Barack Obama on The Stimulus

Last Updated : Mar 15, 2011

Summary

The American Recovery and Reinvestment Act (ARRA) was President Obama's signature piece of legislation when he came into office. He began to talk about the legislation prior to assuming office and outlined the proposal in a press conference noting that the legislation would be tasked with doing 6 things.

  • create 3 million news jobs - 80% in the private sector
  • double renewable energy production and renovate old buildings
  • rebuilding our crumbling roads, bridges, and schools
  • update and computerize health care system
  • build 21st century classrooms
  • direct tax relief for 95% of American workers

In numerous speeches both before and after assuming office, President Obama spoke about the need for urgency in getting the plan in place. This need for urgency was underscored by the speed at which the bill passed through Congress - 19 days. However, prior to assuming office President-Elect Obama's economic advisor released a document noting the spending pattern for the planned stimulus and it's effect on unemployment. She noted that although the plan had some money to cushion the downturn, the bulk of the job creation money would be in the 2010-2011 timeframe. This would seem to be in direct contradiction to the expressed need to pass the legislation in February of 2009.

That same report, issued by President-Elect Obama's economic advisor, stated that if the ARRA was passed unemployment would not go above 8% but may go as high as 9% without the plan. In reality, unemployment exceeded 10% after the stimulus passed.

The planned allocation of funds from the stimulus consisted of 27% in tax relief, 34% in direct aid to states, and 39% in discretionary spending to stimulate job growth. Most of this money was allocated in the budgets for 2009 and 2010. The tax relief and direct aid to states went into affect almost immediately. The discretionary funds were allocated from the budget but not spent until 2010-2011. In reality, the allocation of discretionary money to projects has been much slower than planned with only 77% of the money projected being spent by the end of 2010 and only half of the money that has been awarded has been received according to Recovery.gov.

On the one year anniversary of the stimulus being signed into law, President Obama spoke at a press conference and stated that the American Recovery and Reinvestment Act had puled the economy back from the brink and was the reason that the economy was growing by 6% instead of shrinking by 6%.

 

Weekly Address as President-Elect

On January 2, 2009 President-Elect Obama gave a weekly web address to note the need for the American Recovery and Reinvestment Act. In that address, President-Elect Obama stressed the need to act "swiftly and boldly" to save the economy and laid out 6 objectives for the plan.

  • create 3 million news jobs - 80% in the private sector
  • double renewable energy production and renovate old buildings
  • rebuilding our crumbling roads, bridges, and schools
  • update and computerize health care system
  • build 21st century classrooms
  • direct tax relief for 95% of American workers

 

George Mason University Speech

On January 8, 2009 President-Elect Obama spoke at George Mason University and discussed the American Recovery and Reinvestment Act. He emphasized in that speech the need to act quickly to avert a depression.

 

Stimulus Predictions

On January 10, 2009 President-Elect Obama's Chief Economic Advisor Christina Romer issued a paper titled "The Job Impact of the American Recovery and Reinvestment Act." In this document Mrs Romer predicted the unemployment rate if the stimulus was passed and if the ARRA failed to pass and displayed those two numbers in the lone chart in the paper. That chart clearly showed that if the stimulus passed, unemployment would not pass 8%. In reality, the unemployment numbers were worse than those Mrs Romer predicted without the ARRA passing. The total number of jobs to be created by the fourth quarter of 2010 was 3,675,000. The chart below is a reproduction of the predicted unemployment rates if the stimulus did and didn't pass, along with the actual rate of unemployment.

 

In that same document Mrs. Romer noted that the bulk of the stimulative funds were designed to be spent in 2010 and 2011, and that only the funds for the vulnerable would be spend immediately.

 

First Presidential Weekly Address

On January 24, 2009, President Obama used his first weekly address to tout the stimulus plan. The White House issued a statement noting the address.

 

House Passage of Stimulus

On January 30, 2009 President Obama used his next weekly address to note the House passage of the Stimulus and urge the Senate to pass the act quickly. On January 28, 2009 President Obama released a statement noting this passage.

At the same time, the administration released a statement noting the state by state affects of the stimulus. 

 

Recovery.gov

On February 9, 2009 President Obama announced the website Recovery.gov to allow everyday Americans a chance to see where the money from the Stimulus was going and the effects it would have on the area.

 

Caterpillar

On February 11, 2009 President Obama issued a statement noting that companies such as Caterpillar would be able to rehire a number of their workers based on actions taken in the Stimulus. The following day, President Obama visited the Caterpillar manufacturing facility and spoke about this issue. After he left the facility, those words were immediately contradicted by the Caterpillar CEO.

