The American Recovery and Reinvestment Act of 2009 Law Research Paper

The American Recovery and Reinvestment Act of 2009
Name: Mingyuan Chang
POL323
Date:11/10/2020
The American Recovery and Reinvestment Act of 2009
Economic recession is one of the challenging prospects for any nation. In 2009, the U.S. was indulged in an economic recession that threatened to cripple its vital industries, including manufacturing, banking, and real estate, among others. The government had to challenge the status and develop fast and efficient economic stimulation strategies. The American Recovery and Reinvestment Act of 2009 has been considered as the strategic input implemented by President Obama to steer economic stimulation after the 2008 economic depression. The American Recovery and Reinvestment Act of 2009 was subject to criticism, with a faction supporting the fact that it targeted creating and maintaining jobs in various strategic industries while another faction disapproved of its impacts on America’s taxpayer. This research will unearth the elements of debates about the American Recovery and Reinvestment Act of 2009 by analyzing its various prospects. The outputs of this analysis will be vital in understanding the Act in terms of its history, the path through the legislative process, arguments for and against it, modifications of the bill, and the voting process that approved the bill.
American Recovery and Reinvestment Act of 2009- from herein- referred to as the Act and/or ARRA that was passed into law on Feb 17, 2009, by the then-president Barack Obama. The Act was formulated as a way to address the 2008/2009 recession that threatened to sink the country into an economic depression. According to Klein and Staal (2017), the main reason for the adoption of the Act was the preservation and creation of jobs and the stabilization of state governments through affordable service delivery as ways to induce an economic recovery. The Act focused on various ways to improve the rate of employment and local production, including increasing local and state government funding, supporting the economically challenged, offering temporary tax relief to growing businesses (CBO, 2015). Some of the ministries and service departments addresses in the Act include education, health, energy, agriculture, security, environment, transport, and finance. Stimulating growth in the above industries was believed to be a valid turning point in reviving the economy that was fast losing its few available jobs and creating no jobs at that time of need.
Background
The period that followed the 2008 presidential elections was a challenging one for the U.S. The challenge stemmed deeper than the aftermath of a grueling indulgence in political campaigns. Before the 2008 presidential elections, the U.S. economy was struggling with a devastating economic depression. The challenge began in 2007 and peaked in 2008. By December 1, 2008, the nation stayed uncertain about the future of that recession. Concerns were lingering over the continuing loss of jobs and the death of other industries. The recession was at the core of the election campaigns. Having been elected, Obama’s focus was now geared towards reviving the economy.
President Bush had noted the grinding impacts of the recession almost a year before and instilled strategies to abate its impacts. At the end of 2007 and the onset of 2008, the Bush administration had instilled measures aimed at addressing the dwindling economy. The government’s response at the time was multifaceted, with emphasis put on existing law and new legislation, budgetary policy, Federal Reserve revitalization, and monetary policy changes. Significant among the reactions was the passing of the Economic Stimulus Act (ESA) of 2008. The bill that was signed into law in February 2008 was primarily focused on recovery rebates for individuals and investment incentives for businesses. The impacts were evident in reduced revenues by $152 billion in F.Y. 2008 and $16 billion in F.Y. 2009. The inputs of ESA barely revitalized the economy as intended. Besides, the nation was much indulged in the political agenda more than it did the economic crisis.
President Bush’s administration commitment to re-stabilize the economy was noted again on October 3, 2008, when he signed into law the Emergency Economic Stabilization Act (EESA) of 2008. EESA was an extension of unemployment compensation majorly. Through EESA, the government mobilized $700 billion in troubled assets from financial institutions in the form of the Troubled Assets Relief Program (TARP). The end of the 110th congress was accompanied by congressional attention turning into actions on the supplemental appropriations act to respond to the deteriorating economic situation. The House passed the measures a Job Creation and Unemployment act of 2008. The president threatened to veto the bill even as the Senate did not consider comparable legislation before the term ended.
The beginning of the 111th congress was met with the challenge of developing policies that would effectively address the economic situation with better success rates than the previous administration’s efforts. President Obama elevated economic recovery among his top priorities in the first year of administration. Obama’s strategy would emphasize the supplemental appropriations act with substantial mandatory spending and revenue components. The supplemental appropriations act was one of the principal strategies that congress considered as a short-term input into the economy. President Obama continued some of the economic policies previously enacted under the Bush administration. The Consolidated Security, Disaster Assistance, and Continuing Appropriations were some of the acts that were continued under the prevalent appropriation act. The considerations on the 9 remaining acts were postponed in FY2009 with a possible enactment of the ARRA.
The Act’s Path to Becoming a Law
The American Recovery and Reinvestment Act of 2009 was introduced in the House as H.R 1 on January 26, 2009. Representative David Obey introduced the bill as the chairman of the House Appropriations Committee. The move was a combination of multiple legislative approvals that were approved by multiple house committees. First among the amalgamating committees was the H.R 598, the American Recovery and Reinvestment Tax Act of 2009. The recovery and reinvestment act was a measure geared towards revenue allocations and other provisions. Several house committees participated in the development and the approvals of the bill. Besides being marked by the House Ways and Means Committee, the H.R 598 also underwent the approval process through committees including the Science and Technology Committee, Financial Services Committee, Education and Labor Committee, and House Energy and Commerce Committee.
