Thursday, March 21, 2013

The American Recovery and Reinvestment Act of 2009





The American Recovery and Reinvestment Act of 2009
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.