Stimulus Package Gives Boost to Engineering

 

April 2009

NSPE TODAY
Stimulus Package Gives Boost to Engineering

BY SARAH OGDEN

On February 17, President Barack Obama signed the highly anticipated and hotly debated economic stimulus bill into law. Officially titled the American Recovery and Reinvestment Act (ARRA), the law provides $787.2 billion in funding and tax cuts over 11 years.

The law passed without any Republican support in the House of Representatives and with the support of only three Republicans in the Senate. Republicans objected to the bill on the grounds that it was laden with pork-barrel projects that would do nothing to stimulate the economy. The Congressional Budget Office estimates that the law will add $184.9 billion to the deficit this year and $399.4 billion in FY10.

ARRA includes a $100 billion investment in infrastructure, an example of spending that will both create jobs and provide long-term value to the nation. The Department of Transportation reported last year that every $1 billion of federal highway investment supports 34,779 jobs. In a timely coincidence, the American Society of Civil Engineers released its 2009 Infrastructure Report Card as Congress was beginning to draft ARRA. Once again, America's infrastructure received a "D." ASCE estimates that $2.2 trillion over five years is needed to bring U.S. infrastructure into a state of good repair.

States are jumping to begin financing projects, and most states are beginning by repaving highways. The stimulus law requires states to begin obligating the first 50% of their highway money within 120 days of February 17 or they will lose it. The Congressional Budget Office, however, remains skeptical that the money can be spent so quickly. Much of the funding for infrastructure projects may not actually be spent until 2010.

CBO anticipates that the law will create jobs and growth in the short term, but will create a drag on the economy over the longterm due to the increase in debt required to pay for the expansion in government. The U.S. may not come out behind, however. The stimulus spending should yield additional returns that will ultimately strengthen the economy. Investments in infrastructure, R&D, and education, for instance, will increase the economy's overall productivity.

To address public concern that the stimulus money be spent wisely, the Obama administration has opted for transparency. Agencies must submit weekly status reports and monthly financial statements to recovery.gov, a Web site that has been advertised as a means for the public to hold the government accountable for its spending. The Web site includes features such as graphs and maps that show how state funding has been distributed for highway improvement.

The president also convened a "fiscal responsibility summit" at the end of February featuring key lawmakers of both parties and members of advocacy groups. Discussion topics included defense procurement, tax reform, social security, healthcare costs, and the federal budget process. The diverse participants sought to find common ground on which to build an eventual compromise between Democrats and Republicans on the thorny issues of budget deficit and national debt.

Unfortunate timing, however, may have undermined these efforts to demonstrate fiscal responsibility. At the end of February, President Obama announced that the FY09 year-end deficit was forecast to be $1.75 trillion—the largest since World War II—just as his $3.55 trillion FY10 budget proposal came out and the House passed a $410 billion FY09 omnibus appropriations bill.

Stimulus Highlights

The American Recovery and Reinvestment Act provides $787.2 billion in funding and tax cuts over 11 years. Here are the amounts for engineering-related projects:

National Institute of Standards and Technology

$580 million

National Science Foundation

$3 billion

Roads and Bridges

$27.5 billion

Transit

$8.4 billion

Rail

$9.3 billion

National Surface Transportation System

$1.5 billion

Wastewater Treatment

$4 billion

Drinking Water

$2 billion

Rural Water and Waste Disposal

$1.4 billion

U.S. Army Corps of Engineers

$4.6 billion

Department of Energy Office of Science

$1.6 billion

Superfund and Brownfields

$900 million