USA: examination of the stimulus programme exploring its impact on broadband and two other sectors

[McKinsey Q] The American Recovery and Reinvestment Act (ARRA) of 2009 represents the largest government intervention in the US economy since the New Deal. The total cost comes to a towering 5.4 percent of GDP—almost equal to federal expenditures on everything but military and mandated social programs during 2008. More than 70 percent of the money is to be spent by the end of fiscal year 2010.

A plan of such scale and reach comes with risks of mismanagement, perhaps even fraud, as funding flows to states and localities. But the act also portends vastly different terms of engagement between the government and the private sector. From energy to high tech to health care and beyond, major sectors of the US economy will feel the effects of policy, spending, and regulatory changes embodied in the stimulus and perhaps in a broader set of government interventions that are still under discussion.

The plans for the energy sector exemplify many aspects of the new approach (see “The US stimulus program: Investing in energy efficiency”). The Obama administration has set three sweeping goals: to create millions of clean-energy jobs over the next decade, to cut oil imports by two million barrels a day over the same period, and to slash greenhouse gas emissions by 80 percent, to levels below those of 1990, by the year 2050. The ARRA’s $97 billion1 in energy-related funding is only the first step. Separate energy and climate bills now under debate include far-reaching provisions, such as cap-and-trade polices for carbon dioxide emissions. The 2010 budget would establish a regulatory framework to recast the energy sector’s fundamental economics.

Inside the US stimulus program: Implications for three industries health care, energy and broadband.