American Recovery and Reinvestment Act of 2009
USINFO | 2013-11-13 17:09
 
American Recovery and Reinvestment Act of 2009
Full title An act making supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, State, and local fiscal stabilization, for the fiscal year ending September 30, 2009, and for other purposes.
Acronym ARRA
Colloquial name(s) The Recovery Act, Stimulus
Enacted by the 111th United States Congress
Effective February 17, 2009
Citations
Public Law 111-5
Legislative history
  • Introduced in the House as H.R. 1 by Dave Obey (D-WI) on January 26, 2009
  • Committee consideration by: Appropriations andBudget
  • Passed the House on January 28, 2009 (244—188)
  • Passed the Senate on February 10, 2009 (61–37)
  • Reported by the joint conference committee on February 12, 2009; agreed to by the House on February 13, 2009 (246—183) and by the Senate on February 13, 2009 (60—38)
  • Signed into law by President Barack Obama onFebruary 17, 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.[1] 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 immediate 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. Shortly after the law was passed, however, Keynesian economist and Nobel laureatePaul Krugman while supportive of the law, criticized the law for being too weak because it did not "even cover one third of the (spending) gap."[2]

Legislative history
Both the House and the Senate versions of the bills were primarily written by Democratic Congressional committee leaders and their staffs. Because work on the bills started before President Obama officially took office on January 20, 2009, top aides to President-Elect Obama held multiple meetings with committee leaders and staffers. On January 10, 2009, President-Elect Obama’s administration released a report[3] that provided a preliminary analysis of the impact to jobs of some of the prototypical recovery packages that were being considered.

House of Representatives


 
Official seal of Recovery.gov, the official site of the American Recovery and Reinvestment Act of 2009.

The House version of the bill, H.R. 1, was introduced on January 26, 2009.[4] It was sponsored by Democrat David Obey, the House Appropriations Committee chairman, and was co-sponsored by nine other Democrats. On January 23, Speaker of the House Nancy Pelosi said that the bill was on track to be presented to President Obama for him to sign into law before February 16, 2009.[5] Although 206 amendments were scheduled for floor votes, they were combined into only 11, which enabled quicker passage of the bill.[6]

On January 28, 2009, the House passed the bill by a 244–188 vote.[7] All but 11 Democrats voted for the bill, and 177 Republicans voted against it (one Republican did not vote).[8]

Senate
The senate version of the bill, S. 1, was introduced on January 6, 2009, and later substituted as an amendment to the House bill, S.Amdt. 570. It was sponsored by Harry Reid, the Majority Leader, co-sponsored by 16 other Democrats and Joe Lieberman, an independent who caucuses with the Democrats.

The Senate then began consideration of the bill starting with the $275 billion tax provisions in the week of February 2, 2009.[9] A significant difference between the House version and the Senate version was the inclusion of a one-year extension of revisions to the alternative minimum tax which added $70 billion to the bill's total.

Republicans proposed several amendments to the bill directed at increasing the share of tax cuts and downsizing spending as well as decreasing the overall price.

[10] President Obama and Senate Democrats hinted that they would be willing to compromise on Republican suggestions to increase infrastructure spending and to double the housing tax credit proposed from $7,500 to $15,000 and expand its application to all home buyers, not just first-time buyers.[11] Other considered amendments included the Freedom Act of 2009, an amendment proposed by Senate Finance Committee members Maria Cantwell (D) and Orrin Hatch (R) to include tax incentives for plug-in electric vehicles[12] and an amendment proposed by Jim DeMint (R) to remove language from the bill that would prohibit funds which would be "used for sectarian instruction, religious worship, or a school or department of divinity; or in which a substantial portion of the functions of the facilities are subsumed in a religious mission".[13]

The Senate called a special Saturday debate session for February 7 at the urging of President Obama. The Senate voted, 61–36 (with 2 not voting) on February 9 to end debate on the bill and advance it to the Senate floor to vote on the bill itself.[14] On February 10, the Senate voted 61–37 (with one not voting)[15] All the Democrats voted in favor, but only three Republicans voted in favor (Susan Collins, Olympia Snowe, and Arlen Specter), with Specter later switching to the Democratic party.[16] At one point, the Senate bill stood at $838 billion.[17]

Comparison of the House, Senate and Conference versions


 
President Barack Obama signs the ARRA into law on February 17, 2009 in Denver, Colorado. Vice President Joe Biden stands behind him.


 
President Barack Obama speaks about the 2,000th project approved through the ARRA. The president is joined by Vice President Joe Biden andSecretary of Transportation Ray LaHood.

Senate Republicans forced a near unprecedented level of changes (near $150 billion) in the House bill which had more closely followed the Obama plan. The biggest losers were states[18](severely restricted Stabilization Fund) and the low income workers (reduced tax credit) with major gains for the elderly (largely left out of the Obama and House plans) and high income tax-payers. A comparison of the $827 billion economic recovery plan drafted by Senate Democrats with an $820 billion version passed by the House and the final $787 billion conference version shows huge shifts within these similar totals. Additional debt costs would add about $350 billion or more over 10 years. Many provisions will expire in two years.[19]

The main funding differences between the Senate bill and the House bill are: More funds for health care in the Senate ( $153.3 vs $140 billion), for green energy programs ($74 vs. $39.4 billion), for home buyers tax credit ($35.5 vs. $2.6 billion), new payments to the elderly and a one-year increase in AMT limits. The House has more funds appropriated for education ($143 vs. $119.1 billion), infrastructure ($90.4 vs. $62 billion) and for aid to low income workers and the unemployed ($71.5 vs. $66.5 billion).[20]

Spending (Senate-$552 billion, House-$545 billion)

Obama addresses a joint session of Congress, with Vice President Joe Bidenand House SpeakerNancy Pelosi.

Obama addresses the111th United States Congress
Address Before a Joint Session of Congress (February 24, 2009)
 
Barack Obama's February 24, 2009 Address Before a Joint Session of Congress. The American Recovery and Reinvestment Act of 2009 was a focal point of the speech.

Address Before a Joint Session of Congress (February 24, 2009) (audio)

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