American Recovery and Reinvestment Act of 2009 (P.L. 111-5): Summary and Legislative History
Released: 2009-04-20T00:00:00

President Barack Obama signed H.R. 1 , the American Recovery and Reinvestment Act (ARRA) of 2009, into law on February 17, 2009, as P.L. 111-5 (123 Stat. 115-521). This report provides a summary and legislative history of ARRA and identifies other resources that provide additional information regarding its content and implementation.

Background

For well over a year, the economy of the United States has been in significant distress. The Business Cycle Dating Committee of the National Bureau of Economic Research, whose determinations regarding the timing of recessions are widely accepted, announced on December 1, 2008, that the economy had entered recession in December 2007. The recession deepened substantially during 2008 and there is considerable uncertainty regarding how long it will last.

The federal government has responded (and continues to respond) to the economic situation by employing many different tools, encompassing both monetary policy, conducted by the Federal Reserve, and budgetary policy, under existing law and new legislation. With respect to new legislative activity, Congress and the President initially responded with the Economic Stimulus Act of 2008, which President George W. Bush signed into law on February 13, 2008 ( P.L. 110-185 ). The act, which consisted mainly of "recovery rebates" for individuals and investment incentives for businesses, reduced revenues by $152 billion in FY2008 and $16 billion in FY2009.

As the economic crisis worsened, Congress and the President enacted additional legislative responses, including extensions of unemployment compensation and the Emergency Economic Stabilization Act (EESA) of 2008 (Division A of P.L. 110-343 ), which President Bush signed into law on October 3, 2008. The EESA created the Troubled Assets Relief Program (TARP), which authorized the Treasury Department to buy up to $700 billion in troubled assets from financial institutions.

Toward the end of the 110 th Congress, congressional attention turned to action on a supplemental appropriations act as another legislative response to the economic situation. The House passed such a measure, the Job Creation and Unemployment Relief Act of 2008 ( H.R. 7110 ), on September 26, 2008. President Bush threatened to veto the bill, and the Senate did not consider comparable legislation before the session ended.

In 2009, at the beginning of the 111 th Congress, President Barack Obama and congressional leaders made action on an economic recovery bill a top priority. The legislative vehicle, it was determined, would be a supplemental appropriations act with substantial mandatory spending and revenue components.

The supplemental appropriations act addressing economic recovery is one of three major appropriations acts for FY2009 considered by Congress thus far (at least one additional appropriations act, providing supplemental appropriations for overseas military operations and other purposes, is expected to be considered during the session). On September 30, 2008, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ) was signed into law by President George W. Bush. Three of the 12 regular appropriations acts for FY2009 were funded by the act for the full fiscal year, and continuing appropriations were provided through March 6, 2009, for activities covered by the nine remaining appropriations acts. Consideration of an omnibus appropriations measure addressing the status of the nine remaining appropriations acts for the remainder of FY2009 was postponed until action on the supplemental appropriations measure pertaining to economic recovery (ARRA) was completed. Following the enactment of ARRA on February 17, 2009, the House and Senate then finished consideration of the FY2009 regular appropriations acts in the form of a single, omnibus measure; President Obama signed H.R. 1105 , the Omnibus Appropriations Act, 2009, into law on March 11, 2009, as P.L. 111-8 .

Legislative History

House and Senate action on ARRA occurred relatively quickly in the opening weeks of the 111 th Congress, from the introduction of legislation in late January 2009 to its enactment into law several weeks later. The House passed the bill on January 28, the Senate passed it on February 10, and both chambers agreed to the conference report on February 13.

Earlier Action on Stimulus Legislation

The quick action on ARRA in 2009 was aided in part by the development of similar legislation (although much smaller in scope) during the previous session, as the 110 th Congress drew to a close.

On September 26, 2008, the House passed an economic stimulus bill, the Job Creation and Unemployment Relief Act of 2008 ( H.R. 7110 ), by a vote of 264-158. On the same day, the Senate rejected a motion to proceed to the consideration of a similar measure, the Economic Recovery Act, 2008 ( S. 3604 ), by a vote of 52-42 (under a unanimous consent agreement, the motion required 60 votes to be successful). These measures, which originated in the Appropriations Committees, entailed appropriations of roughly $60 billion for such matters as infrastructure projects, energy development, unemployment compensation, job training, and Medicaid and food stamps assistance.

During two lame-duck sessions, held between November 17 and December 11, 2008, an expanded economic stimulus proposal, the Economic Recovery Act of 2008 ( S. 3689 ), was introduced by Senate Majority Leader Harry Reid and Senator Robert C. Byrd, the then-chairman of the Appropriations Committee. According to the sponsors, the measure provided $100.3 billion in infrastructure spending and a wide range of other stimulus and recovery activities. The 110 th Congress ended without the House or Senate taking any further action on economic stimulus legislation.

Action on ARRA in 2009

The American Recovery and Reinvestment Act of 2009, H.R. 1 , was introduced on January 26, 2009, by Representative David Obey, chairman of the House Appropriations Committee. The measure was an amalgamation of separate legislative components approved by several House committees:

H.R. 598 , the American Recovery and Reinvestment Tax Act of 2009, a measure containing revenue and other provisions, was marked up by the House Ways and Means Committee on January 22 and approved by voice vote ( H.Rept. 111-8 , Part I (January 27, 2009) and Part II (January 28, 2009)). The bill also was referred to the House Energy and Commerce Committee, Education and Labor Committee, Financial Services Committee, and Science and Technology Committee, but they were discharged from further consideration of the measure; H.R. 629 , the Energy and Commerce Recovery and Reinvestment Act, a measure containing broadband communications, energy, and health-related provisions, was marked up by the House Energy and Commerce Committee on January 22 and approved by unanimous consent ( H.Rept. 111-7 , Part I; January 26, 2009). The bill also was referred to the House Education and Labor Committee, Science and Technology Committee, and Ways and Means Committee, but they were discharged from further consideration of the measure; and H.R. 679 , the American Recovery and Reinvestment Act of 2009, a measure containing the appropriations-related provisions, was marked up by the House Appropriations Committee on January 21 and approved by a vote of 35-22 ( H.Rept. 111-4 ; January 26, 2009).

The House began consideration of H.R. 1 on January 27, under the terms of a special rule, H.Res. 88 , reported by the House Rules Committee. In initial action, the House agreed to a "question of consideration," by a vote of 224-199; this action was necessitated by a requirement in Clause 10(c)(3) of House Rule XXI (the "PAYGO Rule") that the question of consideration be approved before consideration can occur on a measure including a waiver of the PAYGO rule.

On January 28, the House adopted a second special rule, H.Res. 92 , which made several changes to the underlying bill automatically under a "self-executing" feature and prohibited the offering of further amendments except for 11 specified ones. According to the Rules Committee, the self-executing amendment changed provisions in the bill dealing with state certification of the intent to request and use funds provided in the act; the COPS program; the renovation and preservation of buildings on Historically Black Colleges and Universities campuses; funding for the National Mall Revitalization Fund; and family planning. The House then accepted eight of the 11 amendments (offered by Representatives Oberstar, Markey, Shuster, Nadler, Waters, Kissell, Platts, and Teague) and rejected the other three (offered by Representatives Neugebauer, Flake, and Camp), as well as a motion to recommit with instructions offered by Representative Jerry Lewis, the ranking member of the Appropriations Committee, by a vote of 159-270.

The House passed H.R. 1 on January 28, as amended, by a vote of 244-188.

Senate consideration of H.R. 1 occurred over eight days, beginning on February 2 and concluding on February 10 (the Senate was not in session on Sunday, February 8). The first amendment offered to the bill, Reid (for Inouye and Baucus) amendment 98, was a substitute amendment incorporating legislative proposals that had been approved previously by the Senate Appropriations Committee and the Senate Finance Committee:

S. 336 , a measure containing the appropriations-related provisions, was marked up by the Senate Appropriations Committee on January 27 and approved by a vote of 21-9 ( S.Rept. 111-3 ; January 27, 2009); and S. 350 , the American Recovery and Reinvestment Act of 2009, a measure containing the revenue provisions, was marked up by the Senate Finance Committee on January 27 and approved by a vote of 14-9 (no written report).

The Senate considered 42 amendments, adopting 22 and rejecting 13; seven were withdrawn. The final resolution of issues was addressed by Reid (for Collins and Nelson (NE)) amendment 570, which was a substitute for the entire bill. On February 9, cloture was invoked on the amendment, by a vote of 61-36. The next day, following a successful waiver of enforcement procedures under the Congressional Budget Act of 1974, by a vote of 61-37, Senate amendment 570 was adopted.

The Senate passed H.R. 1 on February 10, as amended, by a vote of 61-37.

On February 10, the House and Senate agreed to hold a conference on the bill and appointed conferees (Senators Inouye, Baucus, Reid, Cochran, and Grassley for the Senate, and Representatives Obey, Rangel, Waxman, Lewis (CA), and Camp for the House). The House agreed that day, by a vote of 403-0, to a motion to instruct conferees, offered by Representative Lewis (CA). The motion moved

to instruct the managers on the part of the House that they shall not record their approval of the final conference agreement (as such term is used in clause 12(a)(4) of rule XXII of the Rules of the House of Representatives) unless the text of such agreement has been available to the managers in an electronic, searchable, and downloadable form for at least 48 hours prior to the time described in such clause.

While the House-passed and Senate-passed versions of H.R. 1 were roughly comparable in scope, significant differences in the two versions had to be resolved. According to the Congressional Budget Office, the House-passed version would have increased the deficit by nearly $820 billion over FY2009-FY2019 (reflecting $359 billion in discretionary outlay increases, $279 billion in mandatory outlay increases, and $182 billion in revenue reduction), while the Senate-passed version would have increased the deficit by about $838 billion for the same period (reflecting $287 billion in discretionary outlay increases, $259 billion in mandatory outlay increases, and $292 billion in revenue reduction). Thus, the net increase in the deficit over FY2009-FY2019 was about $19 billion higher in the Senate version compared to the House version:

The Senate-passed version includes $72 billion less in spending from discretionary appropriations in Division A (mostly the result of less funding for education, including the proposed State Stabilization Fund) and about $20 billion less in direct spending in Division B. Those spending decreases would be more than offset by revenue reductions in Division B totaling about $110 billion (mostly because the Senate-passed version would raise the exemption amount allowed against an individual's income for the alternative minimum tax for tax year 2009).

