Effects of $850bn package far off

Washington - Much of the spending on rebuilding roads, bridges and other infrastructure contained in President-elect Barack Obama's $825bn stimulus plan won't hit the economy for years, according to an analysis by congressional economists.

Less than half of $30bn 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 $4bn in highway construction money would reach the economy by September 2010.

The CBO analysis doesn't cover tax cuts or efforts by Democrats to rush aid to cash-strapped state governments. But it illustrates just how difficult it can be to use public investment to rush money into the economy. It usually takes bids and contracts to announce such developments, which invariably takes time.

Overall, only $26bn out of $274bn in infrastructure spending would be delivered in the economy by the September 30 end of the budget year, just 7%. Just one in seven dollars of a huge $18.5bn investment in energy efficiency and renewable energy programmes would be spent within a year-and-an-half.

The findings, released to lawmakers on Sunday, 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.

And other pieces, like efforts to bring broadband internet service to rural and underserved areas won't get started in earnest for years, while just one-fourth of clean drinking water projects can be completed by October of next year.

Still, other elements of Obama's $825bn economic recovery plan, such as $275bn worth of tax cuts to 95% of filers and a huge infusion of help for state governments, will be distributed into the economy more quickly. But Republicans are poised to attack the bill for spending too much.

The Obama transition has stressed that a combination of old and new federal investments will help the economy recover, as well as tax cuts and other steps. Obama economic advisers and their allies on Capitol Hill have sought to identify federal programmes that can deliver dollars fast, like food stamps and a boost in unemployment benefits.

At the same time, defenders of brick-and-mortar projects like federal building and school construction are poised to reap benefits from the big recovery package.

- AP