What to Remember About Barack Obama's 2009 Stimulus Package

The issue-plagued rollout of the CARES Act stimulus checks is finally approaching its end, and [...]

By Christian Long

The issue-plagued rollout of the CARES Act stimulus checks is finally approaching its end, and there's been ample talk about an alleged second round of payments, with President Donald Trump promising another will arrive in the coming weeks. However, it's not the first stimulus package passed in the U.S. in recent years, including one enacted by then-president Barack Obama in 2009.

Known as the American Recovery and Reinvestment Act of 2009, and nicknamed the Recovery Act, the stimulus package was enacted by the 111th U.S. Congress and signed into law by Obama in February 2009, just weeks into his first term. Lawmakers crafted it in response to the Great Recession, which erupted in the fall of 2008. Its primary objective was to save existing jobs and create new ones as soon as possible. It also aimed to provide temporary relief programs for those most affected by the recession while investing in other programs, including infrastructure, education, health, and renewable energy.

The Recovery Act was generally considered to be a success and credited with eventually helping to turn the economy around. However, it wasn't without its critics, nor its long-lasting ripple effects. Here's a rundown of what that 2009 bill entailed and what it inadvertently helped create.

The Size of the Bill

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(Photo: Robert Alexander/Getty Images, Getty)

When it first passed, the Recovery Act was $787 billion. However, it was later revised to $831 billion between 2009 and 2019. Its focus was largely on businesses and industries.

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The Act's Provisions

While its aim was clear, the Recovery Act itself came with five basic provisions.

  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 increase economic efficiency by spurring technological advances in science and health.
  4. To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
  5. To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.
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How it Was Spent

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(Photo: Sam Lafoca/Construction Photography/Avalon/Getty Images)

The Act specified that 37 percent of the package should be devoted to tax incentives while or 18 percent was allocated to state and local fiscal relief with more than 90 percent of state aid is slated for Medicaid and education. The remaining 45 percent was reserved for federal spending programs ranging from transportation, wastewater, federal unemployment extentions and scientific research programs.

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Buy American

The Recovery Act also included a 'Buy American' provision, which imposed a general requirement that any public projects that were funded by the new stimulus package must only use manufactured goods produced in the United States. The Washington Post reported in 2009 that the 'Buy American' provision managed to cause outrage in the Canadian business community, which resulted in Canada retaliating with its own restrictions on trade with the U.S.

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Political Backlash

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(Photo: David McNew/Getty Images)

There was significant opposition to the Recover Act and was some of the fuel that created the Tea Party movement and likely contributed to Republicans winning the House in the 2010 midterms. No Republicans in the House voted for the stimulus, although three Republican Senators were in favor. Those on the left, however, thought that the package of not going far enough.

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End Result

In February 2014, the White House issued a statement claiming that the stimulus package either saved or created an average of 1.6 million jobs per year between 2009 and 2012, preventing an economic relapse into another Great Depression. Former House Speaker John Boehner criticized the report since, echoing Republican sentiments that the act cost too much and did too little.

The libertarian group The Reason Foundation had conducted its own study of the results of the Recovery Act. Of the 8,381 sampled companies, 23 percent hired new workers and kept all of them when the project was completed. Only 41 percent of sampled companies hired workers period, while 30 percent of companies did hire but laid off all workers once the government money stopped funding.

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