The conference report on H.R. 1 ( H.Rept. 111-16 ) was filed on February 12. The conferees developed compromise levels between the House and Senate positions on each major component ($308 billion in discretionary outlay increases, $267 billion in mandatory outlay increases, and $211 in revenue reduction) in a way that lessened the overall impact of the bill on the deficit to $787 billion, well below the House and Senate levels (see Table 1 in the next section).

On February 13, the House took up the conference report after agreeing to the question of consideration required by the PAYGO rule, by a vote of 232-195. Consideration of the conference report occurred pursuant to the terms of a special rule, H.Res. 168 . Following the defeat of a motion to recommit with instructions offered by Representative Miller (MI), by a vote of 186-244, the House agreed to the conference report, by a vote of 246-183.

Later on February 13, the Senate considered the conference report. By identical votes of 60-38, the Senate waived enforcement procedures under the Congressional Budget Act of 1974 and then agreed to the conference report.

President Obama signed H.R. 1 into law on February 17, 2009, as P.L. 111-5 .

Overview of the Act

ARRA is a relatively lengthy and complex act, amounting to just over 400 pages (in slip law form) and melding together hundreds of billions of dollars in discretionary spending, mandatory spending, and revenue provisions encompassing the jurisdiction of several House and Senate committees. Discretionary spending is provided in, and controlled by, annual appropriations acts under the jurisdiction of the House and Senate Appropriations Committees. Spending in this category typically funds the routine operations of federal agencies and many grant programs. Mandatory spending (sometimes referred to as direct spending) generally is provided in, and controlled by, substantive legislation under the jurisdiction of the various authorizing committees in the House and Senate. Mandatory spending, for the most part, funds entitlement programs such as Social Security, Medicare, and unemployment compensation. Revenue laws are under the jurisdiction of the House Ways and Means Committee and the Senate Finance Committee.

ARRA provides almost $800 billion through extensive discretionary spending, mandatory spending, and revenue provisions that the Administration estimates will save or create some 3.5 million jobs. Funding is provided for existing and some new programs in the 15 Cabinet-level departments and 11 independent agencies. Some of the funds are distributed to states, localities, other entities, and individuals through a combination of formula and competitive grants and direct assistance. In addition to new spending and tax provisions, new policies are created regarding unemployment compensation, health insurance, health information technology, broadband communications, and energy, among others.

With regard to its specific impact on the budget, the act is expected to increase the deficit by $787.2 billion over the 11-year period covering FY2009-FY2019; the cost estimate prepared by the Congressional Budget Office (CBO) is presented in Table 1 . The estimated deficit impact reflects spending increases of $575.3 billion (in outlays) and revenue reductions of $211.8 billion.

The total spending increases consist of $311.2 billion in discretionary new budget authority (yielding $308.3 billion in outlays) and $269.5 billion in mandatory new budget authority (yielding $267.0 billion in outlays).

Table 2 provides information on the rate at which spending under the act is expected to occur.

As Table 2 shows, 20.9% of total outlays ($120.1 billion) are estimated to occur by the end of FY2009. By the end of FY2010, 59.0% of total outlays ($339.4 billion) are expected to occur, and by the end of FY2011, 80.9% of total outlays ($465.6 billion) are expected to occur. The cumulative rate of mandatory spending compared to discretionary spending over the first several fiscal years differs, with mandatory spending occurring more quickly. By the end of FY2011, for example, 91.3% of mandatory outlays ($243.8 billion) are expected to occur, compared to 71.9% of discretionary outlays ($221.8 billion).

Revenue reductions (as shown in Table 1 ) occur more quickly, with reductions of $64.8 billion in FY2009 and $180.1 billion in FY2010. The combined revenue reduction for these two years ($244.9 billion) exceeds the net revenue reduction of $211.8 billion over the 11-year period ending in FY2019; a modest revenue reduction occurs in FY2011, followed by modest revenue increases in all subsequent years.

CBO also prepared a year-by-year assessment of the macroeconomic effects of ARRA.

With regard to its structure, the act consists of several opening sections (e.g., short title) and two major divisions. Division A (Appropriations Provisions) includes supplemental appropriations for FY2009 (and later fiscal years) covering all 12 of the parallel regular appropriations acts. The supplemental appropriations corresponding to each regular appropriations act are presented separately in Titles I-XII of the division. Four additional titles, dealing with health information technology, a state fiscal stabilization fund, accountability and transparency, and general provisions complete the division.

Division B (Tax, Unemployment, Health, State Fiscal Relief, and Other Provisions) consists of seven separate titles.

Division A includes the discretionary spending provisions, but some significant substantive provisions as well. Division B includes the mandatory spending and revenue provisions, with some exceptions. In addition, Division B includes two titles that are not budgetary in nature: Title VI (Broadband Technology Opportunities Program) and Title VII (Limits on Executive Compensation). In the summary sections that follow, related provisions are discussed together, regardless of the division in which they were placed.

Table 3 provides a contents listing of ARRA, by opening section and division and title, with page references to the text of the public law. In addition, the table provides page references to the legislative text and explanatory statements in the conference report—as printed as a separate document ( H.Rept. 111-16 ) and as inserted into the Congressional Record of February 12, 2009.

Summary of Discretionary Spending Provisions

Division A of ARRA provides $311.20 billion in appropriations for a broad array of agencies, programs, and activities. The funds are provided in twelve titles corresponding with the twelve annual appropriations bills, and also an additional title for the State Fiscal Stabilization Fund. Not every agency typically funded through the annual appropriations bills received funding in ARRA. Moreover, the agencies that were funded received widely varying dollar amounts. In turn, these amounts constitute widely varying percentages of each agency's most recent annual appropriations (FY2009).

For each of the funding titles of Division A, the entries below identify the total funding provided in the title and describe the primary purposes of the funding. The entries also include percentages that indicate the extent to which the funding in ARRA is a supplement to other FY2009 funding. There are 12 entries each corresponding to one title of Division A. However, the entry for Title VIII, Departments of Labor, Health and Human Services, and Education, and Related Agencies, also discusses the State Fiscal Stabilization Fund (Title XIV) which received appropriations for education programs.

Table 4 indicates the total discretionary budget authority for FY2009-FY2019 provided by title in Division A. Table 5 and Table 6 , at the end of this section, provide additional information on appropriations in Division A, including funding by department and agency.

Of the $311.20 billion in total funding, $288.73 billion is identified as for FY2009. The remainder is identified for future fiscal years, specifically $7.08 billion for FY2010 and $15.39 billion for FY2011 through FY2019. The ARRA states that the appropriations are in addition to amounts otherwise appropriated for the fiscal year involved, and that all funding is designated as emergency funding.

The monies in the law are available for obligation until September 30, 2010 (the end of FY2010) unless otherwise specified. Most of the accounts funded in Division A of the law do not contain different periods of obligation, although there are a number of exceptions. For instance, funding for the Inspectors General of the agencies typically is provided for a longer period of obligation. By comparison, the 12 regular, annual appropriations laws typically contain varied periods of obligation for funds therein. Some funds are made available until expended, while others are provided for one or multiple fiscal years.

The ARRA contains a variety of provisions requiring agencies receiving the funds to notify Congress on how the money is to be spent. For example, it requires that each agency receiving funding in the Interior, Environment, and Related Agencies title notify the House and Senate Appropriations Committees as to how the monies are to be spent. Specifically, it provides that each such agency is to submit to the House and Senate Committees on Appropriations, within 30 days of enactment, a general plan for the expenditure of the funds. Each agency also is to submit to the committees, within 90 days of enactment, a report "containing detailed project level information associated with the general plan." As another example, several of the appropriations included in the Departments of Labor, Health and Human Services, and Education, and Related Agencies title require the pertinent agency head to submit an operating plan to the Appropriations Committees prior to making any obligations of the funds provided. The timelines and requirements for the plans vary, but they generally focus on detailing activities to be supported and describing the planned allocation of resources, to be followed by subsequent reports on actual obligations and expenditures.

Among the general provisions of ARRA, agencies are to begin spending the funds "as quickly as possible consistent with prudent management." With regard to funds for infrastructure, recipients are to give preference to activities "that can be started and completed expeditiously," with a goal of using at least 50% of the monies for activities that can be started within 120 days of enactment.

The ARRA also requires the establishment of a website with information on how the funds in Division A are allocated. The Administration has established a website to monitor implementation of the AARA—( http://www.recovery.gov/ ). For further information on implementation and oversight provisions of ARRA, see the "Summary of General Oversight Provisions" and "Additional Resources" sections of this report.

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (Division A, Title I)24

Agriculture programs—including nutrition assistance, rural development, farmer assistance, and conservation—receive $26.47 billion in ARRA. This is 24% over the $108.09 billion in the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies.

Of the $26.47 billion, nutrition assistance programs receive the largest share at $20.74 billion. Increased food stamp benefits and expanded eligibility in the newly renamed Supplemental Nutrition Assistance Program (SNAP) represent the largest single increase; monthly food stamp benefits for families rise 20% on average from current levels. Second, rural development receives $4.36 billion (160% of the regular FY2009 amount), focused primarily on broadband infrastructure but also rural water and waste disposal infrastructure, community facilities, and rural housing. In particular, the rural broadband program receives $2.50 billion, allowing outlays through FY2015 that are 20-30 times more than recent annual appropriations. Third, assistance for farmers totals $744.0 million, primarily for crop insurance/disaster programs but also for the farm loan program, which is facing higher demand during the financial crisis. Fourth, conservation programs receive $348.0 million for watershed flood prevention infrastructure. Finally, USDA receives $250.0 million for its own facilities maintenance and computer infrastructure.

Commerce, Justice, Science, and Related Agencies (Division A, Title II)27

The ARRA provides $15.92 billion for agencies covered under the Commerce, Justice, Science, and Related Agencies (CJS) appropriations bill. This is a 27% supplement to the $59.93 billion in other FY2009 appropriations.

