The American Recovery and Reinvestment Act of 2009

Kristen Tolbert
Blog Post 2

During the Great Recession,  the American Recovery and Reinvestment Act of 2009 was passed.  The intent of the American Recovery and Reinvestment Act of 2009 to was to stimulate economic growth.  The government provided specific ways to help individuals. Firstly, they provided education benefits.  These were intended to help both students and the families of those students find ways to be able to afford the cost of getting an education.  Earned Income tax credit, health coverage tax credit and additional child tax credit were provided too. These allowed more families to qualify for getting a tax credit as well as paying more of the premium.  Taxpayers who purchased new cars were able to deduct the state and local sales taxes that they paid when purchasing the car, or other fees they paid in a state that does not have sales tax.   The government also implemented provisions that specifically affected business.  A work opportunity tax credit was created which allowed businesses to claim a credit for hiring returning veterans and troubled youth.  Businesses were also able to receive incentives for their energy efficiency.  Municipal Bond Program were also created to finance many different things such as construction, and public projects.  All of these programs can be used to stimulate the economy and improve productivity.  If companies are better able to afford the tools necessary for the job, then the workers can make the product easier and quicker and customers can better use the product.   If people have more money to spend, after receiving tax credits or receiving money back then they have more money to spend from their income on things in the economy.   Also, if the government is able to provide help with costs of education then more people can attend school and become trained for the necessary skills that they need for a job.  The act was intended to increase purchasing.   When people have the option to put less money into taxes, they are able to increase the consumption part of GDP.   If people purchase more, then the aggregate demand will increase in the short run. They are more likely to spend their money on other things in the economy since they now have less of their income going towards taxes.  Increasing production and consumption will cause an increase in the short run aggregate supply and aggregate demand in the short run.  However, in the long run, things change a bit.  If the aggregate demand is increased in the short run, then more people want the product and the price of the product will then increase.  As the price increases, less consumers will purchase the product because it is now costing them more to purchase the same product that they were originally purchasing.   Now that consumers are purchasing less as well as the government giving tax breaks and money back on some purchases, the government debt is going to increase.  In the short run, this will increase aggregate demand and supply, but in the long run it is going to hurt the economy because it will increase government spending and put our country in even more debt. 

The American Recovery and Reinvestment Act of 2009: Information Center. (n.d.). Retrieved April 26, 2016, from https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center

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

US "American Recovery and Reinvestment Act"

The US went into what is known as the great recession during the years 2007, 2008, and 2009. To combat the recession the government put an act into place called the American Recovery and Reinvestment Act. A recession occurs when the unemployment rate goes up causes the money supply to go down, and with this drop in money supply it is hard to pay for employment and causes people to be frugal with their money. With the decreased amount of money going into the economy the US put this act in place to reverse this. The act was meant to create increased employment rates and give benefits to those who recently got laid off. By doing this the government was able to lower inflation and increase spending which in turn helped the economy.

The act itself was aimed specifically to help the economy as quickly as possible. To do this the act included methods such as, tax cuts, domestic spending fluctuation, and also including benefits that worked with unemployment and education. The main point of all these implementations of the act was to get more money into the economy. For instance, the tax cuts allowed those who were employed to make more money and the government also increased tax returns giving even more money into the economy. By recycling the money already in the economy, and not producing more currency, this prevented inflation. During the recessions there were many layoffs which left many people unemployed, in addition to the decrease in hiring’s that businesses were making. To help, the government increased their own spending and gave more benefits to those who needed the money. This included giving benefits to those who were unemployed and giving finical aid to students who couldn't afford higher education. This is a highly debated topic today, on how much college costs that is. the reason the government spent money on getting students through college is so that those students could get better jobs coming out of college, these jobs would pay more thus creating more money circulating through the economy. With all of this increased government spending there is a concern that this could hurt the economy in the long run if the government can’t gain back the money it spent during the years following the recession. 

Domestic spending is a very important factor for any economy. Domestic spending is a key factor in a countries RGDP because usually households are not represented in GDP. RGDP is very important to an economy because it is shows how much people are spending. If you look at the aggregate demand curve it will usually show prices dropping and RGDP rising. The act put in place by the government prevented inflation, as said earlier, which means that prices will not increase but rather stay the same or drop, and spending would increase. The increase in spending created a rise in RGDP. With an overall increase in spending and decrease in unemployment the Government was successful in their implementation of the American Recovery and Reinvestment act. 

