package.

If you spend nearly 800 billion dollars to get the economy moving again, you can be sure of three things: 1. some of the money will be wasted and/or stolen, 2. some of the money will do some good, and 3. some federal agencies will get the money out the door faster than others. One of the agencies given a large amount of new funding under the stimulus program was the Department of Energy, which received $36.7 billion dollars of the $43 billion allocated by the bill to energy projects. Since the transition to a green energy economy is critical to recovery, one would think that it would be important to spend these funds as quickly as possible.

Recall that the stimulus package included a number of provisions that simultaneously increased spending and reduced taxes. The $787 billion package spent nearly $500 billion for programs and allocated about $288 billion to tax relief. The NY Times website includes a detailed outline of the program’s allocations.

The spending or non-tax portion of the bill breaks down into seven broad categories:

1.      State and local fiscal relief: $144 billion

2.      Infrastructure and Science: $111 billion

3.      Welfare Programs: $81 billion

4.      Health Care: $59 billion

5.      Education: $53 billion

6.      Energy: $43 billion

7.      Other: $8 billion

Some of the science funding is beginning to make its way to universities like the one I work at, providing funds for student scholarships, research jobs, facilities and equipment. While the impact of these funds will certainly be felt in waves, the first of these waves has hit the shore. It takes a while to make good use of these extra funds, and once we receive them from Washington, we cannot instantly build a lab or hire a researcher. Still, new grants are arriving on campuses across America, and scientists are moving quickly to take advantage of this rare opportunity to obtain extra funding for their labs. Moreover, in addition to these immediate short-term impacts, the longer-term economic benefits from scientific discoveries and newly trained researchers will ensure that the effects of these funds will be felt for many years to come.

In the Energy Department, the pace of spending stimulus funds has been excruciatingly slow. Fortunately, in recent weeks we have begun to see some signs that this particularly lumbering federal giant is finally beginning to get its act together. In early October, the Department announced a $750 million program funded by the American Recovery and Reinvestment Act to “help accelerate the development of conventional renewable energy generation projects.” According to the DOE website, these funds would “cover the cost of loan guarantees which could support as much as $4 to 8 billion in lending to eligible projects.” The goal is to use federal loan guarantees to entice private capital into the energy marketplace. The Department of Energy has also announced a number of grant programs for universities researching energy issues.

The Department of Energy’s share of the stimulus bill totals nearly $37 billion dollars.  According to the department’s “Recovery and Reinvestment” website, the funds have been earmarked for various projects and allocated in the following manner:

1.      $16.8 billion invested in improving energy efficiency and developing sources of renewable energy

2.      $6 billion for decontamination and clean up of Cold War nuclear sites

3.      $4.5 billion for development and implementation of Smart Grid programs and efficient electrical transmission

4.      $4 billion in loan guarantees for renewable energy projects

5.      $3.4 billion for research on carbon capture and storage and other ways to control carbon emissions

6.      $1.6 billion in funding for research and academic programs like those discussed above at schools and universities across the country

7.      $400 million to the Advanced Research Projects Agency-Energy for other research and technology development projects, the federal government’s website for tracking stimulus spending, shows that the Department of Energy has received about $18 billion (actually $18,255,356,221) of the $36.7 billion listed above, but as of October 9, 2009, had only spent about one billion (or $1,023,085,017). The Department of Energy is spending its stimulus money at a much slower rate than the rest of the federal government. While the team at Energy has only spent about 3% of the $36.7 billion they were allocated, overall federal spending has reached about 22%, or $173 billion of the full stimulus package of $787 billion. 

While I am tempted to observe that an inability to spend money may very well be a comment on the overall competence of the Department of Energy, I will instead try to believe that just like the tortoise and the hare, DOE’s leadership believes that “slow and steady wins the race.”

This brief run through the stimulus spending data tells us two things. First, most of the impact of the stimulus will be in the future; over three quarters of the money promised is still in the bank. Second, we should not be surprised at the lack of impact of the stimulus on development of a green energy economy. Economists are telling us that the recession is over, yet unemployment is still rising. Perhaps the economy needs an extra shot of stimulus to caffeinate the job market. The good news is that when you look at the spending data, that extra burst of economic espresso is still being brewed. The Slow and Steady Stimulus Package is Moving Down the Track, Or: It’s a Local, Not an Express