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Free EssaysLaw CategoryRecovery and Reinvestment ActBuy an essay
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The Recovery and Reinvestment Act (ARRA) is an American economic stimulus package signed into law on February 17 2009. This paper will seek to discuss why the Act stirs great interest and the market failure it was intended to correct.


The design of the stimulus package was to respond to the economic recession of the late 2000s. The recession was at its peak in 2008. The main objective of the Act was to save and create jobs in America (Goals of the Recovery Act). Secondary objectives included provision of relief packages to those who had hit by the recession and direct investment in health, education, health, infrastructure and green energy. The act expanded social welfare programs and unemployment benefits. It would reduce private spending but increase government spending. The stimulus package was estimated to cost about 800 billion dollars (American Recovery and Reinvestment Act of 2009).

The Recovery and Reinvestment Act stirs great interest since it was a massive investment plan that was centered on job creation. It was a response to the most recent economic recession; the previous one had been witnessed in 1980s. In addition, it stirred serious debate in both houses about the best way to manage the economy.

Businesses would receive various incentives that would directly or indirectly lead to reduced job cuts. For example, the government would meet part of training costs for green workers and issue bonus depreciation funds. Businesses would therefore be able to speed depreciation of assets. New payroll tax credit for workers was introduced. The government set aside 6 billion dollars for research and development of renewable energy and loan guarantees for electronic transmission technologies, 27.5 billion dollars for bridge and highway construction projects, improvements in railway transport system, shipyards and airports, and15 billion dollars for tax refunds to organizations. These initiatives would lead to job creation and cost efficiency.  

Other social welfare projects include health sector reform. Obamacare health bills were passed into law in March 2010. The health plan is a milestone in reducing the discrimination witnessed in the health care sector. It allows for health insurance of all people regardless of gender, social and health status. Tax credits would be given to businesses that provide workers with insurance. In addition, there would be no limit to amount of care/service. This bill will essentially reduce health costs to people and businesses.


The main objective of Recovery and Reinvestment Act was to save and create jobs. Secondary objectives of the Act include increased unemployment benefits and social welfare programs.

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