 

Cost Estimates

Prior to signing the ARRA into law, the Congressional Budget Office scored the plan and noted that it consisted of three main types of spending; tax relief, direct aid to states, and discretionary spending for stimulative effect. The total cost of the plan was estimated at $787 Billion.

Of the two types of spending, Direct Aid and Discretionary Spending, the CBO looked at how much was allocated in the budget each year and how much was expected to be spent each year. What was found was that the Direct Aid was to go mainly to fill in needed areas of budgets for programs already in existence and it was spent as soon as possible. The Discretionary Spending was allocated in the first two budgets, but was not actually spent until years later. The charts below show the cumulative amount of money allocated and spent for the Direct Aid, and Discretionary Spending Programs. Note that the amount is cumulative so the 2010 numbers are money spent in all previous years plus that year. The final chart shows the cumulative amount added to the debt to reach the $787 Billion total.

 

Signing of the Stimulus into Law

On February 17, 2009 President Obama signed the American Recovery and Reinvestment Act into Law. He spoke about the law prior to signing it in a short press conference.

 

Weekly Address on the Passage of Recovery Law

On February 20, 2009 President Obama used his weekly address to note the passage and signing of the Recovery and Reinvestment Act into law.

 

Timeline of the ARRA

The total amount of time taken to move the American Recovery and Reinvestment Act from introduction into the House to signing into law was 23 days with just 19 of those days required to move the bill through Congress. The major actions include the introduction of the bill, its passage in the House and Senate, the passage of the combined versions in the House and Senate, and the signing of the bill into law.

Jan 26, 2009 Introduced in the House
Jan 28, 2009 Passed the House
Feb 10, 2009 Passed the Senate
Feb 12, 2009 Conference report filed
Feb 13, 2009 Conference report passed Senate
Feb 13, 2009 Conference report passed House
Feb 17, 2009 Signed into law by President Obama

 

The 2000th Project

In April of 2009 President Obama spoke at a construction site and noted the 2000th project funded by the stimulus. The President stated that the Stimulus bill was indeed working and that green energy and other companies were starting to rehire workers.

 

One Year Anniversary

On the one year anniversary of the signing of the stimulus, President Obama spoke at a press conference and stated that the stimulus had averted an depression and was the main reason why the economy was growing at 6% instead of shrinking at 6% (fourth paragraph).

 

Shovel Ready Jobs

Throughout the selling of the Stimulus plan the phrase "shovel ready jobs" was used to denote construction projects that would be able to go as soon as funding was available. The phrase was used by President Obama himself and by numerous members of the administration. President Obama drove home this idea when he attended a ground-breaking for a project just two weeks after signing the stimulus.

In October of 2010, the New York Times had a story where President Obama noted that there was in fact no such thing as a shovel ready job.

Days later, David Brooks of the New York Times admitted that President Obama had confided to him a year earlier that he was aware there was no such thing as a shovel ready project.

 

Stimulus Spending

Quarterly reports are available from Recovery.gov that show the total amount of money awarded and spent. The chart below shows the cumulative amount of that money awarded and dispersed to date. The second chart compares the amount of funds projected to be allocated in the budget and spent each year and the amount which has actually been spent. It can be seen that by the end of 2010, the amount of money spent is less than projected and of the money spent, roughly half of it has been received to date. These charts do not include the tax reductions. 

 

 

Sponsored and Cosponsored Legislation

This representative has not been identified as sponsoring or cosponsoring significant legislation related to this title.

References

[1] Website: Congressional Budget Office Article: ESTIMATED COST OF THE CONFERENCE AGREEMENT FOR H.R. 1, THE AMERICAN RECOVERY AND REINVESTMENT ACT OF Author: CBO Accessed on: 03/14/2011

[2] Website: Council of Economic Advisors - The Obama Administration Article: The Job Impact of the American Recovery and Reinvestment Act Author: Christina Romer and Jared Bernstein Accessed on: 03/14/2011

[3] Website: InnocentBystanders Article: Correction to the May Unemployment Chart Author: NA Accessed on: 03/14/2011

[4] Website: UPI.com Article: Obama: Shovel-ready jobs already on move Author: NA Accessed on: 03/15/2011

[5] Website: New York Times Article: Education of a President Author: PETER BAKER Accessed on: 03/15/2011

[6] Website: Real Clear Politics Article: Brooks: Obama Told Me "Shovel-Ready" Jobs Don't Exist Last Year Author: NA Accessed on: 03/15/2011

[7] Website: Time.com Article: How to Spend a Trillion Dollars Author: MICHAEL GRUNWALD Accessed on: 03/15/2011

[8] Website: Reuters Article: Show us the money: shovel-ready projects set to go Author: Nick Carey Accessed on: 03/15/2011

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