Question

What was the intended purpose of the American Recovery and Reinvestment Act (ARRA) of 2009 and why was this legislation proposed? Include key economic terms from Module 1 lectures and the text in your answer (GDP, mixed economy, etc.).

Answer 1

Purpose of the American Recovery and Reinvestment Act (ARRA) of 2009

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 affected by the recession and invest in infrastructure, education, health, and renewable energy. The Act included direct spending in infrastructure, education, health, and energy, federal tax incentives, and expansion of unemployment benefits and other social welfare provisions. It also created the President's Economic Recovery Advisory Board.

ARRA listed the basic intent behind the proposal. This Statement of Purpose included the following:

1. To preserve and create jobs and promote economic recovery.
2. To assist those most impacted by the recession.
3. To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
4. To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
5. To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.