Wednesday, March 4, 2009

Stimulus Spending Challenges Agency and Industry Capacity

In a speech yesterday to employees at the Department of Transportation, President Obama announced that 200 federal construction projects funded by the stimulus legislation will break ground in the next few weeks. Nevertheless, FEMA's experience with gargantuan construction spending suggests that both the government agencies charged with spending this money, and the construction industry responsible for completing the funded projects, will have their capacity tested by this huge influx of cash.

At hearings Tuesday, House Homeland Security Chairman Bennie Thompson told the Emergency Preparedness Subcommittee that out of $10.4 billion appropriated for repairs after hurricanes Katrina and Rita, $4.7 billion still has not been spent. Thompson blamed Louisiana Governor Bobby Jindal and Mississippi Governor Haley Barbour for the delays. Without regard to who is at fault, these facts do not bode well for the pace of distribution of the stimulus appropriations which will have to be funneled through state agencies.
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