American Recovery and Reinvestment Act Backgrounders & Briefs

By Jason Scott Smith, Department of History, University of New Mexico

Economic stimulus has become controversial.  The American Recovery and Reinvestment Act (ARRA), passed by Congress in 2009 and signed into law by President Barack Obama, put public investment back on the policy agenda.  ARRA was, as Obama put it, “the most sweeping economic recovery package in our history…[one] that will bring real and lasting change for generations to come.”   A number of politicians and experts agreed with Obama.  For example, California Governor Arnold Schwarzenegger, drawing on the historical example of Franklin Roosevelt’s New Deal, said, “This is the most perfect time…to lay out a plan to rebuild America, just like Roosevelt has done because it would stimulate the economy and it would stimulate a tremendous amount of jobs.”   Economist Mark Zandi, an adviser to John McCain’s 2008 presidential campaign, testified before Congress that public works investment delivers $1.59 of revenue for every dollar spent, versus $1.22 for every dollar of tax cuts.  “The boost to GDP from every dollar spent on public infrastructure is large,” stated Zandi, “and there is little doubt that the nation has underinvested in infrastructure for some time, to the increasing detriment of the nation’s long-term growth prospects.”