Definition of the Economic Stimulus Bill
The 2009 American Recovery and Reinvestment Act, better known as simply the economic stimulus bill, marked an early legislative victory for President Barack Obama, who made such a bill a priority of his successful 2008 presidential campaign. The bill passed, but not without concerns about the long-term effects of its cost.
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Function
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President Obama argued that the bill was needed to stimulate economic activity. The U.S. economy went into a recession in 2008 in the wake of a global financial crisis.
Features
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The 2009 stimulus bill featured a series of tax credits and reductions. It also increased federal spending on various government programs and initiatives.
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Tax Cuts
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The key tax break in the bill is a $400 per-person credit known as "Making Work Pay." In addition, the bill cuts some individual and business taxes.
Spending Increases
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The spending side of the stimulus bill increased federal expenditures on education and health care. It also extended unemployment benefits.
Infrastructure
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The stimulus bill provided funding for infrastructure projects such as road and bridge construction. During the 2008 presidential campaign, Obama identified improving the nation's crumbling infrastructure as a national priority.
Effects
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Overall, the stimulus bill carried a total price tag of $787 billion over a 10-year period. An analysis by the Washington, D.C.-based Committee For a Responsible Federal Budget warned that the additional government debt could pose long-term economic burdens, but was optimistic that the package could provide short-term stimulus to the economy.
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