American Recovery and Reinvestment Act of 2009

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2009 Recovery Bill
Acronym / colloquial name ARRA (official acronym)
"stimulus package", "stimulus bill", "stimulus plan", and several other variations (unofficial)
Enacted by the 111th United States Congress
Effective February 17, 2009
Public Law 111-5
Legislative history
Major amendments
Official seal of the American Recovery and Reinvestment Act of 2009.
U.S. President Barack Obama signs the ARRA into law on February 17, 2009 in Denver, Colorado. Vice President Joe Biden stands behind him.

The American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5, PDF, H.R. 1, S. 1) is a stimulus package enacted by the 111th United States Congress and signed into law by President Barack Obama on February 17, 2009. The Act of Congress was based largely on proposals made by President Obama and is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The measures are nominally worth $787 billion. The Act includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector. The Act also includes numerous non-economic recovery related items that were either part of longer-term plans (e.g. a study of the effectiveness of medical treatments) or desired by Congress (e.g. a limitation on executive compensation in federally aided banks added by Senator Dodd and Rep. Frank). The government action is much larger than the Economic Stimulus Act of 2008, which consisted primarily of tax rebate checks.

The bill was first approved by the House of Representatives, and then by the Senate. Congressional negotiators announced on February 11 that they had completed the Conference Report of the bill.[1] The Conference Report with final handwritten provisions was made available to the public on February 13.[2] On that day, the Conference Report was voted on and passed as Roll Call Vote 70 by the House, 246-183. The vote was largely along party lines with all 246 Yea votes given by Democrats and the Nay vote split between 176 Republicans and 7 Democrats.[3] No Republicans in the House voted for the bill. Later that day, the Senate passed the bill, 60-38, with all Democrats and Independents voting for the bill along with three Republicans.[3] The remaining 38 Republican senators voted against the bill.[4][5] The bill was signed into law on February 17 by President Obama at an economic forum he was hosting in Denver, Colorado.[6]


[edit] Legislative history

[edit] House of Representatives

The House version of the bill, H.R. 1, was introduced on January 25, 2009. 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.[7] Although 206 amendments were scheduled for floor votes, they were combined into only 11, which enabled quicker passage of the bill.[8]

On January 28, 2009, the House passed the bill by a 244-188 vote.[9] All but 11 Democrats voted for the bill, and 177 Republicans voted against it (one Republican, Ginny Brown-Waite, did not vote).[10]

[edit] 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.[11] 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.[12] 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.[13] 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[14] 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".[15]

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.[16] On February 10, the Senate voted 61-37 (with one 1 not voting)[17] All the Democrats voted in favor, but only three Republicans voted in favor (Susan Collins, Olympia Snowe, and Arlen Specter).[18] At one point, the Senate bill stood at $838 billion.[19]

[edit] Comparison of the House, Senate and Conference versions

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[20] (severely restricted Stabilization Fund) and the low income workers (reduced tax credit) with major gains for the elderly (largely left out of the Obama & House plans) and high income tax-payers. A comparison of the $827 billion economic recovery plan drafted by Senate Democrats with a $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.[21]

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).[22]

[edit] Conference report

On February 12, 2009, House Majority Leader Steny Hoyer scheduled the vote on the bill for the next day, before wording on the bill's content had been completed and despite House Democrats having previously promised to allow a 48-hour public review period before any vote. The bill was not completed and posted on a House website until 10:45 PM on February 12.[23] The next day, the House passed a revised version of the bill by a vote of 246-183,[24] with no Republicans voting in favor and 7 Democrats voting against.[25]

The Senate vote was the same as for the earlier version.

[edit] Provisions of the Act

Composition of the Act:
Tax Relief - includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy.
State and Local Fiscal Relief - Prevents state and local cuts to health and education programs and state and local tax increases.

The Act specifies that 37% of the package is to be devoted to tax cuts 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). 45% or $357 billion is allocated to federal social programs and federal spending programs.

