The
American Recovery and Reinvestment Act of 2009
For
a period, the effects of financial crisis continued to affect the performance
of various economies because the financial sectors were largely affected. In
order to avert the consequents of the harmful effects of the crisis to the
economy, various economies reacted by enacting various policies and bills to
help in the establishment of economic stability. Certainly, the economy of the United
States also reacted by enacting an economic development and strategic
development plan under the umbrella of American Recovery and Reinvestment Act
of 2009. This act was signed by the president in 2009 and its purpose was help
in the restoration of the development of the economy by creating more jobs and
championing the establishment of economic stimulus. In view of this
realization, the aim of this paper is to help ascertain the benefits of
American Recovery and Reinvestment Act of 2009 in the economy. The purpose of
this paper is to identify different sets of provisions and recommendations that
have been suggested by the proponent so the act. Identification of these
attributes will be beneficial in explaining the role of the Act in stimulating
economic growth and in preventing future occurrence of the financial crisis in
the economy. Other attributes of the paper are to highlight the suggested
investment criteria that should be adopted by the moderator of the economy. Some
of the characteristics of the act includes the aspects of direct spending
infrastructure, health provisions, energy consideration, educational
perspectives, the expansion of employment benefits and the establishment of
other social welfare and attributes. The development of this act also took into
consideration the aspects of long term developmental strategies by identifying
the measures responsible for preventing the future occurrence of the financial
crisis or the recession in the economy.
The recovery act
During the year 2000, the global economies experienced
adverse reduction in the performance of their economies and this had adverse
effects in the realization of social welfare. Some of the repercussions that
were experienced included reduction in the reduction in economic growth
increase in interest rates rise of inflation and employment rates. One
significant effect of the crisis was the subsequent reduction in the rate of
economic performance and this prompted the intervention of the government intervention (Representatives, 2011). The intervention of
the government was initiated through the enactment of the American Recovery and
Reinvestment Act of 2009 and the establishment of the policies depicted in the
act. The rational for the implementation of this act was provided by the
Keynesian macroeconomic theory. According to this theory, the government should
offset the decrease in the private spending with a corresponding increase in
public spending during the periods of recession. In reality, the recovery act
was beneficial because it provided objectives with the aim of developing the
sectors that were adversely affected by the financial crisis. Some of the
sectors adversely affected by the crisis were highlighted as infrastructure,
health, education and the green energy production. This incentive is beneficial
because it will enhance the aspects of job creation thereby increasing the
chances for recovery of the economy. Creation of more employment opportunities
in the economy has the effect of enhancing development of the national income
and the GDP of the nation. In this regard, the policy has initiated recovery
measures that have been beneficial in rehabilitating the economy and
stimulating the growth through development of the economic factors.
In order to help in economic development and stimulus,
the act provided for the spending of $831 billion in the provision of
healthcare, education, infrastructure, federal tax and expansion of
unemployment benefits (Representatives, 2011).
The realization of the financial crisis was detrimental because it resulted in
the reduction in the performance of the above factors and this resulted in the
provision of the act to help in the restoration of the factors that enhances
development.
The aspect of bonus deprecation was also considered by
the act and it represented an extension of the 2008 stimulus plan. The
provision of this incentive allowed for the consideration of depreciation of
assets in an attribute that encouraged investments. This incentive proved critical
because it allowed first year depreciation of 50% of the cost of the asset and
further acceleration of the depreciation allowance. This measure had the impact
of increasing the present value f the depreciation tax shield that is
associated with the acquisition of new capital expenditures thereby leading to
the rise in the net present value of the investment. The provision of this
incentive resulted in the consideration of increasing the number of investments
in the economy. High rates of investments in the economy are extremely
beneficial because it leads to the establishment of more employment
opportunities. This further has the consideration of enhancing high national
income and GDP consecutively.
The American Recovery and Reinvestment Act of 2009 have
special recommendation for the investments in the economy because it seeks to
enhance the circulation of money in the economy. One of the provisions of the
act is spend $831 billion dollars into the economy with the aim of enhancing
growth and development of the economic sectors. With the increase in the
circulation of money in the economy, the aspects of investments in the economy
will be empowered by the increase in the flow of money and this has the
attribute of enhancing development economy (Representatives,
2011). Increase in the flow of currency in the economy, has the rational
of impacting positively in the attributes of development.
Conclusion
In summary, the enactment of the American Recovery and
Reinvestment Act of 2009 was extremely beneficial to the American economy
because it highlighted on the enhanced of the factors that stimulated the
recovery and development of the economy. The usage of the act proved beneficial
by helping to increase the rates of employment and economic recovery. Economic
development is largely associated with the aspect of investments and the recovery
programs must highlight the attributes of enhancing development. In view of the
recovery act, the act has been beneficial in highlighting the element of
economic recovery and development through the enhancing of investments and
improved spending. Therefore, it is extremely credible to conclude that the
usage of the American Recovery and Reinvestment Act of 2009 is extremely
crucial for the recovery and development of the economy.
Recommendation
The enactment of the economic recovery act was
detrimental because it failed to achieve the goal. There is highly recommended
that the Act should specify the kinds of jobs to be restored between the
private or the public sector and then address the profound issues. The system
should adopt the provision where contracts, loans and grants are the incentives
used n driving people back to work.
References
Representatives,
U. S. (2011). The American Recovery and Reinvestment Act Of 2009. United
States: BiblioGov.
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