Commerce. The ARRA includes $7.92 billion for the Department of Commerce (DOC). Of this amount, $5.35 billion (68%) is for the National Telecommunications and Information Administration (NTIA) for activities such as broadband deployment in the United States and the conversion from analog to digital television broadcasts. (Division B, Title VI contains the authorization for the Broadband Technology Opportunities Program (BTOP) at NTIA. )

For the 2010 census, the Bureau of the Census receives $1.00 billion to hire and train additional personnel, increase targeted media purchases, and improve risk management. Up to $250.0 million of the $1.00 billion is to be used for partnership and outreach efforts to hard-to-count groups. The National Oceanic and Atmospheric Administration receives $830.0 million, with $600.0 million for facility and fleet construction and maintenance and $230.0 million for research, restoration, navigation, conservation, and management activities. The National Institute of Standards and Technology receives $580.0 million for construction and research activities (plus a $20.0 million transfer). The Economic Development Administration receives $150.0 million for Economic Development Assistance programs, and the Office of Inspector General receives $6.0 million.

Justice. The Department of Justice (DOJ) receives $4.00 billion, with $2.0 million for the Inspector General and the rest for grant programs. Specifically, the Office on Violence Against Women receives $225.0 million for violence against women prevention and prosecution programs, and the Community Oriented Policing Services Office receives $1.00 billion for its hiring program. The Office of Justice Programs receives $2.77 billion, including $2.00 billion for the Edward Byrne Memorial Justice Assistance Grant program, $225.0 million for Byrne Competitive grants, $225.0 million for construction of correctional facilities on tribal lands, $125.0 million for rural law enforcement assistance, $100.0 million for victim compensation grants, $50.0 million for Internet Crimes Against Children taskforces, and $40.0 million for law enforcement assistance along the southern border and in High-intensity Drug Trafficking Areas.

Science. Two science agencies receive a total of $4.00 billion. The National Aeronautics and Space Administration (NASA) receives $1.00 billion, including $400.0 million for science, to accelerate the development of the tier 1 set of Earth science climate research missions and to increase the agency's supercomputing capabilities; $400.0 million for exploration; $150.0 million for aeronautics; $50.0 million for cross-agency support, with the highest priority for restoring NASA-owned facilities damaged by natural disasters during 2008; and $2.0 million for the Inspector General. The National Science Foundation (NSF) receives $3.00 billion, comprised of $2.50 billion for research and related activities (R&RA), $400.0 million for its major research equipment and facilities construction account, $100.0 million for education and human resources (EHR), and $2.0 million for the Inspector General. Language in the joint explanatory statement provides further direction, such as to allocate $300.0 million of the R&RA funds to NSF's major research instrumentation program and $60.0 million of the EHR funds to the Robert Noyce scholarship program.

Department of Defense (Division A, Title III)29

The ARRA provides $4.56 billion to DOD accounts that had been funded by the FY2009 Department of Defense Appropriations Act (Division C, P.L. 110-329 ). Apart from these stimulus funds and funds appropriated for military construction (which are provided separately), a total of $543.57 billion has been appropriated for DOD in FY2009. The funds in ARRA increase that total by 0.8%.

The additional DOD funds provided by ARRA are aimed largely at programs that serve one of two goals. A total of $4.24 billion is for maintenance of DOD facilities, of which $400.0 million is for medical facilities, $153.5 million is for renovation of barracks, and $3.69 billion is for repair and maintenance of other facilities and for projects that would improve the energy efficiency of DOD facilities. An additional $300.0 million is for research and development projects that would improve DOD's energy efficiency. The law also provides an additional $15.0 million for the office of the DOD Inspector General.

Energy and Water Development (Division A, Title IV)31

In total, ARRA contains $50.83 billion for Energy and Water Development programs, a 128% supplement to the $39.56 billion included in regular and supplemental appropriations for FY2009 ($33.80 billion in the omnibus appropriations law, P.L. 111-8 , and $5.76 billion in the supplemental appropriations law, P.L. 110-252 ). The three major programs in the Energy and Water Development bill support the Army Corps of Engineers (Corps) Civil Programs, the Bureau of Reclamation in the Department of the Interior, and the Department of Energy (DOE).

The ARRA appropriates $4.60 billion for construction, operation, maintenance, and planning of Corps navigation, flood control, and ecosystem restoration projects and for other Corps civil works activities. This is a 41% supplement to the $11.16 billion in FY2009 appropriations for these activities—$5.40 billion in regular appropriations ( P.L. 111-8 ) and $5.76 billion in supplemental appropriations ( P.L. 110-252 ). The ARRA amount, therefore, represents 85% of the regular appropriations for the Corps. The Bureau of Reclamation receives $1.00 billion in ARRA, a 93% addition to the $1.08 billion in regular FY2009 appropriations. Reclamation funds are to be used for elements of projects, programs, or activities that can be completed within the funding amounts provided in ARRA and not create budgetary obligations in future fiscal years, and include specific appropriations for water reuse and recycling, certain restoration, rural water supply, and canal projects in the 17 western states.

The Department of Energy receives $38.73 billion in ARRA, a 144% supplement to the $26.97 billion in other appropriations for FY2009. DOE has many programs, and the distribution of ARRA money varies widely among them. While some programs do not receive any appropriation from ARRA, others are funded many times over their regular budgets. Among the major recipients, Energy Efficiency and Renewable Energy programs receive $16.80 billion, more than eight times the $1.93 billion in the regular FY2009 appropriations law. Electricity Delivery and Energy Reliability, funded at $137.0 million in the FY2009 appropriations, receives $4.50 billion in ARRA, a 32-fold increase. Fossil Fuel Research and Development receives $3.40 billion in ARRA, almost four times as much as the $876.3 million in the FY2009 appropriations law.

Other major DOE programs that receive ARRA money are Defense Environmental Cleanup, which receives $5.13 billion, a 91% addition to the $5.66 billion in the FY2009 appropriations law, and Science programs, which receive $2.00 billion from ARRA, a 42% addition to the $4.77 billion in the regular FY2009 appropriations law.

Financial Services and General Government (Division A, Title V)33

The ARRA provides $6.86 billion for Financial Services and General Government agencies. This is a 15% supplement to the $44.58 billion in other appropriations for Financial Services and General Government agencies for FY2009. Of the $6.86 billion, $5.86 billion is provided to the General Services Administration (GSA). The large majority of GSA's appropriation, $5.55 billion, is for construction projects and "green" building initiatives. GSA receives an additional $300.0 million for the purchase of energy–efficient motor vehicles, and $7.0 million for the agency's Office of Inspector General.

Of the $6.86 billion total, the Small Business Administration (SBA) receives $730.0 million. Of that amount, $630.0 million is provided for loan guarantees and loan subsidies, $69.0 million for salaries and expenses, $15.0 million for the Surety Bond Guarantee Revolving Fund, $10.0 million for the Office of Inspector General, and $6.0 million for direct loans.

Another $187.0 million of the total is provided to the Department of the Treasury. Of that amount, $100.0 million is for programs funded through the Community Development Financial Institutions Fund, $80.0 million is for the Internal Revenue Service to implement the TAA Health Coverage Improvement Act of 2009, and $7.0 million is for the Treasury Inspector General for Tax Administration. The remaining $84.0 million of the total Title V funding is for the Recovery Act Accountability and Transparency Board, which was established to coordinate and conduct oversight of funds distributed under ARRA in order to prevent fraud, waste, and abuse.

Department of Homeland Security (Division A, Title VI)37

The ARRA includes $2.76 billion for a number of agencies and programs within the Department of Homeland Security (DHS). Funding provided in ARRA represents a 7% supplement to the $41.33 billion in other appropriations for DHS for FY2009. Of the $2.76 billion total, ARRA provides $200.0 million to the Office of the Under Secretary for Management for various activities and costs associated with the consolidation of DHS headquarters. It contains $5.0 million for the Office of Inspector General for the oversight and audit of programs, grants, and projects funded under Title VI. The law includes $680.0 million for Customs and Border Protection, comprised as follows: $100.0 million for non-intrusive inspection technology; $60.0 million for tactical communications equipment and radios; $100.0 million to deploy SBInet technology to the border; and $420.0 million for the construction and modification of ports of entry. Further, ARRA contains $20.0 million for tactical communications equipment and radios for Immigration and Customs Enforcement.

The law includes $1.00 billion for the Transportation Security Administration for checked baggage explosives detection systems and checkpoint explosives detection equipment. It contains $240.0 million for the Coast Guard, of which $142.0 million is dedicated to the Alteration of Bridges program for those bridges that are ready to proceed to construction and $98.0 million is for a variety of acquisition and maintenance activities. Finally, ARRA also provides $610.0 million to the Federal Emergency Management Agency, of which $100.0 million is for the Emergency Food and Shelter program and $510.0 million is for selected DHS assistance programs for states and localities: $150.0 million for the Transit Security Grant Program; $150.0 million for the Port Security Grant Program; and $210.0 million for the Assistance to Firefighters Program.

Interior, Environment, and Related Agencies (Division A, Title VII)38

In total, ARRA contains $10.95 billion for Interior, Environment, and Related Agencies. This is a 40% supplement to the $27.59 billion in other appropriations for Interior, Environment, and Related Agencies for FY2009. Of the $10.95 billion, $7.22 billion is provided to the Environmental Protection Agency (EPA). The majority of EPA funding is for clean water ($4.00 billion) and drinking water ($2.00 billion) state revolving fund grants. The remainder of the funds is primarily for cleanup projects, specifically Superfund remediation, grants for cleanup of Brownfields and leaking underground storage tanks, and diesel emission reduction grants. Another portion of the funds is for the Office of Inspector General. EPA funding in ARRA nearly equals the agency's FY2009 regular appropriations of $7.64 billion.

Another $2.50 billion of the $10.95 billion total is provided to the four federal land management agencies: the Bureau of Land Management, Fish and Wildlife Service, National Park Service, and Forest Service. These funds are provided for construction; wildfire management; and maintenance, repair, and rehabilitation of facilities and trails, among other purposes. Still another $1.00 billion of the $10.95 billion is provided to the Bureau of Indian Affairs for activities including repair and restoration of roads, construction and improvement of schools, and maintenance and repair of detention centers ($500.0 million) and to the Indian Health Service for facilities construction, deferred maintenance, sanitation projects, and equipment purchases ($500.0 million), among other activities. The remaining $230.0 million of the $10.95 billion is provided to several other agencies for purposes including deferred maintenance of the U.S. Geological Survey, salaries and expenses of the DOI Inspector General, repair of Smithsonian facilities, and grants for the arts.

