Contractors say stimulus has been slow to kick in

Much of the $787 billion in a federal program to spur the economy was supposed to pour like mixed concrete onto American roads, bridges, and construction sites. So far, though, the amount of money funneling into US construction zones is less than expected.

This doesn't mean that President Obama's giant economic stimulus is failing altogether. But construction industry executives told reporters Thursday that the law is falling short of its potential to boost spending on infrastructure and create jobs.

"It is disappointing to see so many of these programs getting off to such a slow start," said Stephen Sandherr, chief executive of the Associated General Contractors of America.
Transportation-related projects are faring relatively well, he said. But in other areas, the flow of money is a trickle so far. Mr. Sandherr cited examples from several large federal agencies:

• The American Recovery and Reinvestment Act provides $4.6 billion for the US Army Corps of Engineers, but the Corps has spent just $84 million of that so far.

• Just $12 million has been paid out for improving federal buildings, out of nearly $6 billion allocated for the General Services Administration.

• The Environmental Protection Agency has paid out only about $30 million – out of $6 billion available – for drinking water and other clean water programs.

Judging by a survey within the trade association, Sandherr says, relatively few new jobs are being created by the stimulus.

Among some 900 general contracting firms responding to the survey, nearly 200 said they are recipients of stimulus funds (and 376 more said they hope to win stimulus-funded contracts). But only 31 percent of the firms getting funds said they had hired new workers, or rehired those who had been laid off.

This suggests that, even when the money does flow, the positive impact may be to prevent potential layoffs as often as it is to allow firms to hire again. In a tough downturn for construction firms, even that is a big plus.

"We’re basically taking [jobs] at no markup to keep our people employed," said Dave Higgins, president of HMH builders in northern California, speaking on the same conference call with Sandherr. "The worst thing for a contractor is to lay key people off."

Even before the massive stimulus measure was passed, a central debate in Congress was whether so much money could be spent efficiently and quickly to help pull the economy out of recession. Lawmakers, backed by many economists, decided that passing the law was the best course.

Now, the economy shows tentative signs that the recession is bottoming out, and skeptics say the stimulus isn't the reason. They say it's time to start pulling back some of the taxpayer money that hasn't been spent.

Other policy experts say the economy remains fragile, and the stimulus is playing a vital role alongside other recovery policies. Without it, they say, unemployment would be higher. Consumers, without the stimulus-provided tax breaks, would be spending even less.

Both sides generally agree, though, that stimulus is at best a temporary measure, and that infusions funded by government borrowing or taxes aren't the basis for a long-term economic expansion.

A report by Goldman Sachs last week confirms the notion that infrastructure stimulus is running slower than expected, but that's being offset by aid to states at a higher than expected pace.

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