The second complementary legislation to ARR was HR 629 of the Energy and Commerce Recovery and Reinvestment Act. The HR 629 was a measure containing broadband health, energy, and communications-related provisions. HR 629 was marked up by the House Energy and Commerce Committee through unanimous consent. HR 629 was well-referred to other committees that included the Ways and Means Committee, the Science and Technology Committee, and the House Education and Labor Committee. The participation of the above auxiliary committees was discharged from further consideration of the measure. The last legislative component in the path to the introduction of ARRA was HR 679; the American Recovery and Reinvestment Act 2009. The partial measure to the Act was to contain appropriations-related provisions. This Act was effectively marked by the House Appropriations Committee and was approved by a vote of 35 against 22.
The Act was introduced to the House on January 26th, 2009, for amendments and jurisdiction decisions and later transferred to the Senate on 29th for review and approval. It was then returned to the House on 10th February 2009 to resolve the differences in the senator recommendations, and the house review was tabled on the 13th. The Senate agreed to the changes, and the bill was presented to the president on 16th and signed into law on the 17th of February, 2009.
After its introduction on 26th, the bill was passed through the Committees and Appropriations and Budgets and Houses for considerations for debate in the House. The Committee considered the bill and was approved as the original Bill for further amendments on the 28th of January. Some of the amendments proposed by the House on 28th to H.R.1. include H. Amdts.12-15 touching on energy, transport, and state funding (CRS, 2009). Before handing to the Senate on 29th, the House proposed ten amendments to the bill approving seven spread among energy, transport, and funding (CRS, 2009).
The bill from the House was received and read in the Senate on 29th January and was tabled on 2nd February 2009. According to the Congressional Research Service (2009), the Senate made several amendments to the House Bill labeled from S. Amdt.98-570. Some of the senate proposals on the bill touch on infrastructure investments, revenue, biomedical research, support for small businesses, department of defense funding, and social security benefits (CRS, 2009). The Senate also reviewed the bill’s proposals on education funding, veteran welfare, and displaced people. House received the senate amendments on 10th Feb, tabled on 13th, and presented to the president on 16th and became law after President Barack Obama signed it on 17th February 2009.
The voting process for The American Recovery and Reinvestment Act of 2009 was highly partisan, with legislators leaning towards their political parties to cast their votes. The bill was subjected to a house vote on January 28, 2009. The bill would pass by a 244-188 vote. All the democrats except 11 voted for the bill (Mathews, 2011). With only one Republican restraining from the voting, the other 177 voted against the bill. The bill faced notable opposition, especially from the Republicans. The opposing arguments included the understanding that its implementation would impose a long-term financial burden on the American taxpayer. With a possible imbalance in the spending between the public and private sectors, the worry was majorly anchored on the possibility of demanding another legislation upon ARRA’s failure. The other aspect of the opposition was based on the understanding that the nation could overcome the economic crisis without resorting to the American Recovery and Reinvestment Act of 2009 (Mathews, 2011). The then vice president, Joe Biden, had indicated that the economy was on its way to recovery and would not require legislation towards a stimulus program. However, the arguments were defeated because the U.S. kept losing more jobs with industries, especially the construction industry, failing consistently. At the time of the ARRA enactments, uncertainties clouded the U.S. over when the depression would end.
Goals of the Legislation
The timing of AARA of 2009 was meant to act as an economic revival program of the government to provide and preserve jobs through increased state government expenditure through a fiscal stimulus with an almost $800 billion budget (Klein and Staal, 2017). The Act’s goal was to make supplemental appropriations in selected sectors of the economy as a way to increase self-sufficiency to ministries, local and state governments (CRC, 2009). The Act was aimed at injecting money into the U.S. economy with targeted sectors like infrastructure, social benefits- especially for challenged groups-, science and health technological investments, and subnational governments as a way to increase jobs and help with economic revitalization (Carley, 2016; Crucini and Vu, 2017). Each of the aspects targeted by AARA had different levels of support from legislators and economists, depending on the projected impacts of its legislation.
Local and State Government Aid Funding
The Act’s goal in increasing local and State Governments was through some initiatives like raising the Medicaid charges, education federal aids, support to commute projects and road constructions, revolving & relief funds, and tax credits (CBO, 2015). The funding’s main role was to stabilize state governments weakened by the depression as well as balance the taxes that were above the generated revenues, thus straining the service delivery (Klein and Staal, 2017). These inductions helped in maintaining the services offered especially in medicine, to maintain the workforce and social care. The goal behind the surge in local government by federal injections is to increase the financial resources, which would result in more output (Carley, 2016).
Some of the proponents of the formula used to fund state governments argued that the Act did not specifically state the requirement for the spending but rather allowed for flexible funds in the oversight expenditure (Howard, 2014). This means that each state had the freedom to choose whatever project to spend on, which can easily lead to misappropriation of funds. In this regard, Howard (2014) notes that this would necessitate audit agencies as overseers of state spending. Another argument against injecting stimulus funding to state governments is that without offering the necessary incentives to work and spend will increase production but leave a substantial debt in the long-term. Other studies also indicate that the stimulus failed to increase individual expenditure and consumption and government purchases (Mathews, 2011).
Job Creation
One of the main reasons for the implementation of the Act was to have an immediate increase in the rate of employment (Barnow, 2013). One w...