PART 1: INTRODUCTION
It seems that the midterm election has judged for Present Obama and the Democratic Party by their activities during the last two years. The American Recovery and Reinvestment Act of 2009 is the main policy of Present Obama’s administration to face the financial crisis so that the Act should afford a lot of duties for the low approval rate of Present Obama and the Democratic Party in the midterm election. The paper will introduce the background and main context of the American Recovery and Reinvestment Act of 2009 and put emphasis on the evaluation of the Act.
PART 2: BACKGROUND OF THE ACT
At the beginning of 2008, many people believed that the U.S. recession had begun. Financial market turbulence indicated that the crisis would not be mild and brief. Alan Greenspan, ex-Chairman of the Federal Reserve, stated in March 2008 that the financial crisis in the United States was likely to be judged as the harshest since the end of World War II. During the weekend of September 13–14 in 2008, Lehman Brothers declared bankruptcy after failing to find a buyer; Bank of America agreed to purchase Merrill Lynch; American International Group-the leader of world insurance and finance corporation, sought a bridge loan from the Federal Reserve. The economic data of 2008 was not optimistic. According to the report issued by the United States Department of Labor, the unemployment rate rose from 4.9% in January to 6.2% in September, which reaching the highest level in recent five years. According to the report issued by the United States Department of Commerce, the first four seasonal real GDP percent changed in 2008 compared with the preceding period were --0.7, 0.6, -4.0, and -6.8. These data announced that the economic crisis was coming. In Oct 3 of 2008, President Bush signed the Emergency Economic Stabilization Act of 2008, which is a law in response to the subprime mortgage crisis and authorizes the United States Secretary of the Treasury to spend up to $700 billion to purchase distressed assets. However, $700 billion is not enough to face the economic crisis.
PART 3: CONTEXT OF THE ACT
On February 17 2009, Present Obama signed the American Recovery and Reinvestment Act of 2009, which was based largely on President Obama’s opinions and aimed at providing a stimulus to the U.S. economy. The Act is nominally worth $787 billion and it includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, education, health care, and infrastructure, including the energy sector. Here is the spending list of the act:
1. Tax cuts: $288 billion.
2. Healthcare: $155.1 billion.
3. Education: $100 billion.
4. Aid to low income workers, unemployed and retirees (including job training): $82.2 billion. 5. Infrastructure Investment: $105.3 billion.
6. Energy: $27.2 billion.
7. Housing: $14.7 billion.
8. Scientific research: $7.6 billion.
9. Other: $10.6 billion.
PART 4: PURPOSES OF THE ACT
For a government policy, final evaluation is very important. There are many explanations about the Act is criticized, for example, because it contained a number of R&D projects. Evaluation should depend on the comparison between the results and the purpose of the policy. The Act is an unprecedented effort to jumpstart the economy, create or save millions of jobs, and put a down payment on addressing long-neglected challenges so as to make the country thrive in the 21st century. The Act is an extraordinary response to a crisis unlike any since the Great Depression. The government lists major purposes in the text of the American Recovery and Reinvestment Act of 2009: (1) To preserve and create jobs and promote economic recovery. (2) To assist those most impacted by the recession.
(3) To provide investments needed to...