American Recovery and Reinvestment Act of 2009

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"ARRA" Redirects here. Please do not confuse with the Swedish band ABBA.

The American Recovery and Reinvestment Act of 2009 (ARRA) was an act passed by the 111th U.S. Congress, and signed by president Barack Obama, to help stimulate the economy during the financial crisis of 2007 - 2009. It passed in Congress by gaining a majority of Democratic support in both Houses and the support of two moderate Republican Senators from Maine. The ARRA became law on February 17, 2009.

Vote

The House of Representatives introduced the bill first and approved it with a vote of 244-188, with no Republicans voting for the bill. The bill then entered the Senate, first as a separate bill then resubmitted as an amendment to the House bill. The Senate approved the bill 60-38 with every Democrat and two Republicans voting for the bill and the remaining 38 Republicans voting against the bill. The House approved the final bill with a vote of 246-183 in the House of Representatives with 246 Democrats voting for the bill and all 176 Republicans and 7 Democrats voting against (1 Republican did not vote).

Components of the Act

The Act primarily focuses on infrastructure spending, health care, extended unemployment benefits, middle-class tax cuts, and a long-term investment in education spending. Obama hoped to save 3.5 million jobs with the plan, primarily in the manufacturing and construction sector that were hit hard by the recession and the ongoing housing and financial crises. The final bill had a price tag of $787 billion. The act was proposed in the first week of President Barack Obama's term as 44th President of the United States. Obama also pledged to incorporate financial responsibility and accountability in the bill, and created a website called "recovery.gov" to allow the public to review the bill and provide comments. Recovery.gov will also allow the public to see where the money is spent. Obama later placed Vice President Joe Biden in charge of the ARRA spending.

Criticism from conservatives

Conservatives have been greatly outspoken in their criticism of ARRA. They contend that the ARRA is a liberal spending bill that will not solve the problem of the economic crisis, inflates the government, contributes further to the national debt, and may ultimately lead to socialism. Senate Republicans frequently claimed the bill was passed too quickly and that allowed wasteful government spending to creep into the bill. House Minority Leader John Boehner even showed his displeasure by throwing the bill, at the time 1100 pages long, on the floor during debate.

During a debate between Republican National Committee Chairman Michael Steele and Democratic National Committee Chairman Virginia Governor Tim Kaine, Fox News anchor Gretchen Carlson asked Kaine:

"Governor, let me start with you. On the whole idea of what Barack Obama said last night, he did believe in the private sector, but he does believe that the government needs to step in to jump start the economy. In your mind, is that starting the role of socialism?"

Newly elected GOP chairman Michael Steele, the former Lieutenant Governor of Maryland, voiced his opposition to the bill, intelligently stating that the bill would create "work, not jobs," telling George Stephanopoulos on ABC This Week:

"No, it's not a job. A job is something that -- that a business owner creates... [Work from the government] is a contract. It ends at a certain point, George. You know that. These road projects that we're talking about have an end point."

Southern governors Bobby Jindal of Louisiana, Haley Barbour of Mississippi, and Mark Sanford of South Carolina have been outspoken in criticizing the ARRA and have said publicly that they plan to refuse some of the money that would be allocated to their states.

The conservative solution of the economic crisis

Conservative pundits and leaders provide their solution of the economic crisis as tax cuts to small businesses and reduced government spending in a manner similar to Reaganomics. This is commonly considered a modern implementation of "trickle down" economics that was widely criticized by Barack Obama during his presidential campaign. (Interestingly, Karl Rove now argues that Obama's "trickle down economics" won't work [1]). Under the conservative model, government tax cuts to small businesses will encourage the owners to expand due to a lower cost of capital. Tax cuts to employees would encourage them to work or to seek work harder. The businesses would then hire additional employees and thus expand the economy with minimal governmental intervention.

Many Republicans (such as Paul Ryan) have basically pushed for austerity which, in a depressed economy, is becoming increasingly cranky economics given how well it's working out for other countries. There's also the fact that the push for austerity in the first place was partially the result of an Excel error.

Pundits such as Michelle Malkin and Sean Hannity also erroneously point to numerous hidden "earmarks" in the act, at one point stating that there were 9,000 of them in the text of the bill. Governor Bobby Jindal provided his examples of what he believed were two earmarks in the Act in his response to President Barack Obama's first address to Congress on February 24, 2009.

List of earmarks in ARRA as defined by conservatives

Bobby Jindal:

• $300 million for new cars for the government
• $8 billion for high speed rail projects, such as a Maglev train from Disneyland to Las Vegas
• $140 million for "something called volcano monitoring"

Sean Hannity:

• $30 million to save a Salt Harvest Marsh Mouse...in Nancy Pelosi's district
• The railway for Harry Reid
• Numerous earmarks that Democrats "hide"
• All terrain vehicle trails

Michelle Malkin:

• $200,000 for “Tattoo Removal Violence Prevention Outreach Program”
• Maine lobster earmark in the omnibus
• $5.8 million earmark for the “Ted Kennedy Institute for the Senate…for the planning and design of a building & an endowment”
• National Council of La Raza, $473,000 earmark from Sens. Bingaman and Menendez

Outcome

A great deal of the discussion of the stimulus is divided along ideological lines. The proponents of the stimulus as well as many later evaluations follow a Keynesian approach to economics. Critics of the stimulus included Keynesians and liberals who argued that it was too small to be fully effective and those in conservative schools such as the Chicagoans. Because of this split, not only is there no agreement over the success of the American Recovery and Reinvestment Act, but few can even agree on how such success would be measured. There have been many studies, however, and the general consensus is that the stimulus was effective to at least some degree, although that effectiveness was hampered by its slow implementation and limited size. President Obama has consistently called for a second round of stimulus, eventually doubling down on this view with a strongly-worded speech demanding a new $447 billion bill with similar intentions - if a new label of "jobs bill."

External links

• Recovery.gov
• Full Text of ARRA
• Assessing the Stimulus and Its Aftermath, Econbrowser
• GAO on ARRA