Obama Bailout Plan Ineffective Says Congressional Budget Office

It will take years before an infrastructure spending program proposed by President Barack Obama will boost the economy, according to congressional economists, in stories reported by many establishment media outlets today.

The findings, released to lawmakers Sunday but apparently only reported today to become lost in the media's wall-to-wall inauguration coverage, call into question the effectiveness of congressional Democrats' efforts to pump up the economy through old-fashioned public works projects like roads, bridges and repairs of public housing.

Less than half of the $30 billion in highway construction funds detailed by House Democrats would be released into the economy over the next four years, concludes the analysis by the Congressional Budget Office. Less than $4 billion in highway construction money would reach the economy by September 2010.

The economy has been in recession for only a few months and many economists believe a recovery may begin by the end of 2009. That would mean that most of the infrastructure money wouldn't hit the economy until it's already on the mend.

The Congressional Budget Office analysis doesn't cover the effect of redistribution of income in Obama's "tax cuts" or efforts by Democrats to provide relief to state governments to help with their Medicaid bills. The analysis, however, illustrates just how difficult it can be to use government intervention to rush money into the economy. It usually takes bids and contracts, along with lengthy permitting and regulatory reviews, to implement such developments, which invariably will take time.

Overall, only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent. Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

Read it.

Source: Congressional Budget Office