Obama: Stimulus Will Be Spent Quickly, Efficiently

Many congressional Republicans derided the stimulus as wasteful.

U.S. President Barack Obama sought on Monday to bolster political support for the $787 billion economic rescue package, telling the nation's state governors the money would go out quickly and be spent wisely.

The package of public works funds, tax cuts and aid to states that Obama, a Democrat, signed into law last week highlighted partisan division in Washington after it was passed by Congress with only three Republican votes.

Many congressional Republicans derided the stimulus as wasteful. While some Republican governors have said they would refuse part of the money, most state leaders have welcomed it as needed help for their fiscal woes.

Meeting with the governors of both parties at the White House, Obama told them a $15 billion portion of the stimulus package to help states pay for the Medicaid health program for the poor would be going out on Wednesday.

"This is not a blank check," Obama said. "We're going to work with you closely to make sure that this money is spent the way it's supposed to."

Obama pushed the stimulus plan through the Democratic-led Congress, arguing it was needed to prevent the U.S. recession from turning into an economic catastrophe.

But he has been forced to defend the measure as Republicans in Congress, and some governors, characterized it as larded with wasteful spending and warned it would only bloat the budget deficit.

A handful of Republican governors will refuse to take optional matching grants for expanding unemployment insurance to part-time workers and others. They say the provision will permanently increase their states' spending levels.

Obama said their dispute had been overblown, as the grants are "a fraction of the overall stimulus package." He said they total $7 billion, or less than 1 percent of the recovery plan.

After the meeting with Obama, Louisiana Governor Bobby Jindal, a possible Republican presidential candidate in 2012, said his concerns reach past the grants component.

"Certainly, I think there could have been a very different stimulus bill written," said Jindal, who will give his party's rejoinder to Obama's address to Congress on Tuesday. "It is not just limited to those provisions."

Jindal has said his state will use another stimulus plan component to boost unemployment benefit checks. The grants he is refusing would equal $32.8 million over three years.

Mississippi Gov. Haley Barbour, another Republican who will decline $50 million for unemployment, said too much has been made about Republicans turning down some funds. He said all of the governors will take some of the money.

MOST OF 50 STATES IN RECESSION

The governors do not know what will happen to refused funds but on Monday New York Senators Kirsten Gillibrand and Charles Schumer asked Obama to give any unwanted money to their state.

That is unlikely, given that a state legislature can override a governor who refuses stimulus grants.

Both Barbour and Republican South Carolina Governor Mark Sanford, who may turn down energy effect grants as well as unemployment funds, have indicated their states could circumvent their wishes.

Along with Medicaid funds, transportation money should begin reaching the states within two weeks. But even before aid arrives, some are wondering whether states will need another recovery plan.

On Monday, Moody's Economy.com Chief Economist Mark Zandi said 42 of the 50 states are in a recession and others will soon follow.

"We understand we can't keep going back to the federal government and saying we have budget gaps," said Pennsylvania Governor Edward Rendell, who chairs the National Governors Association. "Let's see how this one works."

To underline his promise of strict oversight of the stimulus package, Obama announced he was putting Vice President Joe Biden in charge of supervising its implementation.

Biden will help ensure there are no bottlenecks in distributing money and that it will go to projects to help the economy recover.

Obama also named Earl Devaney, a former Secret Service special agent and longtime government investigator, to serve as the top watchdog overseeing the funds.

Devaney has served for a decade as the inspector general at the Department of Interior, where he led investigations into a series of scandals at the agency.