Bibliography:

Renwick, Danielle. "U.S.- Cuba Relations." Council on Foreign Relations. Council on Foreign Relations, 24 Mar. 2016. Web. 21 Apr. 2016. <http://www.cfr.org/cuba/us-cuba-relations/p11113>

US-Cuba Trade Relations

In the years following World War 2 there was much speculation centered on the political rivalry held between the Democratic US and the Communist Soviet union. Both of these countries wanted to implement their political ideas to unstable nations to create a larger contingency of communist and democratic nations, this would eventually turn into what we know today as the cold war. Most of the countries that were being influenced by the US and the USSR were in the European and Middle East region but Cuba was also a country that was unstable. The US put Fulgencio Batista into power to try and establish a democratic government but in 1959 Fidel Castro, a communist idealist, overthrew Batista. This led to the USSR opening up trade and political diplomacy with Cuba. The US saw Cuba as a threat and decided to cut tie with the country. As the relations and trade between Cuba and the USSR increased, the US set a full on economic embargo on Cuba in hopes to cripple their economy. In 1961 an event known as the Cuban missile crisis happened, this was a conflict involving nuclear missiles being sent to Cuba by the USSR leaving the US open to a close and effective nuclear strike. This crisis basically vilified Cuba as a communist nation that was an enemy of the state.

The cold war ended in 1991 but Cuba was still cut off from American diplomacy. In 1992 the US said that they would re-open trade with Cuba if they were to become a democratic state. As seeing that this wasn't going to happen the US and Cuba remained opposed to trade with each other. In efforts to relive tension between the two states, the US exported goods to Cuba such as produce (i.e. agricultural goods) and medical supplies that were needed within the country. This one sided export of goods left the US at a 1.1.26 trillion dollar deficit. Barrack Obama’s first term as president (2008-2012) had focus on bettering the foreign relations between these two countries, and in 2014 Barrack Obama was able to re-open diplomatic relations with Cuba. Fidel Castro, who had since died, was succeeded by Raul Castro. Raul and Barrack decided that relations between the two states could offer help with the human rights issues that had come about within the country. Since the re-opening of relations in 2014 the US has risen to become Cuba’s 5th largest trading partner, still trading agricultural goods but also creating a large trade base with telecommunications. 

Both the US and Cuba suffered trade losses around 1 trillion dollars because of the embargo and realized that this was hurting both economies. Both countries recognize the problem with restrictions on their trade, even today. The net export and imports that countries have gathered will only decrease with these trade restrictions. This is still an ongoing debate within congress as to whether or not they can forget the past and re-open full tare with Cuba. The embargo that was placed on Cuba hurt them more than it hurt the US as seeing that the US has a larger economy and has a more stable economy. If the US and Cuba were to open up trade again both imports and exports of both countries would rise which would in turn strengthen both economies. This is important to both countries, but more so for Cuba. If the US and Cuba can settle their differences and begin trading with each other with no restrictions this would not only show diplomatic improvement but also economic improvement. 

Bibliography:

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

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=expansionary+fiscal+policy

Reid R Melillo. The Impact of The American Recovery and Reinvestment Act of 2009

Reid Melillo

4/26/16

Dr. Kassens

MacroEcon122

The Impact of The American Recovery and Reinvestment Act of 2009

            Following the Great Recession which stunned our economy from 2007 to 2009, the United States Government and The Obama Administration instituted “The American Recovery and Reinvestment Act of 2009”. This provision is commonly referred to as the Stimulus Act, referring to its intent to stimulate and boost the economy by means of expansionary fiscal policy.

The intent of this expansionary policy is to close a recession gap, decrease the unemployment rate, and stimulate the economy. This is accomplished by instituting provisions that increase government purchases, an increase in transfer payments, and of course to cut taxes. Specifically for this act, the provisions that were put into place focused a lot of its attention on cutting taxes. One specific provision of the “The American Recovery and Reinvestment Act of 2009” was the “Earned Income Tax Credit” where a family can earn increased tax breaks based on their modest income and the amount of children that they have. Another example of a stimuli provision was how people can earn up to $2,400 in unemployment benefits, tax-free. Provisions like these allow the person to keep more of their paycheck or saved money, where they can then spend that money in the market for goods and services, stimulating the economy.

