The American Recovery and Reinvestment Act (ARRA) provided $787 billion in funding to promote spending and economic growth during the global recession. It funded “shovel-ready” projects and included tax credits and relief to state budgets. Economists were divided on its effectiveness.
American Recovery and Reinvestment Act (ARRA) funds are funds allocated by the United States federal government to a variety of agencies and institutions to promote spending and economic growth. It was approved in early 2009 by Congress and signed into law by President Barack Obama. Its purpose was to stimulate the flagging American economy by promoting construction projects, weatherization efforts, and other capital spending.
ARRA funding was provided as a direct result of the global recession that caused home values to plummet and unemployment rose to nearly 10% between late 2008 and 2009. The related financial crisis made credit very difficult to obtain. obtain for both businesses and local government, It is difficult to embark on capital projects or purchase high-priced items. To stimulate spending, the US government chose to provide funding for a variety of projects to help stimulate the economy and job growth.
Total ARRA funding was $787 billion United States dollars (USD). Extended unemployment benefits, new tax credits, competitive grant programs, direct relief to state budgets, and many other programs and initiatives were included in the program. Each element was intended to preserve and create jobs, promote economic growth and efficiency, protect the country’s most vulnerable populations, and minimize cuts to essential services.
Economists were divided in their opinion on funding ARRA as a way to deal with the recession. While many saw it as the ideal way to beat the recession, others felt that more government spending was not the answer. Others believed that funding levels were not large enough to offset the depth of the recession.
One of the main concepts of ARRA’s funding was that it funded “shovel-ready” projects that would result in immediate spending and hiring. Ideally, the crafters of the bill envisioned uses such as local governments using the funds to begin bridge repairs and similar large-scale projects for which they previously did not have the money. This happened in many cases, but critics of the stimulus bill argued that it did not happen on the scale or with the speed anticipated.
Despite the fairly stringent requirements for the ways ARRA funding could be spent, many states were able to use it to offset their own budget shortfalls. While this generally avoided the need to raise taxes or institute austere service cuts, the temporary nature of the funding meant that states were delaying rather than addressing systemic budget deficits. In early 2011, common wisdom accepted that ARRA funding mitigated the worst of the recession, but it remained unclear how states and the federal government would try to pay its current costs.
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