American Recovery and Reinvestment Act of 2009


The American Recovery and Reinvestment Act of 2009 , nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Great Recession, the primary objective of this federal statute was to save existing jobs and create new ones as soon as possible. Other objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable 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 ARRA's rationale was based on the Keynesian economic theory 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.
The politics around the stimulus were very contentious, with Republicans criticizing the size of the stimulus. On the right, it spurred the Tea Party movement and may have contributed to Republicans winning the House in the 2010 midterm elections. Not a single Republican member of the House voted for the stimulus, and only three Republican senators voted for it. Most economists agree that the stimulus was smaller than needed. Surveys of economists show overwhelming agreement that the stimulus reduced unemployment, and that the benefits of the stimulus outweigh the cost.

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 that provided a preliminary analysis of the impact to jobs of some of the prototypical recovery packages that were being considered.

House of Representatives assembly

The House version of the bill, H.R. 1, was introduced on January 26, 2009 by Dave Obey, the chairman of the House Committee on Appropriations, 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. Although 206 amendments were scheduled for floor votes, they were combined into only 11, which enabled quicker passage of the bill.
On January 28, 2009, the House passed the bill by a 244–188 vote. All but 11 Democrats voted for the bill, but not a single Republican voted in favor: 177 Republicans voted against it, while one Republican did not vote.

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, SA 570. It was sponsored by Harry Reid, the Majority Leader, co-sponsored by 16 other Democrats and Joe Lieberman, an independent who caucused 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. 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. 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.
Other considered amendments included the Freedom Act of 2009, an amendment proposed by Senate Finance Committee members Maria Cantwell and Orrin Hatch to include tax incentives for plug-in electric vehicles.
The Senate called a special Saturday debate session for February 7 at the urging of President Obama. The Senate voted, 61–36 on February 9 to end debate on the bill and advance it to the Senate floor to vote on the bill itself. On February 10, the Senate voted 61–37
All the Democrats voted in favor, but only three Republicans voted in favor. Specter switched to the Democratic Party later in the year. At one point, the Senate bill stood at $838 billion.

Comparison of the House, Senate and Conference versions

Senate Republicans forced a near unprecedented level of changes in the House bill, which had more closely followed the Obama plan. 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 were set to expire in two years.
The main funding differences between the Senate bill and the House bill were: More funds for health care in the Senate, renewable energy programs, for home buyers tax credit, new payments to the elderly and a one-year increase in AMT limits. The House had more funds appropriated for education, infrastructure and for aid to low income workers and the unemployed.

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

  • Aid to low-income workers and the unemployed
  • * Senate – $47 billion to provide extended unemployment benefits through December 31, increased by $25 a week, and provide job training; $16.5 billion to increase food stamp benefits by 12 percent through fiscal 2011 and issue a one-time bonus payment; $3 billion in temporary welfare payments.
  • * House – Comparable extension of unemployment insurance; $20 billion to increase food stamp benefits by 14 percent; $2.5 billion in temporary welfare payments; $1 billion for home heating subsidies and $1 billion for community action agencies.
  • Direct cash payments
  • * Senate – $17 billion to give one-time $300 payments to recipients of Supplemental Security Income and Social Security, and veterans receiving disability and pensions.
  • * House – $4 billion to provide a one-time additional Supplemental Security Income and Social Security Disability Insurance payment to the elderly, of $450 for individuals and $630 for married couples.
  • * Conference – $250 one-time payment to each recipient of Supplemental Security Income, Social Security Insurance, Veterans pension, Railroad Retirement, or State retirement system
  • Infrastructure
  • * Senate – $46 billion for transportation projects, including $27 billion for highway and bridge construction and repair and $11.5 billion for mass transit and rail projects; $4.6 billion for the Army Corps of Engineers; $5 billion for public housing improvements; $6.4 billion for clean and drinking water projects.
  • * House – $47 billion for transportation projects, including $27 billion for highway and bridge construction and repair and $12 billion for mass transit, including $7.5 billion to buy transit equipment such as buses; and $31 billion to build and repair federal buildings and other public infrastructures.
  • Health care
  • * Senate – $21 billion to subsidize the cost of continuing health care insurance for the involuntarily unemployed under the COBRA program; $87 billion to help states with Medicaid; $22 billion to modernize health information technology systems; and $10 billion for health research and construction of National Institutes of Health facilities.
  • * House – $40 billion to subsidize the cost of continuing health care insurance for the involuntarily unemployed under the COBRA program or provide health care through Medicaid; $87 billion to help states with Medicaid; $20 billion to modernize health information technology systems; $4 billion for preventive care; $1.5 billion for community health centers; $420 million to combat avian flu; $335 million for programs that combat AIDS, sexually transmitted diseases and tuberculosis.
  • * Conference – A 65% COBRA subsidy for 9 months will apply to workers laid off between Sep 1, 2008 and Dec 31, 2009. Those already laid off have 60 days to apply for COBRA.
  • Education
  • * Senate – $55 billion in state fiscal relief to prevent cuts in education aid and provide block grants; $25 billion to school districts to fund special education and the No Child Left Behind K–12 law; $14 billion to boost the maximum Pell Grant by $400 to $5,250; $2 billion for Head Start.
  • * House – Similar aid to states and school districts; $21 billion for school modernization; $16 billion to boost the maximum Pell Grant by $500 to $5,350; $2 billion for Head Start.
  • * Conference – The Conference Report merged most education aid with the State Fiscal Stabilization fund and gave power over the funds to each governor under voluminous restrictions. The Governor is "Required" to spend $45 billion of the money on education to restore funding to 2008 levels but the mechanisms to enforce state maintenance of effort at 2005–06 levels are complex and potentially impossible to implement. Hard hit states such as Nevada cannot possibly find enough funds to get to the 2005–06 state funding levels for education. Some states with no current budget cuts for education, such as Arkansas and North Carolina, may get nothing. This will result in a monumental 50 state legal and political fight over how to re-budget to best take advantage of the federal legislation. Many states will further reduce state funds for education to the 2005–06 minimum so these state resources can be used for other state priorities and the net gain for education will be far less than the total federal appropriation.
  • Energy
  • * Senate – $40 billion for energy efficiency and renewable energy programs, including $2.9 billion to weatherize modest-income homes; $4.6 billion for fossil fuel research and development; $6.4 billion to clean up nuclear weapons production sites; $11 billion toward a smart electricity grid to reduce waste; $8.5 billion to subsidize loans for renewable energy projects; and $2 billion for advanced battery systems.
  • * House – $28.4 billion for energy efficiency and renewable energy programs, including $6.2 billion to weatherize homes; $11 billion to fund a smart electricity grid.
  • Homeland security
  • * Senate – $4.7 billion for homeland security programs, including $1 billion for airport screening equipment and $800 million for port security.
  • * House – $1.1 billion, including $500 million for airport screening equipment.
  • Law enforcement
  • * Senate – $3.5 billion in grants to state and local law enforcement to hire officers and purchase equipment.
  • * House – Comparable provision.