page_title: American Recovery and Reinvestment Act of 2009
section_title: Recommendations by economists
hierarchical_section_title: American Recovery and Reinvestment Act of 2009 / Recommendations by economists
caption_attribution_description: President Barack Obama announces the Economic Recovery Advisory Board.
context_page_description: The American Recovery and Reinvestment Act of 2009, nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Great Recession, the primary objective of this federal statute was to save existing jobs and create new ones as soon as possible. Other objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable energy.
  The approximate cost of the economic stimulus package was estimated to be $787 billion at the time of passage, later revised to $831 billion between 2009 and 2019. The ARRA's rationale was based on the Keynesian economic theory that, during recessions, the government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration.
  Surveys of economists show overwhelming agreement that the stimulus reduced unemployment. In a 2014 IGM Forum survey, only one economist disagreed that the stimulus had lowered unemployment.
context_section_description: Economists such as Martin Feldstein, Daron Acemoğlu, National Economic Council director Larry Summers, and Nobel Memorial Prize in Economic Sciences winners Joseph Stiglitz and Paul Krugman favored a larger economic stimulus to counter the economic downturn. While in favor of a stimulus package, Feldstein expressed concern over the act as written, saying it needed revision to address consumer spending and unemployment more directly. Just after the bill was enacted, Krugman wrote that the stimulus was too small to deal with the problem, adding, "And it's widely believed that political considerations led to a plan that was weaker and contains more tax cuts than it should have – that Mr. Obama compromised in advance in the hope of gaining broad bipartisan support." Conservative economist John Lott was more critical of the government spending.
  On January 28, 2009, a full-page advertisement with the names of approximately 200 economists who were against Obama's plan appeared in The New York Times and The Wall Street Journal. This included Nobel Memorial Prize in Economic Sciences laureates Edward C. Prescott, Vernon L. Smith, and James M. Buchanan. The economists denied the quoted statement by President Obama that there was "no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy". Instead, the signers believed that "to improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth." The funding for this advertisement came from the Cato Institute.
  On February 8, 2009, a letter to Congress signed by about 200 economists in favor of the stimulus, written by the Center for American Progress Action Fund, said that Obama's plan "proposes important investments that can start to overcome the nation's damaging loss of jobs", and would "put the United States back onto a sustainable long-term-growth path".  This letter was signed by Nobel Memorial laureates Kenneth Arrow, Lawrence R. Klein, Eric Maskin, Daniel McFadden, Paul Samuelson and Robert Solow. The New York Times published projections from IHS Global Insight, Moodys.com, Economy.com and Macroeconomic Advisers that indicated that the economy may have been worse without the ARRA.
  A 2019 study in the American Economic Journal found that the stimulus had a positive impact on the US economy, but that the positive impact would have been greater if the stimulus had been more frontloaded.
caption: President Barack Obama announces the creation of the Economic Recovery Advisory Board on February 6, 2009.
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