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American Recovery and Reinvestment Act of 2009

After an intense debate, Congress approved the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). President Obama signed it into law on February 17, 2009. For Senator Lieberman's comments on the passage of ARRA click here. The final version of this legislation will cost a total of about $787 billion over a number of years. The package consists of about $211 billion in tax relief for businesses and families and $575 billion worth of investments to assist communities and families. To view the full text of ARRA click here.

The passage of this package was necessary and timely. Over the last 12 months, almost every aggregate economic indicator has turned negative, including employment, capital investment, and trade. Our economy lost over four million jobs Since December 2007. Consumer demand is expected to drop by $1 trillion this year and next.

The country is in an emergency, and this legislation must be judged in the context of the world we live in now. We are losing hundreds of thousands of jobs each month; the value of homes has dropped more than $4 trillion over the last year, our stock markets have lost around $8 billion, and our credit markets are no longer functioning efficiently enough to spur economic growth.

Unemployment in Connecticut is now over seven percent, prices for food, energy, child care, and other basic necessities are squeezing tight family budgets; and thousands have lost their homes to foreclosure. In these times, the federal government can, and should, take a more activist stance to cushion the blow to families and communities.

The bill is targeted to help those who have been hit especially hard by the economic downturn. ARRA provides household tax relief by instituting a tax break of $800 for working families ($400 for individuals) through a reduction in the amount of income tax that is withheld from each paycheck or through claiming a credit on their tax returns. It also decreases the income threshold to receive the refundable portion of the child tax credit, temporarily suspends the taxability of unemployment benefits, and increases the income thresholds subject to the alternative minimum tax (AMT) for one more year.

For businesses, this legislation allows qualified small businesses to accelerate recognition of the research and development tax credit, extends the 'net operating loss' carryback from two to five years, and extends the bonus depreciation schedule for capital expenditures incurred in 2008 to capital expenditures incurred in 2009. These tax provisions are crucial to help businesses and families that have been negatively affected by the recession to weather the current storm. Click here for the Joint House-Senate summary of the tax provisions in ARRA.

Additionally, ARRA provides federal funding for assistance to municipalities and states that face serious budget shortfalls that prevent them from maintaining critical public services and making needed investments in infrastructure. This problem is particularly acute in Connecticut. Governor M. Jodi Rell's office recently projected that our state faces a deficit of over $6 billion over the next few years.

This legislation will help Connecticut, and all states, by supplementing state funding to maintain public housing, school systems, and medical care for the elderly and for low-income families. Click here to see Senator Lieberman's comments on the funding for Connecticut in ARRA. Furthermore, under this legislation, cities and municipalities will be able to apply for funding to make important infrastructure investments in transportation, school construction, training for displaced workers, energy conservation, and water facility maintenance. To view the Joint House-Senate short summary of appropriations provisions in ARRA click here.

The package also makes significant long-term investments in the nation's green economy, helping to reduce our dependence on foreign oil while creating new jobs in energy-related industries. By investing in the development of clean, renewable energy sources, we can minimize our need for non-renewable fuels and curb our nation's greenhouse gas emissions. The measure improves our energy security by making investments to redesign and retrofit our infrastructure so we consume less energy and to modernize our energy transmission systems to enhance reliability.

In total, the bill provides over $35 billion in funding specifically for programs to advance these goals, as well as an additional $20 billion in tax credits for energy efficiency and renewable energy. ARRA will significantly improve the allocation of our clean energy resources while helping to achieve our common goal of promoting viable, innovative, and renewable domestic power sources.

Many rightly observe that this legislation has a very high price tag given the uncertainty that it will cure our economic ills. But the legislation is big because our problem is big. In the Senator's view, incremental approaches will take us down the same path of Japan during the 1990s with stagnant growth and recurring federal intervention in the economy.

Funding from this Act must not be spent in a wasteful manner. Speed in distributing money is critically important, but we cannot afford to repeat the kinds of mistakes that occurred in support of Iraqi reconstruction projects or in the aftermath of Hurricane Katrina where money rushed out the door with little accountability and too many tax dollars were wasted. Senator Lieberman supported the inclusion of an additional $200 million for inspectors general to hire experienced auditors and investigators to oversee spending under ARRA. Click here to view accountability and transparency provisions in ARRA. In addition to those measures, Governor Rell has set up a website that the public may use to track how Connecticut is allocating funds from ARRA at www.recovery.ct.gov.

As Chairman of the Senate Committee on Homeland Security and Governmental Affairs, which has oversight responsibility for government spending generally, the Senator has already held a hearing to examine how the federal government will track the billions of dollars spent over the next two years as a result of this legislation. You may view this hearing and subsequent hearings at http://hsgac.senate.gov/public/.

With America in the midst of the most serious economic crisis since the Great Depression, it was imperative that Congress take action to jump-start the economy. The Senator worked with several moderate Senate colleagues to forge the bipartisan compromise. In order to obtain the 60 votes needed to pass the recovery package, some compromises had to be made; and some funding and tax cuts were eliminated. The only alternative was to see the proposal fail altogether. Although imperfect, this legislation will begin the long process of restoring economic growth and transforming our economy.

Click here for more resources and specific answers to Frequently Asked Questions about ARRA.

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