Departments of Labor, Health and Human Services, and Education, and Related Agencies (Division A, Title VIII) and State Fiscal Stabilization Fund (Division A, Title XIV)41

Two titles of ARRA provide funding for the Departments of Labor, Health and Human Services, and Education, and Related Agencies. Title VIII provides a total of $72.56 billion, including $4.81 billion for the Department of Labor, $21.92 billion for the Department of Health and Human Services, $44.64 billion for the Department of Education, and $1.20 billion for related agencies. Title XIV provides $53.60 billion to the Department of Education for a new State Fiscal Stabilization Fund, bringing ARRA Education total to $98.24 billion. The ARRA total from the two titles is $126.16 billion, a 20% supplement to the $638.47 billion in other appropriations for Labor, Health and Human Services, and Education, and Related Agencies for FY2009. For discretionary programs, however, ARRA total of $124.15 billion is a 78% supplement to the $160.08 billion in regular FY2009 appropriations for the agencies. In contrast, the much smaller ARRA total of $2.01 billion for mandatory programs (provided through Division A) is a 0.4% supplement to the $478.39 billion in regular FY2009 appropriations.

Department of Labor (DOL). The ARRA includes $4.81 billion for the Department of Labor. The amount is a 31% supplement to the $15.32 billion in other FY2009 appropriations, and a 39% supplement to the $12.41 billion in FY2009 discretionary funding for DOL. Of the $4.81 billion total, $4.20 billion is provided for employment and training programs authorized by the Workforce Investment Act (WIA) and the remaining $606.0 million went to related DOL programs. The amount for WIA programs represents a 79% supplement to the $5.31 billion in the Omnibus Appropriations Act, 2009. Of the $4.20 billion in WIA funding, a total of $3.95 billion is appropriated for Training and Employment Services activities as follows: (1) formula grants to states receive $2.95 billion, including $500.0 million in grants for adult employment and training, $1.20 billion in grants for youth activities, and $1.25 billion in grants for dislocated worker assistance; (2) the Dislocated Workers Assistance National Reserve receives $200.0 million; (3) the YouthBuild program receives $50.0 million; and (4) $750.0 million is provided for a new program of competitive grants for worker training and placement in high-growth and emerging industries. The remaining $250.0 million in WIA funding goes to the Office of Job Corps for construction and renovation of Job Corps Centers. The balance of ARRA funding for DOL is for the Community Service Employment for Older Americans program ($120.0 million), state unemployment insurance and employment service operations ($400.0 million), departmental management ($80.0 million), and the Office of the Inspector General ($6.0 million).

Department of Health and Human Services (HHS). The ARRA provides $21.92 billion for the HHS programs funded under this appropriation. This is a 4% supplement to the $501.20 billion in total regular FY2009 appropriations, and a 31% supplement to the $71.38 billion in FY2009 discretionary funding for HHS. Of the $21.92 billion, the National Institutes of Health (NIH) receives the largest share at $10.00 billion (a 33% supplement to regular FY2009 appropriations). The Administration for Children and Families receives $5.15 billion, including $2.00 billion for the Child Care and Development Block Grant (a 94% supplement) and $3.15 billion for Children and Family Services programs (a 34% supplement). The Office of the HHS Secretary receives a total of $3.07 billion for several programs, including $1.00 billion for a new Prevention and Wellness Fund and $2.00 billion to implement activities authorized under the Health Information Technology for Economic and Clinical Health Act (Division A, Title XIII of ARRA). The Health Resources and Services Administration receives $2.50 billion, including $2.00 billion for health centers (a 91% supplement) and $500.0 million for health professions training programs. The Agency for Healthcare Research and Quality (AHRQ) receives a total of $1.10 billion for comparative effectiveness research ($300.0 million for AHRQ programs, $400.0 million for transfer to NIH, and $400.0 million for the Secretary to allocate). Finally, the Administration on Aging receives $100.0 million for senior nutrition programs.

Department of Education (ED). The ARRA provides $98.24 billion for programs that are or will be administered by the Department of Education. This is a 148% supplement to the $66.51 billion in regular FY2009 appropriations for ED.

Of the $98.24 billion, $42.62 billion is appropriated for existing discretionary ED programs—a 90% supplement to the regular FY2009 appropriations for these programs. Three programs that receive the largest shares of the funding are discussed here; the balance of ARRA funding for existing programs is provided in smaller amounts to numerous other ED programs. Most of ARRA funds for existing elementary education programs are appropriated for programs that provide formula grants directly to states or local educational agencies (LEAs), while most funds at the postsecondary level are appropriated for Pell Grants, which go directly to students. For some programs, these appropriations provide a substantial increase over the amount of funding provided through the regular appropriations process in recent years. The ARRA provides $10.00 billion for Title I-A, Education for the Disadvantaged, Grants to LEAs, a 69% supplement to the $14.49 billion in regular FY2009 appropriations for the program. Similarly, ARRA provides $11.30 billion for the Individuals with Disabilities Education Act (IDEA), Part B Grants to States, a 98% supplement to the $11.51 billion in regular FY2009 appropriations. At the postsecondary level, ARRA provides $15.64 billion in discretionary funding for Pell Grants, a 90% supplement to the $17.29 billion in regular FY2009 appropriations.

The remaining $53.60 billion in ARRA funding for ED is appropriated for the new State Fiscal Stabilization Fund. After making reservations from the appropriation, including a $5.00 billion reservation for the Secretary of Education to provide State Incentive Grants and establish an Innovation Fund, $48.32 billion will be provided to governors through formula grants to each state that chooses to apply for funding through this program. At the state level, the governor must use 81.8% of the funds received to restore state support for public elementary and secondary education and for public institutions of higher education (IHEs) to the greater of the FY2008 or FY2009 level for FY2009, FY2010, and FY2011. The governor is required to use the remaining 18.2% of the state allocation for "public safety and other government services," which may include assistance for elementary and secondary education and public IHEs.

Related Agencies. The ARRA includes $1.20 billion for related agencies. This is a 2% supplement to the $55.43 billion in total regular FY2009 appropriations, and a 9% supplement to the $12.75 billion in FY2009 discretionary funding for these agencies. Of the $1.20 billion, ARRA provides $1.00 billion to the Social Security Administration (SSA). Of this amount, $500.0 million is to replace SSA's National Computer Center and $500.0 million is for processing disability and retirement claims. SSA's Office of the Inspector General receives $2.0 million. The ARRA provides $201.0 million to the Corporation for National and Community Service. This amount includes $89.0 million for AmeriCorps State and National Grants, $65.0 million for the AmeriCorps Volunteers in Service to America program, and $40.0 million for the National Service Trust. Among other activities, the National Service Trust provides educational awards to participants in AmeriCorps, VISTA, and the National Civilian Community Corps.

Legislative Branch (Division A, Title IX)51

The ARRA contains $25.0 million for the legislative branch, all of which is provided for the Government Accountability Office (GAO). This amount is a 0.6% supplement to the $4.40 billion in other appropriations for Legislative Branch for FY2009. The ARRA requires GAO to conduct bimonthly reviews of selected states and localities on their use funds provided by the act. It also seeks to ensure GAO access to various records related to contracts awarded with funds provided in the act.

Military Construction and Veterans Affairs and Related Agencies (Division A, Title X)52

The ARRA includes $4.28 billion for Military Construction and Veterans Affairs and Related Agencies, a 4% addition to the $119.61 billion otherwise appropriated for FY2009. Of the $4.28 billion, $2.88 billion is devoted to military construction, military family housing construction and operation, and the Department of Defense (DOD) Homeowners Assistance Fund. Army construction ($180.0 million) is specified for use on child development centers and "warrior transition complexes." Army family housing construction receives an additional $34.5 million and operations another $3.9 million. Navy and Marine Corps construction ($280.0 million) is to be used for troop housing, child development centers, and energy conservation and alternative energy projects. Air Force construction ($180.0 million) is to be devoted to troop housing and child development centers. Air Force family housing construction receives $80.1 million and operations an additional $16.5 million. Defense-wide construction ($1.45 billion) is dedicated to hospitals, with a small portion reserved for the Energy Conservation Investment Program. The Army National Guard construction account is allocated $50.0 million, and the Air National Guard an additional $50.0 million. The Homeowners Assistance Fund, which provides assistance to DOD personnel forced to sell primary homes in depressed housing markets because of relocations due to base closures or downsizing, receives a $555.0 million appropriation, and additional legislative language expands eligibility to new categories of personnel.

Of the $4.28 billion, ARRA provides $1.40 billion to the Department of Veterans Affairs. This amount includes $1.00 billion for the medical facilities account, and $50.0 million for the National Cemetery Administration. The funding for these accounts is for non-recurring maintenance and energy conservation projects in VA medical facilities and monument and memorial repairs in VA national cemeteries. The law does not specify which VA medical facilities or cemeteries would receive funding. The ARRA also provides: $150.0 million for the general operating expenses account to temporarily increase the number of claims processing personnel; $50.0 million for information technology; $1.0 million for the Office of the Inspector General; and $150.0 million for grants for construction of state extended care facilities.

State, Foreign Operations, and Related Programs (Division A, Title XI)54

The ARRA contains $602.0 million for programs under the Department of State and the U.S. Agency for International Development (USAID). This is a 1.5% supplement to the other $40.46 billion in other appropriations for State, Foreign Operations, and Related Programs for FY2009. Of the $602.0 million, $382.0 million is provided for State Department activities, including $90.0 million under Diplomatic & Consular Programs to address facilities requirements for passport and training functions, $290.0 million to the Capital Investment Fund (CIF) for security upgrades to the information technology system (of which $38.0 million is to be transferred to USAID's CIF for coordination of State and USAID information technology systems), and $2.0 million to the Office of the Inspector General for oversight requirements. The remaining $220.0 million is provided for the U.S.-Mexico International Boundary and Water Commission for immediate repair and rehabilitation requirements, of which up to $2.0 million may be merged with funds for salaries and expenses.

