Economy Update: A Year Later, the Recovery Act Is Working

For Immediate Release:

February 16, 2010

Contact:

Katie Grant
Stephanie Lundberg
(202) 225 - 3130


 
When President Obama and the Members of the 111th Congress took their oaths of office last year, America faced its greatest economic crisis in a generation. With banks afraid to lend, businesses were unable to pay their workers; with massive layoffs, consumer spending fell, and reduced demand led to more layoffs and a deepening spiral of unemployment. To break this cycle, Congress passed and President Obama signed the American Recovery and Reinvestment Act, a bill designed to create and save jobs, inject demand into the economy, and build our future prosperity on a firmer foundation.
 
As we approach the first anniversary of the Recovery Act’s signing on February 17, it’s time for a close look at this vital legislation—legislation that has been falsely called a failure by partisan critics, even though many of those who voted against it now hypocritically take credit for jobs and funds sent to their districts. On the contrary, the facts—recognized by economists across the political spectrum—show that the Recovery Act is working: creating jobs, returning our economy to growth, and heading off a Second Great Depression.
 
The Agenda for Recovery
The Recovery Act was a combination of tax cuts, job-creating projects, aid to state and local governments to prevent layoffs of teachers and police officers, and assistance to individuals hurt by the recession. In one year, the Recovery Act has created jobs and strengthened our economy:
 
• $37 billion in tax cuts, which has already reached 95% of working families
• Nearly $20 billion in loans to more than 42,000 small businesses
• Funding for more than 12,500 transportation projects nationwide; 8,500 are already underway
• Support for more than 2,850 construction projects at more than 350 military facilities
• Funding for 51 clean-up and construction projects at Superfund sites across America
• Innovative technology investments, which include:
o $8 billion set aside to start building a high-speed rail network
o $7 billion slated to bring broadband Internet to American communities, a necessity in the 21st-century economy
o More than $5 billion to fund 12,000 medical research projects
o $3.4 billion for smart grid technology to bring greater energy efficiency to American households
o $2.4 billion for clean, advanced vehicle technology
All of these investments have put Americans to work—and, just as importantly, they are ensuring that our economy will emerge from the recession stronger and more competitive.
 
In addition, the Recovery Act has helped state and local governments meet budget crunches brought on by the weak economy that would have resulted in mass layoffs of teachers, police officers, and firefighters, and other first responders, as well as cuts to essential services. The Recovery Act worked to provide Americans with continued access to medical care by stopping state Medicaid cuts, and it has provided nearly $60 billion in school funding, ensuring that our children’s education does not suffer in the recession, and saving or creating more than 300,000 educational jobs at the same time.
 
To ensure a sustainable and lasting recovery, Recovery Act funds were scheduled to flow into the economy over the course of two years, so more funds are set to hit the economy in the months ahead. Programs that will receive funding include grants to improve transportation in cities and towns across America, and grants to promote proven education strategies for our schools, both of which will save and create jobs. As winter comes to an end, thousands of new construction projects will break ground, as well. Three quarters of recipients of Recovery Act funds indicated that their projects remain underway, which means that the Recovery Act will continue to support job creation throughout the year.
 
The Results
There is no doubt that these investments are working. According to the nonpartisan Congressional Budget Office, the Recovery Act has already saved or created as many as 2.4 million jobs. Americans are back at work on everything from new roads to cutting-edge research. Teachers, firefighters, and police officers are staying on the job, educating our children, protecting our homes, and keeping our streets safe.
 
And, after four straight quarters of decline, our economy is growing again. In the most recent quarter, our economy grew by 5.7%—the fastest rate in six years. That follows economic growth of 2.2% in the previous quarter, making this the first time since 2007 that our economy has grown two quarters in a row. Economists agree that much of that success can be attributed to the Recovery Act. In fact, even an economist from the conservative American Enterprise Institute recently concluded that the Recovery Act helped add “about 4 percentage points to U.S. growth” during the second half of 2009.
 
Since President Obama took office, job losses have consistently decreased—from an average loss of 726,000 per month in the last quarter of the Bush Administration, to just 35,000 in the most recent quarter.
 
And according to the nonpartisan Center on Budget and Policy Priorities, the Recovery Act is “keeping more than 6 million Americans out of poverty and reducing the severity of poverty for 33 million more.”
 
The Work Ahead
Despite this progress, Americans are still hurting from economic crisis. Millions remain out of work, and our unemployment rate remains unacceptably high. That is why, after a year dedicated to recovery work, job creation remains Congress’s top priority.
 
The House has already passed the Jobs for Main Street Act to help small businesses hire workers and access credit, launch more job-creating projects, and increase emergency aid for families that continue to struggle with long-term joblessness. The Senate expects to pass a jobs bill, as well, and Congress looks forward to sending final legislation to the President’s desk soon.
 
Congress is also exploring other innovative ways to create jobs. They include redirecting TARP funds from Wall Street to help community banks increase lending to small businesses and working with the Department of Commerce to promote American exports abroad. The Obama Administration has announced more tax credits for renewable energy manufacturing projects, one of the most popular parts of the Recovery Act. And the Administration has also proposed further tax cuts and hiring incentives for small businesses, along with more funding for quality educational programs through Race to the Top.
 
As Congress focuses on job creation, we hope to work with Republicans. Job losses affect the families represented by every Member of Congress—so it is imperative that we collaborate on solutions.
 
 
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