The following are details to the different parts of the final bill[26][27] [28][29]:

[edit] Tax cuts

Total: $288 billion

[edit] Tax relief for individuals

Total: $237 billion

  • $116 billion: New payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010. Phaseout begins at $75,000 for individuals and $150,000 for joint filers. [30]
  • $70 billion: Alternative minimum tax: a one year increase in AMT floor to $70,950 for joint filers for 2009.[30]
  • $15 billion: Expansion of child tax credit: A $1,000 credit to more families (even those that do not make enough money to pay income taxes).
  • $14 billion: Expanded college credit to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples making more than $160,000.
  • $6.6 billion: Homebuyer credit: $8,000 refundable credit for all homes bought between 1/1/2009 and 12/1/2009 and repayment provision repealed for homes purchased in 2009 and held more than three years. This only applies to first-time homebuyers.[31]
  • $4.7 billion: Excluding from taxation the first $2,400 a person receives in unemployment compensation benefits in 2009.
  • $4.7 billion: Expanded earned income tax credit to increase the earned income tax credit — which provides money to low income workers — for families with at least three children.
  • $4.3 billion: Home energy credit to provide an expanded credit to homeowners who make their homes more energy-efficient in 2009 and 2010. Homeowners could recoup 30 percent of the cost up to $1,500 of numerous projects, such as installing energy-efficient windows, doors, furnaces and air conditioners.
  • $1.7 billion: for deduction of sales tax from car purchases, not interest payments phased out for incomes above $250,000.

[edit] Tax relief for companies

Total: $51 billion

  • $15 billion: Allowing companies to use current losses to offset profits made in the previous five years, instead of two, making them eligible for tax refunds.
  • $13 billion: to extend tax credits for renewable energy production (until 2014).
  • $11 billion: Government contractors: Repeal a law that takes effect in 2012, requiring government agencies to withhold three percent of payments to contractors to help ensure they pay their tax bills. Repealing the law would cost $11 billion over 10 years, in part because the government could not earn interest by holding the money throughout the year.
  • $7 billion: Repeal bank credit: Repeal a Treasury provision that allowed firms that buy money-losing banks to use more of the losses as tax credits to offset the profits of the merged banks for tax purposes. The change would increase taxes on the merged banks by $7 billion over 10 years.
  • $5 billion: Bonus depreciation which extends a provision allowing businesses buying equipment such as computers to speed up its depreciation through 2009.

[edit] Healthcare

More than 11% of the total bill is allocated to help states with Medicaid

Total: $147.7 billion

  • $86.6 billion for Medicaid
  • $24.7 billion to provide a 65 percent subsidy of health care insurance premiums for the unemployed under the COBRA program
  • $19 billion for health information technology
  • $10 billion for health research and construction of National Institutes of Health facilities
  • $1.3 billion for medical care for service members and their families (military)
  • $1 billion for prevention and wellness
  • $1 billion for the Veterans Health Administration
  • $2 billion for Community Health Centers
  • $1.1 billion to research the effectiveness of certain healthcare treatments
  • $500 million to train healthcare personnel
  • $500 million for healthcare services on Indian reservations

[edit] Education

Total: $90.9 billion

  • $44.5 billion in aid to local school districts to prevent layoffs and cutbacks, with flexibility to use the funds for school modernization and repair (State Equalization Fund)
  • $15.6 billion to increase Pell Grants from $4,731 to $5,350
  • $13 billion for low-income public schoolchildren
  • $12.2 billion for IDEA special education
  • $2.1 billion for Head Start
  • $2 billion for childcare services
  • $650 million for educational technology
  • $300 million for increased teacher salaries
  • $250 million for states to analyze student performance
  • $200 million to support working college students
  • $70 million for the education of homeless children

[edit] Environment

Total: $7.2 billion

  • $4 billion for wastewater infrastructure
  • $2 billion for drinking water infrastructure
  • $600 million for hazardous waste cleanup at Superfund sites
  • $300 million for reductions in emissions from diesel engines
  • $200 million for cleanup of leaking Underground Storage Tanks
  • $100 million for cleaning former industrial and commercial sites (Brownfields)

[edit] Aid to low income workers, unemployed and retirees (including job training)

Payments to Social Security recipients and people on Supplemental Security Income were parts of the final bill

Total: $82.5 billion

  • $40 billion to provide extended unemployment benefits through Dec. 31, and increase them by $25 a week
  • $19.9 billion for the Food Stamp Program
  • $14.2 billion to give one-time $250 payments to Social Security recipients, people on Supplemental Security Income, and veterans receiving disability and pensions.
  • $3.95 billion for job training
  • $3 billion in temporary welfare payments
  • $500 million for vocational training for the disabled
  • $400 million for employment services
  • $120 million for subsidized community service jobs for older Americans
  • $150 million to help refill food banks
  • $100 million for meals programs for seniors, such as Meals on Wheels
  • $100 million for free school lunch programs