Transportation, Housing and Urban Development, and Related Agencies (Division A, Title XII)55

The ARRA provides $61.80 billion for programs within the Department of Transportation (DOT) and the Department of Housing and Urban Development (HUD). This is a 57% supplement to the $109.06 billion provided in the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2009 (Division I, P.L. 111-8 ).

DOT. DOT receives a total of $48.12 billion from ARRA, primarily to make capital assistance grants. This additional funding represents a 72% supplement to DOT's regular FY2009 funding ($67.22 billion).

The ARRA funding is allocated among ten grant programs, focusing on different modes of transportation. The largest allocation, $27.50 billion, goes to states and localities for highway projects, though passenger and freight rail and port infrastructure projects also are eligible for this funding in certain circumstances. The next largest allocation, $9.30 billion, is for states and Amtrak for intercity passenger rail projects, including high-speed rail. Transit projects receive $8.40 billion; aviation projects receive $1.30 billion; and small shipyards receive $100.0 million. The law also provides $1.50 billion for competitive grants for surface transportation projects of national and regional significance, whether highways, bridges, transit, rail, or port infrastructure. For most of these programs, the grants provided with funding from ARRA will not require any local match. States will be required to certify that they are using these grants to supplement their planned transportation spending, rather than substituting the additional funding for their planned spending. Further, the DOT Inspector General's Office is given $20.0 million to help audit these expenditures.

HUD. The ARRA provides $13.68 billion for HUD in FY2009. This funding is a 33% supplement to the $41.54 billion provided for HUD in P.L. 111-8 .

The $13.68 billion in HUD funding includes $4.00 billion for the repair and modernization of public housing and $2.00 billion for the acquisition, rehabilitation, and sale of abandoned and foreclosed housing through the Neighborhood Stabilization Program. It includes $2.00 billion to fund the full-year renewal of project-based rental assistance contracts between HUD and private property owners and another $2.25 billion is included to provide gap financing for certain tax credit financed affordable housing developments. The HUD funding also includes $1.50 billion for homelessness prevention activities, to be awarded to localities via the Emergency Shelter Grant program formula.

The remaining HUD funding is provided for: supplemental Community Development Block Grant assistance ($1.00 billion); supplemental grants for Native American block grant recipients ($510.0 million); competitive grants for energy efficiency and green retrofits in HUD-assisted multifamily properties ($250.0 million); supplemental funding for the lead paint hazard reduction program ($100.0 million); and supplemental funding for HUD's Office of Inspector General ($15.0 million). Administrative provisions in the law increase the Federal Housing Administration loan limits and the government sponsored enterprises (GSE) conforming loan limits. The GSE changes are estimated to cost $37.0 million in FY2009 and $13.0 million in FY2010.

Summary of Mandatory Spending Provisions

Most mandatory spending in ARRA is contained in Division B of the act; however, some $29 billion of estimated outlays contained in Division A are also the result of changes in mandatory programs (for example, the Supplemental Nutrition Assistance Program, formerly known as food stamps). Of total amounts shown in Table 1 for mandatory spending under Division B, nearly $69 billion is from refundable tax credits. For purposes of this CRS report, these tax provisions are generally discussed in the "Summary of Tax and Public Finance Provisions," although a few that are directly related to the mandatory provisions discussed below also are mentioned here.

Non-tax mandatory spending in Division B totals $198 billion over the 10-year period FY2009-FY2019, according to CBO estimates. The vast majority of this spending will occur in the first two years ($160 billion). Almost all funds will be spent during the five-year period FY2009-FY2013 ($194 billion). The key exception to this pattern, however, is the Medicaid/Medicare health information technology provisions (Title IV of Division B), which do not take effect until FY2011.

The largest single component of spending results from provisions intended to provide fiscal relief to states under the Medicaid program (Title V of Division B). CBO estimates that Title V provisions will result in $90 billion in outlays over 10 years, with $78 billion in spending during the first two years (FY2009 and FY2010) and nearly the full $90 billion spent during FY2009-FY2013.

The next largest category of mandatory non-tax spending results from changes in unemployment compensation (UC), which CBO estimates will cost $39 billion over 10 years, with more than $37 billion of that total occurring during the first two years. UC provisions are combined in Title II of Division B with provisions that amend the Temporary Assistance for Needy Families (TANF) and Child Support Enforcement (CSE) programs and that provide one-time "economic recovery" payments to certain individuals (e.g., recipients of Social Security and other benefit programs). CBO estimates that the combination of TANF, CSE, and economic recovery payments will cost $18 billion over 10 years, with $17 billion of that spending in the first two years. Most of this spending is for the economic recovery payments.

Subsidies for COBRA health insurance premiums will cost an estimated $25 billion over 10 years, and Medicare/Medicaid health information technology (HIT) provisions will cost an estimated $21 billion. Most of the HIT spending will occur in FY2011-FY2015, with estimated savings starting in FY2016.

Table 7 , toward the end of this report, provides summary information on the levels of mandatory spending (and revenue changes) provided in ARRA.

Trade Adjustment Assistance (Division B, Title I, Part I)

ARRA reauthorizes and expands the Trade Adjustment Assistance (TAA) programs (for workers, firms and farmers) through the end of calendar year 2010. It also created a TAA for Communities program. These programs provide various forms of assistance (e.g., income support, training, job search and relocation assistance, technical assistance) for individuals, businesses and communities adversely affected by imports or shifts in production out of the United States. In addition, a refundable Health Coverage Tax Credit (HCTC) is available to offset part of the health insurance premiums of eligible workers.

Regarding TAA for Workers , ARRA expands eligibility to additional groups (including service and public sector workers) and extends income support benefits an additional 26 weeks. ARRA increases the amount of a worker's job search and relocation expenses that may be reimbursed by the program and increases the amount of annual training funds available. The law also continues and eases eligibility for a wage insurance program for older workers, and increases the portion of a worker's health insurance premium that will be covered by the HCTC.

ARRA also makes significant changes to TAA for Firms . The new law extends eligibility to services firms in addition to manufacturing and agricultural firms, and increases a firm's flexibility in demonstrating it has been negatively affected by trade. The law requires the Secretary of Commerce, upon being informed by the Secretary of Labor that a firm's workers are covered by the TAA for Workers program, to notify the firm of its potential eligibility under the TAA for Firms program.

For TAA for Farmers , ARRA makes it easier for any group of commodity producers, including fishermen, to qualify for assistance by lowering a key threshold and broadening the scope of the factors to be examined in determining eligibility. Also, instead of receiving cash payments automatically under a formula as before, a producer that meets specified requirements will become eligible for financial assistance only upon the completion of training intended to help him or her become more competitive in producing the same or another commodity.

The TAA for Communities program makes communities that have received one or more certifications under the TAA for Workers, Firms, or Farmers program eligible for strategic planning grants as well as for economic development grants if the communities cannot match grant funds as required by other federal programs.

Unemployment Compensation (Division B, Title II, Subtitle A)

ARRA contains several provisions affecting unemployment benefits. The law increases unemployment benefits by $25 per week for all recipients of regular unemployment compensation (UC), extended benefits (EB), emergency unemployment compensation (EUC08), Trade Adjustment Assistance (TAA) programs, and Disaster Unemployment Assistance (DUA). Supplemental compensation will be available from the time a state enters into an agreement with the Labor Secretary and ending in most cases before January 1, 2010.

The act extends the temporary EUC08 program through December 26, 2009, to be financed by federal general revenues. It also provides for 100% federal financing of the EB program to end before January 1, 2010, to be financed through the Unemployment Trust Fund. ARRA allows states the option of changing temporarily the eligibility requirements for the EB program in order to expand the number of persons eligible for EB benefits, to end before June 1, 2010. The law also adds an additional 13 weeks to the maximum amount of time railroad workers may receive extended unemployment benefits.

ARRA suspends income taxation on the first $2,400 of unemployment benefits received in 2009, for taxable years beginning after December 31, 2008. It provides relief to states from the payment and accrual of interest on federal loans to states for the payment of unemployment benefits, from enactment of the stimulus package on February 17, 2009 through December 31, 2010.

ARRA provides for a special transfer of up to $7 billion in federal monies to state unemployment programs as "incentive payments" for changing certain state UC laws. All incentive payments must be made before October 1, 2011. States do not need to repay these sums to the federal government. Any changes that states make to state unemployment programs as a result of ARRA's modernization provisions would be permanent. Finally, the act transfers a total of $500 million to the states for administering their unemployment programs, within 30 days of enactment of the law. States do not need to repay these sums to the federal government.

TANF and Child Support Enforcement (Division B, Title II, Subtitle B)

Most funding to states under the Temporary Assistance for Needy Families (TANF) program is provided through a block grant that totals $16.5 billion a year. TANF has additional funding streams, however, including a $2 billion contingency fund for states that meet criteria of economic need. ARRA retains the current TANF contingency fund and adds a new, temporary "emergency contingency fund," that provides extra funding to states in FY2009 and FY2010. States receive extra federal grants to cover 80% of increased recession-related costs in those two years. Recession-related costs are defined as increased basic assistance (for states with increased basic assistance caseloads), non-recurrent short-term benefits, or subsidized employment expenditures. A state's cumulative combined funding from both the TANF contingency fund and the temporary emergency fund is limited to 50% of its annual basic TANF block grant for the two years. The ARRA provides an appropriation of $5 billion for the emergency fund.

ARRA also temporarily modifies the caseload reduction credit that applies toward TANF work participation standards. Under existing TANF law, the credit reduces a state's work participation standard for caseload reduction that has occurred since FY2005 to the fiscal year prior to the current fiscal year. If caseloads rise, the credit diminishes, raising the effective (after credit) work participation standard. ARRA modifies the credit for the FY2009, FY2010, and FY2011 standards, allowing the credit to be based on caseload reduction through FY2007 or FY2008 for those years. Thus, caseload increases occurring in FY2008 through FY2010 will not reduce caseload reduction credits. Finally, under pre-ARRA law, states could reserve unspent TANF grants without fiscal year limit for the purpose of providing cash welfare. ARRA allows states to use unspent TANF grants for any TANF benefit and service.

