American Recovery and Reinvestment Act (ARRA)
President Obama signed into law the American Recovery and Reinvestment Act (ARRA) on February 17, 2009. In the face of the nation’s greatest financial crisis since the Great Depression, the Act represents a significant investment in future of America’s economy.. White House and independent economists have predicted the ARRA will create or save 3.5 million jobs—fully 90 percent of them in the private sector.
In addition to providing short-term stimulus, the Act should also benefit the nation by:
- Investing $150 billion in new infrastructure—the largest increase in our nation´s transportation funding since the 1950s.
- Providing capital over three years to eventually double domestic renewable energy capacity.
- Undertaking the largest weatherization program in history by modernizing 75% of federal building space and more than 1 million homes.
- Increasing college affordability by funding Pell Grants—increasing the maximum award by $500 and providing a new higher education tax cut to nearly 4 million students.
- Taking a big step toward computerizing Americans' health records.
- Providing $3.95 billion for training and employment services—including $750 million for research and job training projects in “green jobs,” health care, and other high-demand and emerging occupations.
- Providing an $800 tax credit for 129 million working households and cutting taxes for millions of families through an expansion of the Child Tax Credit.
The Office of Management and Budget (OMB) and the U.S. Treasury will make the funding provided in the Act available to agencies. Federal agencies will allocate these funds in five primary ways:
- By Formula. Certain funds in the Act are allocated by a formula—usually set in law—to states and localities. Examples include:
- Medicaid (Federal Medicaid Assistance percentage payments)
- State Fiscal Stabilization Fund
- Highway Infrastructure Investment
- Workforce Investment Act
- By Competition. Other programs allocate funding through competitive solicitations. In the coming weeks, agencies will distribute requests for proposals and convene panels to evaluate applications. Examples of agencies and programs that have or will hold such competitions include:
- National Institutes of Health
- National Science Foundation
- Broadband Program
- Green Jobs Act
- By Demand. Some programs respond directly to demand from eligible individuals, including:
- Premium Subsidies for COBRA Continuation Coverage
- Unemployment Insurance
- Education Pell Grants
- Food Stamps (SNAP)
- Small Business Loans
- TradeAct
- By One-Time Automatic Disbursement. The Recovery Act includes some one-time benefits, such as payments of $250 to Social Security, Veterans and Supplemental Security Income beneficiaries.
- By Agency Plan. Many programs in the Act allocate funding according to public operating and spending plans. These programs include:
- Environmental cleanup of nuclear waste sites
- National parks construction
- Defense and veterans infrastructure programs
The recovery package provides a total of $789.5 billion in spending and tax cuts over two years. According to the White House, the money is distributed as follows:
| $288 billion |
Tax Relief |
| $144 billion |
State and Local Fiscal Relief |
| $111 billion |
Infrastructure and Science |
| $81 billion |
Protecting the Vulnerable |
| $59 billion |
Health Care |
| $53 billion |
Education and Training |
| $43 billion |
Energy |
| $8 billion |
Other |
$225 billion—28.5% of the total recovery plan—is distributed to state and local governments using a funding formula. Of this $225 billion, Virginia will receive an estimated $4.8 billion.
Tax relief comprises approximately 35% of the total recovery plans.
The remainder of the recovery plan package is awarded competitively or through other mechanisms that cannot be estimated on a state-specific basis.
See how the ARRA will impact Virginia.
