The Truth Behind the Trillion-Dollar Stimulus, the Biggest Economic Recovery Plan in History (2012)
The American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L.
111--5), commonly referred to as the Stimulus or The Recovery Act, was
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 Great 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 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.[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 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 laureate Paul 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".
Economists such as Martin
Feldstein, Daron Acemoğlu, National Economic Council director Larry
Summers, and Nobel Memorial Prize in Economic Sciences winners Joseph
Stiglitz[54] and Paul Krugman[55] favored large economic stimulus to
counter the economic downturn. While in favor of a stimulus package,
Feldstein expressed concern over the act as written, saying it needed
revision to address consumer spending and unemployment more
directly.[56] Just after the bill was enacted, Krugman wrote that the
stimulus was too small to deal with the problem, adding, "And it's
widely believed that political considerations led to a plan that was
weaker and contains more tax cuts than it should have — that Mr. Obama
compromised in advance in the hope of gaining broad bipartisan
support."[57] Conservative economist John Lott was more critical of the
government spending.[58]
On January 28, 2009, a full-page
advertisement with the names of approximately 200 economists who were
against Obama's plan appeared in The New York Times and The Wall Street
Journal. The economists denied the quoted statement by President Obama
that there was "no disagreement that we need action by our government, a
recovery plan that will help to jumpstart the economy". Instead, the
signers believed that "to improve the economy, policymakers should focus
on reforms that remove impediments to work, saving, 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."[59] The
funding for this advertisement came from the Cato Institute.[60]
On
February 8, 2009, a letter to Congress signed by about 200 economists
in favor of the stimulus, written by the Center for American Progress
Action Fund, said that Obama's plan "proposes important investments that
can start to overcome the nation's damaging loss of jobs", and would
"put the United States back onto a sustainable long-term-growth
path".[61] This letter was signed by Nobel Memorial laureates Kenneth
Arrow, Lawrence R. Klein, Eric Maskin, Daniel McFadden, Paul Samuelson
and Robert Solow. The New York Times published projections from IHS
Global Insight, Moody's.com, Economy.com and Macroeconomic Advisers that
indicated that the economy may have been worse without the ARRA.
http://en.wikipedia.org/wiki/Stimulus...
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