Under the Child Support Enforcement (CSE) program, the federal government provides matching grants to states to reimburse them for part of the costs of running their programs. The federal government also provides incentive payments to states to encourage them to operate effective programs, and requires states to reinvest these incentive payments back into the CSE program or related activities. ARRA requires HHS to temporarily provide federal matching funds on CSE incentive payments that states reinvest back into the CSE program. (This practice had been prohibited by the Deficit Reduction Act of 2005 ( P.L. 109-171 ).) This means that CSE incentive payments received by states and reinvested in the CSE program can be used to draw down additional federal funds. ARRA provides the federal matching funds for FY2009 and FY2010 (i.e., the period October 1, 2008, through September 30, 2010).

Economic Recovery Payments (Division B, Title II, Subtitle C)

ARRA provides for a one-time economic recovery payment of $250 to certain individuals, to be made by the Secretary of the Treasury within 120 days of enactment (before mid-June). The payments will be made to those eligible persons who in November 2008, December 2008, or January 2009, received benefits under: Social Security; Supplemental Security Income (SSI); Railroad Retirement; and certain programs administered by the Department of Veterans Affairs (i.e., disability compensation; pension; dependency indemnity compensation; and special payments to disabled children of certain veterans).

To be eligible, Social Security recipients must be over age 18 (19 if in school). However, disabled children receiving SSI also are eligible for the economic recovery payment. Individuals must live in the United States, District of Columbia, Puerto Rico, or one of the U.S. possessions, and will receive only one payment even if they are beneficiaries of more than one eligible program (for example, receiving both Social Security and veterans benefits).

Taxpayers cannot benefit from both the economic recovery payment and the Making Work Pay tax credit (provided by Section 1001 of Division B of the act) in a single tax year. The economic recovery payment will reduce the Making Work Pay Credit to be claimed for the 2009 tax year on the tax return filed in 2010. The one-time payment may be offset for outstanding child support or other federal or state debts, but will not be offset for Social Security or SSI overpayments. The one-time payment is not counted as income for income tax purposes or as a resource for other federal programs.

ARRA also created a $250 refundable credit against income taxes owed for tax year 2009 for individuals who receive a government pension or annuity from work not covered by Social Security, and who are not eligible to receive the one-time economic recovery payment described above. This refundable credit will also reduce any Making Work Pay credit claimed on the tax year 2009 return filed in 2010.

Premium Assistance for COBRA Benefits (Division B, Title III)

ARRA includes provisions to subsidize health insurance coverage provided through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). ARRA includes COBRA premium subsidies of 65% to help the unemployed afford health insurance coverage from their former employer. The subsidy is available for up to 9 months to those individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before January 1, 2010. There is also a special extended enrollment period for two groups of unemployed who were involuntarily terminated from their employment on or after September 1, 2008: (1) individuals who did not elect COBRA coverage at the time, and (2) individuals who had chosen COBRA coverage after September 1, 2008, but dropped their coverage because they could not afford the premiums. Members of these two groups are to be notified by their former employer within 60 days of enactment and will have an additional 60 days after being notified to elect COBRA and receive the subsidy. ARRA also allows employers to permit eligible individuals the right to elect a different plan offered by their former employer, within 90 days of their notification for the subsidy.

Individuals receiving the subsidy are required to pay no more than 35% of their COBRA premium. The remaining 65% is paid by their former employer, who will be reimbursed through either: (1) a credit against any tax liability for payroll taxes, or (2) if the premium subsidy exceeds their tax liability, a refund. The full subsidy is available for individuals whose modified adjusted gross income (AGI) during the tax year is no more than $125,000 for single filers (or $250,000 for joint filers). The subsidy is phased-out for higher income individuals with a reduced subsidy for individuals with modified AGI less than $145,000 for single filers (and $290,000 for joint filers). If individuals receive the subsidy and their income exceeds the levels specified above, the amount of the subsidy will be recaptured when they file their income taxes. To avoid recapture they may waive their rights to the subsidy and still enroll in COBRA and pay the full premium. However, waiving their right is a permanent decision, and they would not be allowed to take the subsidy in the future.

Health Information Technology (Division B, Title IV) (Division A, Title XIII)

Medicare and Medicaid Payments

Division B of ARRA amends the Medicare and Medicaid statutes to authorize incentive payments for hospitals, physicians and other health care providers that adopt and use electronic health record (EHR) technology. The Congressional Budget Office estimates that Medicare and Medicaid providers will receive a total of $32.7 billion in EHR bonuses over a 10-year period (i.e., 2009-2019). (However, the provision is also estimated to achieve savings, resulting in the lower overall cost cited earlier.) Beginning in 2011, the legislation provides Medicare incentive payments to physicians and hospitals who are meaningful users (as defined in the act) of EHR technology. Physicians are eligible for up to $44,000 in bonus payments; rural providers may receive an additional 10%. Eligible hospitals receive a base amount of $2 million plus an amount based on the number of patient discharges during the year. The hospital payments are adjusted according to the share of Medicare patients and the amount of charity care provided. Both the physician and hospital incentive payments are phased out over time and replaced in 2015 with financial penalties for those who are not using EHR technology.

In addition to the Medicare bonuses, ARRA authorizes a 100% federal match (or FMAP; see discussion in next section) for payments to certain qualifying Medicaid providers—including physicians and other eligible professionals, and acute-care and children's hospitals—for the acquisition and meaningful use of EHR technology. Physician payments cover up to 85% of allowable EHR technology costs. Payments are capped at $63,750 and payable over a period of up to six years. To qualify for Medicaid payments, physicians must pay the remaining 15% of EHR technology costs and waive their right to any Medicare EHR incentives. The Medicaid incentive payment for hospitals, also payable over a period of up to six years, is computed using a modified version of the formula for Medicare hospital EHR payments, adjusted for the facility's Medicaid patient share. Eligible hospitals may qualify for both Medicare and Medicaid EHR incentives.

Office of the National Coordinator, Standards and Privacy

The Medicare/Medicaid health IT provisions included in Division B are a component of new legislation, the Health Information Technology for Economic and Clinical Health (HITECH) Act, which is primarily contained in Title XIII of Division A of ARRA. The HITECH Act is aimed at promoting the widespread adoption of HIT for the electronic sharing of clinical data among hospitals, physicians, and other health care providers. The Act includes three sets of provisions. First, it codifies the Office of the National Coordinator for Health Information Technology (ONCHIT) within HHS. Created by a presidential executive order in 2004, ONCHIT has played an important role in directing HIT activities both inside and outside the federal government. It has focused on developing technical standards necessary to achieve interoperability among varying electronic health record applications; establishing criteria for certifying that HIT products meet those standards; ensuring the privacy and security of electronic health information; and helping facilitate the creation of prototype health information networks. The goal is to develop a national capability to exchange standards-based health care data in a secure computer environment. The HITECH Act requires the HHS Secretary, by December 31, 2009, to issue a comprehensive set of initial HIT standards.

Second, the HITECH Act through a number of mechanisms provides financial incentives for HIT use among health care providers. In addition to the Medicare/Medicaid provisions described above, it establishes several grant programs to provide funding for investing in HIT infrastructure, purchasing certified EHRs, training, and the dissemination of best practices. It also authorizes grants to states for low-interest loans to help providers finance HIT. (See earlier discussion of HHS funding under Division A, Title VIII, for information on appropriations for these grants.) Finally, the HITECH Act includes a series of privacy and security provisions that amend and expand the current federal standards under the Health Insurance Portability and Accountability Act (HIPAA). Among other things, it establishes a breach notification requirement for health information that is not encrypted, strengthens enforcement of the HIPAA standards, and creates transparency by allowing patients to request an audit trail showing all disclosures of their electronic health information.

State Fiscal Relief (Division B, Title V)

The federal medical assistance percentage (FMAP) is the rate at which states are reimbursed for most Medicaid service expenditures. It is based on a formula that provides higher reimbursement to states with lower per capita incomes relative to the national average (and vice versa); it has a statutory minimum of 50% and maximum of 83%. In addition to Medicaid, the FMAP is used in determining the federal share of certain other programs (e.g., foster care and adoption assistance under Title IV-E of the Social Security Act) and serves as the basis for calculating an enhanced FMAP that applies to the State Children's Health Insurance Program (CHIP).

During a recession adjustment period that begins with the first quarter of FY2009 and runs through the first quarter of FY2011, ARRA provisions that are intended to provide fiscal relief to states will hold all states harmless from any decline in their regular FMAPs, provide all states with an across-the-board increase of 6.2 percentage points, and provide qualifying states with an additional unemployment-related increase. The act further allows each territory to choose between an FMAP increase of 6.2 percentage points along with a 15% increase in its spending cap, or its regular FMAP along with a 30% increase in its spending cap. The full amount of the temporary FMAP increase only applies to Medicaid (with some exceptions) and a portion of the temporary FMAP increase (hold harmless plus across-the-board) applies to Title IV-E foster care and adoption assistance. States must meet various requirements to qualify for the FMAP increase.

These FMAP provisions account for almost all (nearly 98%) of the spending under Title V of Division B. Additional Medicaid provisions in the state fiscal relief title of ARRA include temporarily increase Medicaid payment adjustments for hospitals that serve a disproportionate number of low-income patients with special needs (known as DSH payments); extend existing moratoria on implementation of certain Medicaid regulations issued in 2007 and 2008; extend through December 2010 a program known as Transitional Medical Assistance (TMA), which provides continued Medicaid benefits for certain low-income families who would otherwise lose coverage because of changes in their income; extend through December 2010 the QI-1 program that allows Medicaid to pay Medicare Part B premiums for certain low-income individuals who are aged or have disabilities; and provide certain protections for Indians under Medicaid and CHIP.

Other Provisions (Division B, Titles VI and VII)

Division B includes two titles that are not budgetary in nature. Title VI (Broadband Technology Opportunities Program) contains the authorization for the Broadband Technology Opportunities Program at the National Telecommunications and Information Administration (NTIA). The program is funded by discretionary appropriations made to NTIA in the Department of Commerce.

