American Recovery 1

The American Recovery and Reinvestment Tax Act

March 16, 2010

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The American Recovery and Reinvestment Tax Act
The average American is calling today's financial battle Another Great Depression.
Some say that the United States has not seen a crisis this bad since the Great Depression. Over
the past several years the economy has experienced many declines in finance, employment,
housing, cost of energy, and education funding. President Barrack Obama, elected in 2009, has
plans for the economys recovery. Obama introduced a bill to Congress to begin the United
States recovery, only to be declined by Congress. After some revisions, Congress finally
approved The American Recovery and Reinvestment Tax Act in 2009. Obama plans for this bill
to assist all American working classes in the recovery of the economy. The focus of the bill is to
combat the decline of the economys unemployment, education expenses, and grant credits to
tax payers, provide several energy provisions, and try to help the housing market in its
recovery. There is no way that the economy is going to miraculously change overnight, but as
long as Obamas plan for recovery begins working to strengthen the economy within the next
five years, the economy can start to get back to where it was before the crisis.
What started the crisis?
Fingers are not pointed to one in particular area for this crisis. Lenders played a big part
in the crisis in that they were making loans that the borrowers could not afford to pay back
(Orman, 2009). Borrowers were thrilled to get their mortgages, even if they could not afford
them, and Wall Street told people that it would be fine because they had a way to stimulate
investors against the possibility of making high-leveraged bets (Orman, 2009). These people
were made to believe that if bad things happened, and the credit was in default, they would
come to their rescue (Orman, 2009). Once the banks were hurting, average Americans began to
see bad things to happen. Major businesses were going bankrupt along with the common

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American households. More and more Americans began losing jobs and with credit card debts
rising, America was not prepared for what was ahead.
Intention behind the stimulus package
Obama has many different ideas for America, from doubling renewable energy to
weathering homes. He plans on providing billions of dollars in leverage to fund private sectors
in their energy initiatives. With the rates of unemployment rising steeply, he plans on protecting
their well-being by extending their COBRA, which assists unemployed with health expenses if
their health insurance is lost (The Boston Globe, 2009). More tax cuts are expected for
American families in expanding the child tax credit, which is expected to increase for 10
million children and their families (The Boston Globe, 2009). Obama is working on projects for
drinking water and sewer systems. Renovations are planned for 10,000 schools and additional
funding for Pell grants will make college more affordable for several million students (The
Boston Globe, 2009). There is even a plan to build numerous electrical transmission lines and
install meters in homes to be able to control energy use.
How long before the improvements are noticed?
The stimulus package is not going to be a quick fix. The economy did not get into the crisis
overnight, and it is not going to be corrected overnight. If this money is not spent in ways to
boost the economy, the economy could stay in the downward spiral that it is in. Many believe
that this crisis could possibly come to an end by 2014 or possiblely by 2015 if things go as
planned. If Americans do not stop spending carelessly during this time, it has the potential to
worsen. Suze Orman describes our economy as a patient that has been rushed to the hospital in
critical condition (Orman, 2009). After a few months of aggressive treatment, the patient is still
sick but they will see a full recovery eventually (Orman, 2009). She was insinuating that the

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treatment be compared to the intervention by the Federal Reserve, Department of Treasury, and
Congress. There is hope that the economy is going in the right direction, but it takes time.
Will it help or hurt the economy?
According to a recent survey, more than half of those who participated believe that the
stimulus package spends too much and stimulates too little (Personal Communication, 2009). It
is a scary thought that all of this money is being dished out by the government that many think
started this mess. If this money does not stimulate the economy, it is going to be in a bigger
crisis then it is now. $725 billion is a lot of money, and if the government begins spending it,
where will the United Stated turn if the economy does not begin to recover and it runs out of
money? According to the Wall Street Journal, this plan is one of the largest government
expenditures in the history of the United States, and is larger in dollar amounts than any other
nations stimulus plan (Bendavid, 2009). Hopefully, the money will create new jobs for
Americans and everyone can begin slowly working together to get the economy back to where
it was before.
New American Tea Party
There are many angry Americans planning to rebel against the stimulus package, so that
the government knows where the Americans stand. They are copying the Boston Tea Party and
are planning on letting government officials know exactly where they stand. They talk as if the
stimulus package is a very bad idea and is going to hurt the economy even worse then it already
is. Risk Santelli stated, His new organization, The New American Tea Party, acting like an
umbrella organization encompassing several fiscally conservative political watch and advocacy
groups, aim at undermining the stimulus by preventing the funds from reaching their assigned
targets (Westbrook, 2009 p1).

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They are planning on rallying and getting as many Americans as possible to bombard
government officials with tea bags to prove their point.
Who gets the money?
With the billions of dollars the government plans to spend, someone needs to make sure
that the money is going to the people who need it most and that it is going to be used for the
right reasons. Some say that all of the money is going to the same companies that got greedy
and failed the first time, and none of the money is going to working-class Americans. There is a
superintendent of a school district in Utah that says he is broke and that he needs every penny
that he can get to help his schools that are struggling. He said that there was a school nearby on
the border of Wyoming that was wealthy and the superintendent there said that his school did
not need funding. According to the stimulus, schools in the Wyoming district are supposed to
get more than the schools in Utah, which really need the help (Dillion, 2009). This makes me
think that the stimulus package is not very well thought-out, especially if it is helping those that
do not need it but will not help those we do.
Conclusion
Regardless of what Americans think, the bill has been passed and is going into effect.
Americans must understand that if this money does help, it is going to take time and the
economys recovery cant happen overnight. It is going to take several years before anyone is
able to see if the plan corrects the economy. There are many high hopes for this stimulus and it
has the potential to help the economy, but Americans must understand that it will have to take
baby steps to get there. There are many Americans who are mad and taking action, but that is to
be expected with something as important as this. Hopefully Obama has this well thought-out
because it is either going to make or break the United States.

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References
Bendavid, N., Reddy, S., Williamson, E. (2009). Stimulus Package Unveiled. Wall Street
Journal.
Dillion, S. (2009). Some Rich Districts Get Richer as Aid is Rushed to Schools. The New York
Times.
Orman, S. (2009).Suze Ormans 2009 Action Plan. Keeping your money safe & sound. New
York: Spiegel & Greu.
Stimulus plan at a glance. (2009). The Boston Globe. Retrieved April 5, 2009, from
http://www.boston.com/news/nation/washington/articles/2009/01/25/stimulus_plan_at_a_
glance.
Westbrook, S. (2009) New American Tea Party. Weekly World News. Retrieves April 6, 2009,
from http://weelkyworld news.com/politics/6517/new-american-tea-party/print/.