Acts such as this and other expansionary policy acts rely on the Aggregate demand and aggregate supply curve in both the short run and long run scheme to ensure that these policies will in fact stimulate the economy and help to boost the economy out of a recessionary gap. The aggregate demand curve shows the quantity of goods and services demanded in the economy at any given prices level using the equation Y= C + I + G + NX. As price increases all of these variables are affected in different ways, as stated above, “The American Recovery and Reinvestment Act of 2009” made provisions that cut taxes for the people. Due to the additional income people will spend some of this extra money on consumer goods shifting the aggregate demand curve to the right resulting in an increase in demand for goods and services and benefitting the economy. Other areas of expansionary fiscal policy affect aggregate demand such as an increase in government purchases, where the government will spend money that leads to more money in the economy, but also increased labor due to the need of people to produce the good that the government bought. This also shifts the aggregate demand curve to the right. The aggregate supply curve works differently in the short run and long run affects, leading to a difference in how expansionary fiscal policy affects these two curves. First, in the long run, aggregate supply can be affected by expansionary policy in terms of how much goods and services are produced. When the government used the “The American Recovery and Reinvestment Act of 2009” they cut taxes, which led each worker to hold on to more of their pay check. This provides people with an incentive to work more, and if people work more the quantity of goods and services produced will be much higher, shifting the aggregate supply curve to the right.

References:

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

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=expansionary+fiscal+policy

American Recovery From the Great Recession

Officially beginning in December of 2007 and lasting until June of 2009, the Great Recession dropped a bomb on our nation's economy. Consumer spending and business investment were severely cut back. Unemployment rates skyrocketed and the labor market lost 8.4 million jobs. In order to combat this economic decline, Obama signed the American Recovery and Reinvestment Act of 2009 (February 17, 2009). The purpose of the expansionary policy was to combat this massive job loss and included tax credit for individuals and families that applied (usually three children or more). From an individual standpoint, the Act also included homebuyer credit, energy incentives, small social security payouts, reduced health insurance premiums, and increased tax-free unemployment benefits. Additionally, the Act helped students and their families to pay their higher education expenses. Businesses are far more likely to hire students with higher education.

Theoretically, such an act would hope to provide more jobs to the failing economy, along with reducing the already substantial layoff rate. A fiscal policy such as this also helps to reduce inflation by increasing money supply and putting emphasis on domestic spending. It encourages citizens to continue investing in businesses and to maintain customary consumer spending trends. These economic stimuli increased government spending in order to reboot financial drawbacks. "Work Opportunity Tax Credit" was introduced to the Act, expanding credit and encouraging businesses to hire more veterans and disconnected youth.

In the long run, when citizens are paying more for the same goods they used to buy, it can cause unrest. People may demand higher wages at their job, while the government continues to hand out tax cuts and refunds to qualified citizens. This can be a slippery slope from a political standpoint. The government needs to allow their citizens to continue consuming and investing, but all these breaks/refunds could cause the government itself to lose money. It takes great care to maintain balance. Individual states who faced larger budget deficits were awarded fiscal relief by the Act, and the employment rates in these states rose. Even so, the balance was not quite maintained, and although the Act served to pull us out of the recession, our nation's deficit has still increased due to the rise in private spending.
However, the Act succeeded in increasing financial investment from the public in the short-term. GDP rose slightly, and there were 1 million new U.S. jobs created by the second quarter. Although, years after the Act was put into place, further political development has led to a sharp decrease in public spending of all kinds. Additionally, the neglect or misuse of potential U.S. resources remains an issue, namely the potential for public labor. Still, tax breaks and refunds gave citizens more money to spend, easing some of the stress of their daily lives. Aggregate demand increased, and money supply grew significantly.


References:

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

http://www.epi.org/publication/short-long-term-impacts-infrastructure-investments/

Effects of the American Recovery and Reinvestment Act of 2009

Dylan Stein

Effects of the American Recovery and Reinvestment Act of 2009

            The American Recovery and Reinvestment Act of 2009 was put into place under President Barrack Obama while the great recession of our country in the mid to late 2000’s was going on. The American Recovery and Reinvestment Act of 2009 was essentially a stimulus for a failing economy and a way to create jobs in the private sector. Unemployment rates were through the roof and this act essentially provided jobs for the unemployed and would try to stop the lay offs that were happening to people across the United States every day and give them new job opportunities. By the year 2019 this act will have cost the United States $831 billion dollars since it was invested in multiple facets of the economy. These sectors that the was act applied to are health, education, energy, and infrastructure. This act also expanded unemployment benefits getting people various benefits, one of which being welfare, put into place federal tax incentives, and created the Presidents Economic Recovery Advisory Board, which is a panel of non-governmental experts.