Title VII (Limits on Executive Compensation) sets forth restrictions on the compensation of executives of companies during the period in which any obligation arising from financial assistance provided under the Troubled Assets Relief Program (TARP) remains outstanding. The Secretary of the Treasury is required to develop appropriate standards for executive compensation. A Board Compensation Committee must be set up to review employee compensation plans. Any annual or other meeting of the shareholders of a TARP recipient must permit a separate, nonbinding shareholder vote to approve the compensation of executives.

Summary of Tax and Public Finance Provisions67

Division B, Title I of ARRA includes tax provisions targeted to individuals, families, and businesses. Other components of Title I include public finance measures designed to encourage economic development investment, energy conservation and efficiency, and a provision to increase the debt limit, which applies to federal debt held by the public and by the government. Table 7 , toward the end of this report, provides summary information on the level of revenue changes (and mandatory spending) provided in ARRA.

Individual Income Tax Relief (Division B, Title I, Subtitle A)

In addition to the provisions mentioned previously in the economic recovery payments section of this report, ARRA provides other temporary changes to certain individual income tax provisions. The incentives target families and individuals, education, and housing.

Families and Individuals . ARRA enacts a temporary refundable tax credit of up to $400 for individuals and $800 for married couples for tax years 2009 and 2010. The Making Work Pay Tax Credit is calculated at a rate of 6.2% of earned income and will phase out for taxpayers with modified adjusted gross income in excess of $75,000, or in the case of married couples filing jointly, $150,000. The credit is estimated to cost $116.2 billion over 10 years. For taxpayers receiving paychecks who also are subject to withholding, the credit will typically be handled by their employers through automated withholding changes that began in early April. These changes are expected to result in an increase in take-home pay. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return. Private pension recipients are not eligible for the credit unless they have earned income.

At an estimated 10-year cost of $14.8 billion, ARRA increases the eligibility for the refundable child tax credit in 2009 and 2010. The child tax credit allows families with qualifying children under the age of 17 a credit against their federal income tax, and for families with three or more children, the child tax credit is refundable. The refundability of the credit depends on a minimum level of household earnings, which, for 2008, was scheduled to be $12,550. ARRA reduces the threshold to $3,000 permitting more taxpayers to use the additional child tax credit and increasing the amount of the payments they may receive.

The legislation temporarily increases the earned income tax credit for working families with three or more children from 40% to 45%. Under current law, working families with two or more children currently qualify for a tax credit up to the family's first $12,570 of earned income. Generally, this credit is phased-out for working families with adjusted gross income in excess of $16,420 ($19,540 for married couples filing jointly) but the new law increases the beginning point of the phase-out range for all married couples filing a joint return (regardless of the number of children) by $1,880.

In response to lagging sales and financial distress of American automakers, a temporary deduction for state and local sales and excise taxes paid on purchases of new cars, light trucks, recreational vehicles, and motorcycles through 2009 is included in ARRA. The deduction is available regardless of whether a taxpayer itemizes deductions and is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle. The deduction is subject to a phase-out for taxpayers with adjusted gross income in excess of $125,000 ($250,000 in the case of a joint return).

ARRA includes, for 2009 only, an increase in the amount of income that can be exempted for taxpayers under the individual alternative minimum tax (AMT). The AMT was originally designed to make sure that everyone paid at least a minimum of taxes while still preserving the economic and social incentives in the tax code. The AMT provides an alternative set of rules for calculating income tax and the original amounts of income exempt from tax were not indexed for inflation. As a result, almost annually, temporary adjustments, referred to as patches, are made to the exemption amounts. For the 2009 tax year these exemption amounts are adjusted upward by ARRA to $46,700 for individuals and $70,950 for joint filers.

Education Tax Incentives. ARRA expands the Hope education tax credit for 2009 and 2010, by increasing its value and making it partially refundable. Under the new, temporary version of the tax credit, called the American Education Opportunity Tax Credit, taxpayers can receive a credit based on 100% of the first $2,000 of tuition and related expenses (including books) paid during the taxable year and 25% of the next $2,000 of tuition and related expenses paid during the taxable year. Thus, the maximum value increases from $1,800 to $2,500. Unlike the Hope credit, 40% of the American Education Opportunity credit is refundable and is subject to a phase-out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly). The modifications are estimated to cost $13.907 billion over 10 years.

Section 529 Programs, also known as Qualified Education Savings Plans, are tax-advantaged savings plans that cover all qualified education expenses, including tuition, room and board, mandatory fees and books. ARRA expands the eligible qualified education expenses to include computer technology or equipment or Internet access and related services.

Expansion of Home Buyer Tax Credit. ARRA modifies and expands the first-time home buyer credit enacted in the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289 ). The original credit was refundable but taxpayers receiving the credit were required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The HERA credit was equivalent to an interest-free loan equal to 10% of the purchase of a home (up to $7,500) by first-time home buyers and applied to homes purchased on or after April 9, 2008 and before July 1, 2009. ARRA eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009 and increases the maximum value of the credit to $8,000. The tax credit, which is estimated to cost $6.638 billion over 10 years, extends the availability of the credit for homes purchased before December 1, 2009 and is limited to taxpayers with certain income levels.

Energy Tax Incentives (Division B, Title I, Subtitle B)

More than $20 billion in energy-related tax incentives are included in ARRA with $14.1 billion for renewable energy, $2.3 billion for energy efficiency, $2.2 billion for transportation, $1.6 billion for manufacturing, and $1.4 billion for state and local government energy bonds.

Renewable Energy. The renewable energy provisions include incentives for alternative energy investment and alternative energy production. In particular, ARRA expands an energy production tax credit that has been available for wind facilities and other qualifying facilities such as landfill gas, geothermal, hydropower, and others. The length of time to complete such facilities, to place them into service to begin operation, in order to claim the credit is extended three years by ARRA.

Other rules and modifications to investment tax credits are enacted along with several enhancements to existing tax-advantaged bond programs. Clean Renewable Energy Bonds (CREBs) and Qualified Energy Conservation Bonds (QECBs) are two examples. For nonprofit entities, $1.6 billion of new CREBs are authorized to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewable, and municipal waste (trash) combustion facilities. Of the $1.6 billion bond authorization for such projects, one-third is available to state/local/tribal governments, one-third to public power providers, and one-third to electric cooperatives. QECBs, initially authorized by the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), can be used to finance capital expenditures to reduce energy use in publicly owned buildings by at least 20%; implementation of green community programs; rural development involving electricity production from renewables; research facilities and grants for the development of cellulosic ethanol or other nonfossil fuels; technologies to capture and sequester carbon dioxide produced by fossil fuel use; more efficient technologies for producing nonfossil fuels; automobile battery technologies and other technologies to reduce fossil fuel use in transportation, or technologies to reduce energy use in buildings; mass commuting facilities that reduce energy use (including pollution reduction for vehicles used for mass commuting); demonstration projects that promote commercialization of green building technology; conversion of agricultural waste for fuel production; advanced battery manufacturing technologies; technologies to reduce peak electricity demand; technologies that capture and sequester carbon dioxide emitted from fossil-fuel-fired power facilities; and public education campaigns to promote energy efficiency. ARRA authorizes $2.4 billion of QECBs to finance state, municipal and tribal government programs, greenhouse gas reduction initiatives, and loans and grants to implement green community programs.

Energy Efficiency. Incentives for energy efficiency improvements to existing homes and residential efficiency are included in ARRA. Specifically, ARRA expands a 10% investment tax credit for home energy efficiency improvements, with caps of $50 for fans, $150 for furnaces and boilers, and $300 for shell improvements. The investment credit is increased to a rate of 30%, is available for an additional year, through 2010, and certain cap adjustments are made. Another provision of ARRA modifies a 30% investment tax credit for a variety of residential energy efficiency and renewable energy equipment. Prior to ARRA, caps were set on the equipment credit and the credit had to be reduced if the qualifying residence received subsidized financing. ARRA eliminates the caps on residential wind, geothermal, and solar thermal equipment. It also repeals the subsidized financing reduction for residential solar, geothermal, wind, and fuel cells.

Transportation. The Energy Policy Act of 2005 (EPAct2005, P.L. 109-58 ) established tax credits for the installation of retail and residential alternative fuel refueling systems. Eligible fuels include ethanol, natural gas, liquefied petroleum gas, and hydrogen. The retail credit is valued at 30% of the system, up to $30,000. For residential systems, the credit is capped at $1,000. For calendar years 2009 and 2010, ARRA increases the Alternative Fuel Refueling Infrastructure Tax Credit to 50% for all fuels except hydrogen, and raises the limitations to $50,000 for retail systems and $2,000 for residential systems. For hydrogen, the 30% credit is maintained, but the credit limit is raised to $200,000.

ARRA modifies a tax credit for the purchase of new plug-in vehicles (plug-in hybrids and pure electric vehicles). The credit is based on the battery capacity of the vehicle, and, prior to ARRA, was capped at $7,500 for light-duty vehicles and up to $15,000 for the heaviest vehicles. When total U.S. sales of vehicles eligible for the credit reached 250,000, the credit began to phase out. ARRA modifies the existing tax credit to cap the per-vehicle credit at $7,500 for both light-duty vehicles and heavy-duty vehicles up to 14,000 pounds gross weight. It replaces the 250,000 total vehicle limit for phase-out of the credit with a 200,000 per-manufacturer limit. Further, ARRA eliminates the credit for heavier vehicles (after 2009), and establishes a credit of up to $2,500 for low-speed four-wheeled vehicles, as well as two- and three-wheeled electric vehicles. It establishes a credit of up to $4,000 for the conversion of an existing vehicle to battery power. ARRA also allows taxpayers otherwise subject to the Alternative Minimum Tax (AMT) to claim plug-in credit (as well as other alternative fuel and advanced vehicle credits).

Qualified transportation fringe benefits provided by an employer are excluded from an employee's gross income for income tax purposes and from an employee's wages for payroll tax purposes. The benefits include parking, transit passes, vanpool benefits, and qualified bicycle commuting reimbursements. Prior to ARRA, up to $230 (for 2009) per month of employer-provided parking was excludable from income. Up to $120 (for 2009) per month of employer-provided transit, vanpools, and bicycle commuting benefits was excludable from gross income. ARRA increases the benefit for transit, vanpools, and bicycle commuting to $230 per month, thus equalizing the tax-free benefit employers can provide for transit and parking expenses.

