GOP Plan To Slash Federal Spending Complicated By Lack Of Leftover Stimulus Funds
WASHINGTON — Congressional Republicans say they want to cut federal spending by raiding $45 billion from President Barack Obama's politically unpopular economic stimulus program. But they won't be able to get their hands on most of that money.
At most, only about $7 billion of the $814 billion in economic recovery money awarded under the 2009 federal law hasn't already been spoken for, according to the latest White House estimates. And Republican leaders now acknowledge they would be lucky to identify as much as $5 billion in stimulus-related spending cuts as part of a plan to save taxpayers $2.5 trillion over 10 years.
Where did the money go?
It's not that all the stimulus money has been spent; it has been committed for specific projects and programs. In the confusing money flow from Washington to the rest of the country, there's still about $168 billion in stimulus money that has not actually been paid out, according to the administration. But it says nearly all of that money already is tied up in contracts with companies, obligations with states and local governments, promised taxpayer relief and commitments to government programs.
For states, much of that money for Medicaid and education has been worked into budgets, so if Congress took it back it could leave shortfalls, said Raymond Scheppach, executive director of the National Governors Association. "That would be a serious problem, I think, because they're depending on that money."
The unspent money remains in the federal pipeline despite Obama's promise that recovery spending would occur swiftly to stimulate the nation's economy after Congress approved the program nearly two years ago.
Even the $7 billion the White House says is not yet obligated can't readily be yanked back by Republicans as savings because, administration officials said, planning is well under way for the projects expected to benefit.
"These remaining dollars include funding for major high-speed rail, clean energy and other infrastructure projects that in many cases have already been awarded and just haven't been formally put under contract," said Liz Oxhorn, the White House's spokeswoman for the economic recovery program. "Rescinding these funds could halt job-creating projects years in the making where preliminary work in some cases is already under way."
The Republican Study Committee, a group of House conservatives, announced a proposal last month to save the government $2.5 trillion over the next decade. Part of its plan involved pulling back $45 billion in stimulus money.
"That was an estimate," said Brian Straessle, the group's spokesman. "That was not intended to be taken as an exact figure."
Part of the problem is determining how much, if any, stimulus money remains in Washington and how much could be recovered, Straessle said. About three-quarters of the $814 billion in stimulus money has been spent or distributed to taxpayers, state and local governments and companies hired to do work under dozens of programs. House Republicans sorting through the federal budget hope to identify money not yet spent or promised to programs, states or local governments in the coming weeks.
Congress could go after some of the unspent money, although it would require undoing commitments made in the stimulus legislation, and no specific proposals have been offered to do that.
House Budget Committee Chairman Paul Ryan announced another Republican austerity plan Thursday, this one to slash spending for domestic agencies by nearly 20 percent. The proposal stems from the GOP pledge to reduce spending to levels in place before Obama took office.
The roughly $168 billion in stimulus money that still hasn't been spent is proof that Obama's program couldn't deliver the immediate economic jolt promised two years ago, Straessle said. "This is not an attempt at economic stimulus. This is just basic government spending."
Oxhorn said much of that money – $53 billion – is set aside for promised tax relief and government spending to help taxpayers. And $115 billion more is committed in some cases with signed contracts to ongoing programs and projects, like roads and bridges, energy efficiency and education.
States, local governments and other recipients have been slow to spend some of that money, according to weekly reports from federal agencies. For example, more than $14 billion remains in the pipeline to help doctors and hospitals providing Medicaid and Medicare services to convert to electronic health records; nearly $5 billion remains to help weatherize homes and to help states and local governments develop energy-efficiency strategies.
States also expect to receive continued quarterly Medicaid enhancement payments into the summer, the remainder of an $87 billion recovery program intended to help them through their own financial problems. "Every state in the union has plugged that money into their budgets for the coming year," said Michael Bird, federal affairs counsel for the National Conference of State Legislatures.
In some cases, the money is set aside to reimburse states and local governments for projects under way, like highway and local airport improvements. Administration officials have warned that tampering with any of that money would leave states and municipalities on the hook for the cost of those projects.
"You've got some legal issues if this is money that has been obligated by the states already," said Scheppach, of the governor's association. "They're sort of into breaking contracts at that point."
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BRETT J. BLACKLEDGE 02/ 4/11 05:34 PM ET Associated Press