The American Recovery and Reinvestment Act of 2009

Jose Alvarado

April, 26th/2016

Dr. Kassens

The American Recovery and Reinvestment Act of 2009

The intent of the expansionary policy was mainly to bring back balance into the Economy. The American Recovery and Reinvestment Act of 2009 tried to help the unemployment people, people with kids, veterans and homebuyers.

For the unemployment people, the Act would give them the “Up to $2,400 in Unemployment 

Benefits Tax Free in 2009” benefit. Also “workers who lost their jobs between Sept. 1, 2008, and May 31, 2010, may qualify for reduced COBRA health insurance premiums for up to 15 months.” This act helped to give the unemployment people a chance to keep spending. It would be better, for the insurances, for unemployment people to pay a little less than just quitting their coverage.

For the families with kids, they received “Education benefits. The American Opportunity Tax Credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.” Also they would get the “Additional child tax credit.” Education is essential for the economy of a nation. By giving the citizens a chance to help themselves with giving them kids a better education, in the short-term it would have been expensive, but in the long-term when those kids grow up, it will definitely pay off. Probably affecting the Long Run Aggregate Supply curve.  

For the veterans, they got the “$250 for Social Security Recipients, Veterans and Railroad Retirees” benefit. Some veterans had their savings in banks, and when the depression hit the U.S.A they probably lost their life savings, and they probably did not have the chance to make up that money because they don’t have the skills they used to have.

Lastly but not least, the Homeowners benefit. “Homebuyers who purchased by April 30, 2010, and settled by Sept. 30, 2010, may be eligible for a credit of up to $8,000.” At the time, the real state was booming, and so people were buying houses but most of them bought the houses by acquiring debts from banks. And so when the depression hit, most people stopped paying the mortgages because the house value was not as high as when it was first acquired. Banks began taking the houses from the homeowners, and not been able to sell them was one of the causes of their bankruptcies. This benefit would have help people on the short-run because the homeowners, who still had the debt, wouldn’t want to pay from the fact that the price of the house is lower than the debt they are paying. Affecting the Short-run aggregate supply curve.

The American Recovery and Reinvestment Act of 2009 would have not only benefit the individuals but businesses as a whole. The Act of 2009 would have given the “Work Opportunity Tax Credit. This expanded credit added returning veterans and ‘disconnected youth’ to the list of new hires that businesses may claim.” Also “small businesses can offset losses by getting refunds on taxes paid up to five years ago.”

The impact such policies have on the economy that it would have increased production and decrease price levels, but later when production was high enough then the price levels could increase, creating a balance in the economy. Basically creating a balance in the aggregate-demand curve.

https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center