Federal stimulus offers speedy bucks, but how much bang?

Charles Dharapak/AP
President Obama said there was 'not a moment to spare' in rebuilding the economy.

What does America most need from the stimulus package: the most speed from its federal buck -- or the most bang?

The two aren't necessarily incompatible. But in Washington, they often trip over each other because of conflicting priorities, as the stimulus plan's high-speed Internet effort points out.

The need for speed is obvious. Stimulus packages passed during most postwar recessions failed, simply because they didn't take hold until after the economy was already on the mend. The extra federal money stoked inflation instead of recovery. The idea of using a fiscal stimulus had fallen out of favor by the time George W. Bush, for entirely different reasons, pushed through a tax cut that happened to coincide perfectly with a sinking economy.

The timing was exquisite. President Bush's tax cuts are widely credited with keeping this decade's first recession from growing too big.

Obama is sprinting

Deep into the decade's second recession, President Obama is now hoping to do the same.

"When it comes to rebuilding our economy, we don't have a moment to spare," he said Wednesday after meeting with CEOs at the White House. "Most of the money that we're investing as part of this plan will get out the door immediately."

Troublesome details

But who will it benefit? The details of how the money is spent is often as important as how much is being spent.

Federal spending always creates winners (and, thus, losers) and speedy federal spending has a way of foundering on unintended circumstances. Just ask former Treasury Secretary Hank Paulson, whose quick action last fall may have saved the financial system from meltdown but also allowed the rescued banks to spend money for executive bonuses and other perks that angered Congress and scuttled support for his actions.

Tougher than a banking rescue

With even more taxpayer money about to be spread far more broadly throughout the economy, the potential for blunders this time is, arguably, greater.

"I understand that skepticism, given some of the things that have happened in this town in the past," Mr. Obama said Wednesday, in announcing "unprecedented measures" to make the spending transparent through a website now being built called "Instead of just throwing money at our problems, we'll try something new in Washington. We will invest in what works."

It may take a few experiments before the administration gets it right.

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