[edit] Infrastructure Investment

Total: $80.9 billion

[edit] Core investments (roads, bridges, railways, sewers, other transportation)

Highway construction is the biggest single line infrastructure item in the final bill

Total: $51.2 billion

[edit] Investment into government facilities and vehicle fleets

Total: $29.5 billion

[edit] Supplemental investments

Total: $15 billion

[edit] Energy

Loans and investments into green energy technology are a significant part of the final bill

Total: $61.3 billion

[edit] Housing

Total: $12.7 billion

  • $4 billion to the Department of Housing and Urban Development (HUD) for repairing and modernizing public housing, including increasing the energy efficiency of units.
  • $2.25 billion in tax credits for financing low-income housing construction
  • $2 billion for Section 8 housing rental assistance
  • $2 billion to help communities purchase and repair foreclosed housing
  • $1.5 billion for rental assistance and housing relocation
  • $510 million for the rehabilitation of Native American housing
  • $200 million for helping rural Americans buy homes
  • $130 million for rural community facilities
  • $100 million to help remove lead paint from public housing

[edit] Scientific research

NASA is among the research centers receiving additional funds under the Act

Total: $8.9 billion

[edit] Other

Total: $18.1 billion

[edit] Assessments by economists

Economists such as Martin Feldstein, Daron Acemoglu, National Economic Council director Larry Summers, and Nobel Memorial Prize in Economic Sciences winners Joseph Stiglitz[33] and Paul Krugman[34] favor large economic stimulus to counter the economic downturn. Some economists, such as Stiglitz and Krugman, favor a much larger measure. While in favor of a stimulus package, Feldstein expressed concern over the act as written, saying it needs revision to address consumer spending and unemployment more directly.[35] Other economists, including John Lott,[36] Robert Barro and Nobel Prize-winners Robert Lucas, Jr.,[37] Vernon L. Smith, Edward C. Prescott and James M. Buchanan have been more critical of the government spending, saying that the package will increase unemployment and place more debt on future generations.[38]

On January 28, 2009, a full page advertisement with the names of approximately 200 economists who are against President Obama's plan appeared in The New York Times and The Wall Street Journal. The funding for this advertisement came from the Cato Institute. The ad stated, "... we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s... To improve the economy, policymakers should focus on reforms that remove impediments to work, savings, investment, and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth."[39][40]

[edit] Congressional Budget Office report

President Obama in Ohio on March 6, 2009 for the Graduation of the Columbus Police Division’s 114th Class, saying that the ARRA did bring some good news.

A February 4, 2009, report by the Congressional Budget Office (CBO) said that while the stimulus would increase economic output and employment in the short run, the GDP would, by 2019, have an estimated net decrease between 0.1% and 0.3% (as compared to the CBO estimated baseline).[41]

The CBO estimated that enacting the bill would increase federal budget deficits by $185 billion over the remaining months of fiscal year 2009, by $399 billion in 2010, by $134 billion in 2011, and by $787 billion over the 2009-2019 period.[42]

In a February 11 letter, CBO Director Douglas Elmendorf noted that there was disagreement among economists about the effectiveness of the stimulus, with some skeptical of any significant effects while others expecting very large effects.[43] Elmendor said the CBO expected short term increases in GDP and employment.[43] In the long term, the CBO expects the legislation to reduce output slightly by increasing the nation's debt and crowding out private investment, but noted that other factors, such as improvements to roads and highways and increased spending for basic research and education may offset the decrease in output and that crowding out was a not an issue in the short term because private investment was already decreasing in response to decreased demand.[43]

An updated report of the budget and economic outlook by the CBO in March 2009 showed that taxpapers will pay $356 billion, $167 billion more than the original figure of $189 billion in January.[44]

CBO estimates of the impact of the stimulus on GDP

The CBO estimated that an increase in the GDP of between 1.4 percent and 3.8 percent by the end of 2009, between 1.1 percent and 3.3 percent by the end of 2010, between 0.4 percent and 1.3 percent by the end of 2011, and a decrease of between zero and 0.2 percent beyond 2014.[43] The impact to employment would be an increase of 0.8 million to 2.3 million by the end of 2009, an increase of 1.2 million to 3.6 million by the end of 2010, an increase of 0.6 million to 1.9 million by the end of 2011, and declining increases in subsequent years as the U.S. labor market reaches nearly full employment, but never negative.[43] Decreases in GDP in 2014 and beyond is accounted for by a decrease in worker productivity caused by lower wages rather than lower employment.[43]

