American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009
, abbreviated ARRA
(Pub.L. 111-5) and commonly referred to as the Stimulus or The Recovery Act, is an economic stimulus package enacted by the 111th United States Congress in February 2009 and signed into law on February 17, 2009, by President Barack Obama.
To respond to the late-2000s recession, the primary objective for ARRA was to save and create jobs almost immediately. Secondary objectives were to provide temporary relief programs for those most impacted by the recession and invest in infrastructure, education, health, and ‘green’ energy. The approximate cost of the economic stimulus package was estimated to be $787 billion at the time of passage, later revised to $831 billion between 2009 and 2019. The Act included direct spending in infrastructure, education, health, and energy, federal tax incentives, and expansion of unemployment benefits and other social welfare provisions. The Act also included many items not directly related to economic recovery such as long-term spending projects (e.g., a study of the effectiveness of medical treatments) and other items specifically included by Congress (e.g., a limitation on executive compensation in federally aided banks added by Senator Dodd and Rep. Frank).
The rationale for ARRA was from Keynesian macroeconomic theory which argues that, during recessions, the government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration.
Provisions of the Act
Section 3 of ARRA listed the basic intent behind crafting the proposal. This Statement of Purpose included the following:
1. To preserve and create jobs and promote economic recovery.
2. To assist those most impacted by the recession.
3. To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
4. To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
5. To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.
The Act specifies that 37% of the package is to be devoted to tax incentives equaling $288 billion and $144 billion or 18% is allocated to state and local fiscal relief (more than 90% of the state aid is going to Medicaid and education). The remaining 45% or $357 billion is allocated to federal spending programs such as transportation, communication, waste water and sewer infrastructure improvements; energy efficiency upgrades in private and federal buildings; extension of federal unemployment benefits; and scientific research programs. The following are details of the final bill relating to Communications, Information and Security Communications, information, and security technologies
Total: $10.5 billion
- $7.2 billion for complete broadband and wireless Internet access
- $1 billion for explosive detection systems for airports
- $500 million to update the computer center at the Social Security Administration
- $420 million for construction and repairs at ports of entry
- $290 million to upgrade IT platforms at the State Department
- $280 million to upgrade border security technologies
- $210 million to build and upgrade fire stations
- $200 million for IT and claims processing improvements for Veterans Benefits Administration
- $150 million to upgrade port security
- $150 million for the security of transit systems
- $50 million for IT improvements at the Farm Service Agency
- $26 million to improve security systems at the Department of Agriculture headquarters