            The short term impacts of the ARRA were fairly positive since they were put into the U.S. economy. American taxpayers saw a $151 billion dollar return on the money that was spent to create this act in the first quarter. There were 1 million new jobs by the second quarter, job loss was on a decline, and there was a slight rise in Gross Domestic Product. The failing global economy was positively impacted by the ARRA as well because of the short term impact that it had on the United States. The economic stimulus produced a positive impact on every major international industry due to this short term impact on the United States as well. States that faced huge budget deficits were also helped out as well due to the ARRA including state fiscal relief in its agreement. Fiscal relief at the state level was shown by analysis of the ARRA being able to raise employment states that were devastated by the recession, however, by 2011 these short term positive impacts seemed to have been diminished. There was a huge increase in the United States’ debt, there was a large infrastructure deficit, and there was an increase of pressure on public spending. The money that the United States has today is being help privately as oppose to being used by the government and invested into the economy which is what made this country money when the act was first introduced, which is a long term affect of this act causing stagnation in the economy. The long term impacts overall have created decreased private spending and increased government spending. The short term impacts were able to pull in money for the country, get benefits for the unemployed and rise the GDP, the long term affects overall overran the short terms affects and caused more government spending which in turn makes the ARRA not look like such a good idea for the future.

Cites: "The American Recovery and Reinvestment Act of 2009: Information Center." The American Recovery and Reinvestment Act of 2009: Information Center. Web. 26 Apr. 2016.

The American Recovery and Reinvestment act of 2009

Katie Rhatigan
Blog Post #2


  What was the intent of the expansionary policy?
  
During the Great Recession from 2007- 2009 many people were suffering from job losses. A lot of people were not only out of jobs but no longer had benefits their jobs came with. Some benefits include Health Insurance. Families were suffering from day to day lives like paying the bills and feeding their family. On top of families suffering, businesses were also suffering because of pay cuts and layoffs. Some businesses had to just shut down their operations because they could no longer afford it. The American Recovery and Reinvestment Act of 2012 was passed for the purpose of helping the people who suffered from the recession get back on their feet and get back into the workforce. The act also included a stimuli to help promote economic growth.  The recession left its mark on the nation for two long hard years, many people felt they weren't going to make it out but the economy isn't a positive slope all the time, it has its peaks and its downfalls just any normal economy would.

  Discuss examples of stimuli included in this act
   Tax credits were mentioned a lot in this article. It played a big role in the expansionary policy. There were many acts put into place that involved tax credits. Some examples are The Tax Relief and Job Creation Act of 2010, The American Taxpayer Relief Act of 2012 and the Tax Increase Prevention Act of 2014. All of these were put into place not only to help the economy but to help citizens were currently out of  job. These incentives helped the unemployed people get back out there to look for a new job.Another thing that happened to help people get back into the workforce was a change in health insurance plans. Premiums were lowered so more people could afford to have health insurance. This was very helpful because now people didn't have as much of a risk factor hanging over their head. It left less worry for people in and out of the workplace. There were also benefits in 2009 for the unemployed. Some of these benefits were that the first $2,400 unemployed people were receiving was tax free. This really did help people get back on their feel because now they had more money in their pocket.

Theoretically, what impact do such policies have on the economy?

 Of course these acts in particular were put in place for a short term benefit just to help the people who were suffering from the recession. In most inferences, when acts are put into place it is rare for it to a long term affect on the economy. Like I mentioned earlier, the economy is never a steady line, it is always fluctuating on us. Most recessions are not long term just like when the economy is doing well there is bound to be a downfall at some point. People spend more when they have more and people spend less when they have less. The acts that involved taxes were put into place to make consumers feel like that they could spend the money they still had because taxes weren't going to be a huge issue. People more health insurance because premiums became cheaper. The prices in the economy suddenly lowered because they were trying to get people to spend  money still even though theoretically, it was low. The long term affects of course mean that when prices start to rise back up and the economy is out of the recession, pay will increase. This means that the price of things will go up and people will pay for it. The government will suffer from this because they weren't previously collecting as many taxes so as prices increase, government debt will also increase.

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

 The American Recovery and Reinvestment Act of 2009: Information Center. (n.d.). Retrieved April 26, 2016, from https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center