The US Recovery Act and Reinvestment Act, also known simply as the Recovery Act and the Stimulus, became law during President Barack Obama‘s first term in office, on February 17th, 2009.
The Recovery Act was an attempt to stimulate the US economy after the impact of the recession in the first decade of the 21st Century. The Act was also designed to have an immediate affect by reducing unemployment figures and creating jobs. Influenced by the Keynesian macroeconomic theory, the Recovery Act set out to counter the drop in private spending by increasing public spending – in the hope of preventing the US economy slipping into even choppier financial waters.
Though safeguarding jobs was the main aim of the Recovery Act, providing temporary relief for victims of the recession was also an important goal. The Recovery Act meant that there would be more investment in education, health, green energy and in infrastructure as a whole.
The stimulus package itself was estimated, at the time the Recovery Act was passed, to be $787 billion. This figure was then increased to $831 billion, and would cover a ten year period from 2009 to 2019.
One of the consequences of the Recovery Act was the increase in the earned income tax credit (EITC). A several billion dollar package was approved to help give more money to low income families with a minimum of three children. For new tax credits generally, the average was set at $500 for each worker and $1,000 for a couple in work.
Another package of several billion dollars was used as an incentive to homeowners to make their homes more green in 2009 and 2010. For homeowners, who adapted their homes to more energy efficient properties, there was the carrot of being able to recoup 30% of the original cost, as long as it didn’t exceed $1,500.