[edit] See also

[edit] References, the website created for this Act.
  1. ^ New York Times Deal Struck on $789 Billion Stimulus. New York Times. February 11, 2009.
  2. ^ "COMMITTEE ON RULES - Conference Report to Accompany H.R. 1 - The American Recovery and Reinvestment Act of 2009". Retrieved on February 18, 2009. 
  3. ^ a b "US Congress passes stimulus plan". BBC. February 14, 2009. Retrieved on February 17, 2009. 
  4. ^ "Dems power stimulus bill through Congress". Associated Press. February 14, 2009. 
  5. ^ "U.S. Senate: Legislation & Records Home > Votes > Roll Call Vote". Retrieved on 2009-02-18. 
  6. ^ "Stimulus: Now for the hard part". February 17, 2009. 
  7. ^ "Obama seeks congressional consensus on stimulus plan". Newsday. January 24, 2009.,0,7242108.story. 
  8. ^
  9. ^ "House Passes Stimulus Plan Despite G.O.P. Opposition". New York Times. January 29, 2009. 
  10. ^ House Vote On Passage: H.R. 1: American Recovery and Reinvestment Act of 2009
  11. ^
  12. ^ See, for example: S.Amdt. 106, S.Amdt. 107, S.Amdt. 108, and S.Amdt. 109
  13. ^ Sheryl Gay Stolberg (February 2, 2009). "Obama Predicts Support From G.O.P. for Stimulus Proposal". New York Times. 
  14. ^
  15. ^ HR1. SEC. 9302. HIGHER EDUCATION MODERNIZATION, RENOVATION, AND REPAIR. The amendment was ultimately rejected by a vote of 54-43: S.Amdt. 189. Vote on Amendment
  16. ^ Roll call vote 59
  17. ^ Senator Judd Gregg (R) did not vote because, at the time, he was a nominee of the Democratic president to become Secretary of Commerce. Gregg also did not participate in the cloture vote.
  18. ^ Roll call vote 60
  19. ^ David Espo. "Stimulus bill survives Senate test". Associated Press via Atlanta Journal-Constitution. 
  20. ^
  21. ^ "Stimulus bill far from perfect, Obama says" MSNBC
  22. ^ Stimulus bill survives Senate test, via
  23. ^ Even After the Deal, Tinkering Goes On, The New York Times, February 12, 2009
  24. ^ The Senate passed the bill with 60 votes later that night.FINAL VOTE RESULTS FOR ROLL CALL 70, via
  25. ^ House passes Obama's economic stimulus bill, via
  26. ^ "SUMMARY: AMERICAN RECOVERY AND REINVESTMENT". Committee on Appropriations. 2009-02-13. Retrieved on 2009-02-17. 
  27. ^
  28. ^
  29. ^ Note that there are deviations in how some sources allocate spending and tax incentives and loans to different categories
  30. ^ a b House Conference report 111-? Final partially handwritten report released by Nancy Pelosi's Office 2/13/09
  31. ^ ARRA of 2009 Questions & Answers
  32. ^
  33. ^ Stiglitz: Stimulus Must Be Big, Provide Relief To States,
  34. ^ Stimulus Gone Bad,
  35. ^ Boston Herald, January 30, 2009
  36. ^ "Obama's Stimulus Package Will Increase Unemployment - Opinion". 2009-02-03.,2933,487425,00.html. Retrieved on 2009-02-18. 
  37. ^ Bernanke Is the Best Stimulus Right Now,
  38. ^ Investor's Business Daily
  39. ^ Economists say stimulus won’t work, St. Louis Post-Dispatch, January 29, 2009.
  40. ^ Cato Institute petition against Obama 2009 stimulus plan
  41. ^ Official CBO report to the Senate budget committee
  42. ^ CBO-Budgetary Impact of ARRA
  43. ^ a b c d e f letter by Douglas W. Elmendorf, director of the CBO, February 11, 2009
  44. ^ Journal Wire Report (2009-04-05). "National Briefs: Financial bailout to cost a lot more, report says". Winston-Salem Journal. Retrieved on 2009-04-05. 

[edit] External links

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[edit] Analysis of the Act

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