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In February of 2009, Congress passed the American Recovery and Reinvestment Act (ARRA). The act was later signed into law by President Obama in order to address the needs of an economy in recession. The goal of this funding, unlike previous "bail out" dollars to large corporations, was to specifically invest in new jobs and direct assistance to individuals. This purpose will ideally be achieved through tax cuts to homes and businesses, funds to education and health care, extension of unemployment benefits and new government contracts.
Tax Cuts for Homes and Businesses
In total, the package included $288 billion in tax cuts. These cuts are largely aimed at low-income Americans and small businesses. Small businesses hiring individuals out of employment, for instance, will receive tax breaks on the income paid to those individuals. Further, small businesses investing in renewable energy technology receive new incentives to do so. The Child Tax Credit was also expanded under the program.
Federal Funding Increases
The funding increases are aimed at the primary sectors of education and health care. An increase in funding to public schools took the form of the "Race to the Top" program. School districts are required to implement several federal policies, including teacher incentives based on standardized test performance, in order to be eligible for the funds. The health care industry received funding for better computerized medical systems in order to reduce expense associated with misreporting. Funding for the unemployment insurance industry was also increased. Congress passed two extensions on unemployment benefits, increasing the eligibility period by 20 weeks. All told, $224 billion dollars in new funding was allocated toward these initiatives.
New Contracts and Loans
Contracts and loans were expanded to infrastructure development. The $275 billion in funding for these contracts will go in part to the renewable energy industry. Federal buildings will also be "weathered" as part of the initiative, providing new jobs to those individuals who participate in the programs. One million private homes nationwide will receive the same treatment through the grants. Congress hopes the new jobs created through infrastructure development will be lasting changes in the currently weak economy. Repairing of roads and bridges will continue well into the next decade, and expansion of the broadband and wireless networks will also be funded by the ARRA.
Increased Transparency
Finally, the ARRA aims to increase the transparency of where federal dollars are actually allocated. This may not seem to directly help individuals at first. However, many Americans are interested in knowing just what happens with the $800 billion dollar package. Reporting requirements are stringent, and updates on the funding will be available at Recovery.gov as public information. The goal is for the public to engage in the program as much as the federal government has engaged in it. The grants and loans should be competitive, and the federal government hopes a large number of businesses and homes step in to take advantage of the new services being offered. As of March 20010, it is yet to be seen whether this transparency or the programs themselves will be effective in promoting economic recovery.
