ARRA Funding
The American Reinvestment and Recovery Act (“ARRA”) was passed in February of 2009 with the hope that it would stem the rising tide of unemployment and other economic difficulties within the United States. After enjoying a long ride of prosperity and a real estate value boom in many parts of the country, the party came to an end in 2008 and the unemployment rate shot up to over nine percent. The ARRA was passed with the dual objective of both adding jobs to the national economy and retaining jobs by those who currently held them. The total amount of ARRA funding authorized by Congress was $787 billion.
Economist Review of the Legislation
At the time the American Recovery and Reinvestment Act of 2009 was passed there were several different prominent economists who hailed the legislation as a landmark event that would surely assist the United States in pulling out of the economic slump it was in and potentially facing over the long-haul. These economists included Martin Feldstein and Joseph Stiglitz (who had previously won a Nobel Memorial Price in Economic Sciences). The argument put forth by these economists was that a large “economic stimulus” was need to fight the ongoing economic difficulties of the country as a whole. However, other economists were much more critical of the large swath of government spending, arguing that the government was not the answer to solving the problems of the country and that the funds authorized to be spent should be directly placed, through the appropriate channels, back into the hands of consumers. Of course, President Obama sided with the economists who argued the Act was the proper solution to the nation’s economic problems.
Areas of ARRA Funding
The ARRA funding earmarked to be spent under the Act were divided among many different programs and provisions including tax incentives, scientific research, energy initiatives, educational spending, healthcare improvements and more. By far, the largest portion of the spending under this piece of legislation was for tax incentives – a total of $288 billion or almost 37% of all spending authorized under the legislation.
Beyond the various areas of spending, the legislation carried with it a lesser known “Buy American” provision which forced any municipality or government to use only materials (such as iron or steel) made in the United States to complete the project. Perhaps an unintended result of this “Buy American” provision was the reaction from Canada, who chose to enact a retaliatory body of law to stop United States companies from receiving government contracts anywhere in the country. Before the Buy American provisions were to take effect the United States government specifically exempted Canadian companies from the effects of this law.
Effect on the National Budget
The non-partisan Congressional Budget Office estimated that the ARRA funding authorized by the Act increased the federal budget by a total of $787 billion from 2009 to 2019 and that the GDP of the United States would increase between 1.4 percent and 3.8 percent in 2009 and between 1.1 percent and 3.3 percent in 2010.
For more information on the funds provided under the ARRA funding provisions, see the government’s official ARRA website: recovery.gov.
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