Tax Incentives for Business (Division B, Title I, Subtitle C)

Several existing investment tax incentives are enhanced by ARRA along with the addition of some temporary provisions targeted at capital acquisitions.

Under ARRA, business taxpayers may expense (or deduct as a current expense) up to $250,000 of the total cost of certain depreciable assets placed in service in 2009, within certain limits. One limit is a phaseout threshold, which is set at $800,000 in 2009. The act also allows business taxpayers to claim a so-called bonus depreciation allowance in 2009 that is equal to 50% of the cost of qualified assets placed in service that year. Firms unable to use either option for accelerated depreciation have to write off that cost over a longer period, using current depreciation schedules. The rules governing the use of the allowance confine most of its benefits to relatively small firms.

ARRA expands certain rules applying to net operating losses (NOLs). A net operating loss is incurred when a business taxpayer has negative taxable income and can be used to obtain a refund for taxes paid in the past or to reduce future tax obligations. The process of using an NOL to refund previously paid taxes is known as an NOL carryback, whereas the process of using an NOL to reduce future taxes is known as a carryforward. Under current law, there is a two-year carryback period and a 20-year carryforward period for most business taxpayers. ARRA extends the carryback period for up to five years for NOLs incurred in 2008. To qualify as an eligible small business to claim the ARRA incentive, a taxpayer must have $15,000,000 or less in gross receipts.

Other business incentives enacted by ARRA include the deferment of income arising from discharged business indebtedness; special rules applicable to qualified small business stock for 2009 and 2010; temporary reduction in the recognition period for built-in gains tax; and clarification of regulations related to limitations on certain built-in losses following an ownership change.

Prior to ARRA, a taxpayer generally has income where the taxpayer cancels or repurchases its debt for an amount less than its adjusted issue price and is taxed on that income, which is known as cancellation of debt income (CODI). CODI is the excess of the old debt's adjusted issue price over the repurchase price. ARRA allows certain businesses to recognize CODI over 10 years, which essentially defers tax on CODI for the first four or five years and recognizes this income ratably over the following five taxable years. The provision applies for specified types of business debt repurchased by the business after December 31, 2008 and before January 1, 2011.

Section 1202 of the Internal Revenue Code provides a 50% exclusion for the gain from the sale of certain small business stock held for more than five years. The amount of gain eligible for the exclusion is limited to the greater of 10 times the taxpayer's basis in the stock, or $10 million gain from stock in that small business corporation. This provision is limited to individual investments and not the investments of a corporation. The non-excluded portion of section 1202 gain is taxed at the lesser of ordinary income rates or 28%, instead of the lower capital gains rates for individuals. ARRA increases the rate of exclusion to 75% for individuals on the gain from the sale of certain small business stock held for more than five years. This change is for stock issued after the date of enactment and before January 1, 2011.

Manufacturing Recovery Provisions (Division B, Title I, Subtitle D)

Two provisions are included in ARRA with the focus on enhancing manufacturing. Current rules for the industrial development bond are expanded to more broadly define eligibility for manufacturing facilities to include any facility used in the manufacturing, creation, or production of tangible or intangible property. The second provision enacts a new advanced energy investment credit of 30% in value for facilities engaged in the manufacture of advanced energy property.

Certain manufacturing facilities are eligible for tax exempt bond financing. The Internal Revenue Code Section 144(a)(12)(C), however, limits the definition of a manufacturing facility for the purposes of such financing to facilities that are used in the manufacturing or production of tangible personal property. ARRA amends the definition of manufacturing facility to any facility used in the manufacturing, creation, or production of tangible or intangible property described in section 197(d)(1)(C)(iii). Intangible property is any patent, copyright, formula, process, design, pattern, knowhow, format, or other similar item. The new law also clarifies which physical components of a manufacturing facility qualify as "ancillary" and therefore are subjected to a 25% limitation in the amount of bond issuance used to build or re-construct those components.

ARRA establishes a new 30% investment tax credit for facilities engaged in the manufacture of advanced energy property. Advanced energy property includes technology for the production of renewable energy, energy storage, energy conservation, efficient transmission and distribution of electricity, and carbon capture and sequestration. Credits are available only for projects certified by the Secretary of the Treasury, in consultation with the Secretary of Energy, through a competitive bidding process and the Secretary of the Treasury must establish a certification program no later than 180 days after date of enactment in order to allocate the credits. The maximum amount to be allocated is $2.3 billion.

Economic Recovery Tools (Division B, Title I, Subtitle E)

Economic recovery tools include investment and bond finance measures that are expanded by ARRA. Authorization for the new markets tax credit is increased by $1.5 billion a year for 2008 and 2009 to yield an annual available amount of $5 billion each year. Existing bonds for tribal economic development and high speed rail are expanded as certain rules are temporarily relaxed for the purpose of expanding the availability of financing.

ARRA creates a new category of tax credit bonds for investment in economic recovery zones by authorizing $10 billion in recovery zone economic development bonds and $15 billion in recovery zone facility bonds. These bonds can be issued during 2009 and 2010. Each state would receive a share of the national allocation based on that state's job losses in 2008 as a percentage of national job losses in 2008 (each state will receive a minimum allocation of these bonds). These allocations are sub-allocated to local municipalities. Municipalities receiving an allocation of these bonds are permitted to use these bonds to invest in infrastructure, job training, education, and economic development in areas within the boundaries of the state, city or county that has significant poverty, unemployment or home foreclosures.

Under the Internal Revenue Code, Projects funded by bonds issued by tribal governments must satisfy an "essential governmental function" requirement, which limits tribal governments' abilities to issue tax-exempt bonds to finance economic development. ARRA temporarily allows tribal governments to issue $2 billion in tax-exempt bonds for projects without this restriction in order to spur economic development on tribal lands, and requires the Secretary of the Treasury to study whether this restriction should be repealed on a permanent basis.

States are allowed to issue private activity bonds for high-speed rail facilities, which are defined as a facility for the transportation of passengers between metropolitan areas using vehicles that are reasonably expected to operate at speeds in excess of 150 miles per hour between scheduled stops. ARRA modifies the definition of vehicles to include those trains that are capable of attaining speeds in excess of 150 miles per hour.

Infrastructure Financing Tools (Division B, Title I, Subtitle F)

Infrastructure financing tools primarily include bond programs and certain rules and changes are made to many programs in an effort to broaden finance options. Waivers of certain rules for financial institutions to deduct interest expense on the investment in tax-exempt municipal bonds issued during 2009 and 2010 are enacted by ARRA along with modification to a small issuer exception to tax-exempt interest expense allocation rules for financial institutions. New categories of certain tax credit bonds also are added, as well as increases in authorization amounts. These bonds include qualified school construction bonds and Build America Bonds.

Financial Institutions' Deduction of Interest Expense on Tax-Exempt Bonds. Financial institutions have not been allowed to take a deduction for the portion of their interest expense that is allocable to such institution's investments in tax-exempt municipal bonds. In determining the portion of interest expense that is allocable to investments in tax-exempt municipal bonds, ARRA excludes investments in tax-exempt municipal bonds issued during 2009 and 2010 to the extent that these investments constitute less than 2% of the average adjusted bases of all the assets of the financial institution. For purposes of the interest disallowance rule mentioned previously, bonds that have been issued by a "qualified small issuer" are not taken into account as investments in tax-exempt municipal bonds. Under current law, a "qualified small issuer" is defined as any issuer that reasonably anticipates that the amount of its tax-exempt obligations (other than certain private activity bonds) will not exceed $10,000,000. ARRA increases this dollar threshold to $30,000,000 when determining whether a tax-exempt obligation issued in 2009 and 2010 qualifies for this small issuer exception. The small issuer exception also applies to an issue if all of the ultimate borrowers in such issue separately qualify for the exception. For these purposes, the issuer of a qualified 501(c)(3) bond shall be deemed to be the ultimate borrower on whose behalf a bond was issued.

Delay Application of Withholding Requirement on Certain Governmental Payments for Goods and Services. For payments to contractors made after December 31, 2010, the Internal Revenue Code requires withholding at a 3% rate on certain payments made by federal, state, and local governments to persons providing property or services. The withholding is required regardless of whether the government entity making the payment is the recipient of the property or services. Government entities with less than $100 million in annual expenditures for property or services are exempt. Numerous government entities and small businesses have raised concerns about the application of this provision, expressing concern about the administrative burden of implementation. ARRA delays for one year, through December 31, 2011, the application of the 3% withholding requirement on government payments for goods and services in order to provide time for the Treasury Department to study the impact of this provision on government entities and other taxpayers.

Tax-Exempt Bonds and Tax Credit Bonds. The federal government subsidizes the cost of most state and local debt by excluding the interest income from federal income taxation. This tax exemption of interest income is granted because it is believed that state and local capital facilities will be under provided if state and local taxpayers have to pay the full cost. Both tax credit bonds and tax-exempt bonds provide a subsidy to municipalities by reducing the cash interest payments that a state or local government must make on its debt.

Interest on private activity bonds issued by state and local governments typically is not deductible under the alternative minimum tax (AMT), though that interest is deductible under the regular income tax system. This tax treatment can increase the costs of issuing tax-exempt private activity bonds imposed on state and local governments by limiting the marketability of these bonds and, therefore, forces state and local governments to issue these bonds at higher interest rates. ARRA temporarily waives the interest exclusion for the AMT for bonds issued in 2009 or 2010 in order to maximize investment in such bonds, which are typically issued by state and local governments. ARRA also allows AMT relief for current refunding of private activity bonds issued after 2003 and refunded during 2009 and 2010.

ARRA creates a new category of tax credit bonds for the construction, rehabilitation, or repair of public school facilities or for the acquisition of land on which a public school facility will be constructed. There are national limitations imposed by ARRA on the amount of qualified school construction bonds that may be issued. State and local governments have a limit of $22 billion ($11 billion allocated initially in 2009 and the remainder allocated in 2010) and Indian tribal governments have a limit of $400 million ($200 million allocated initially in 2009 and the remainder allocated in 2010).

ARRA also allows an additional $1.4 billion of Qualified Zone Academy Bond (QZAB) issuing authority to state and local governments in 2009 and 2010, which can be used to finance renovations, purchase equipment, develop course material, and train teachers and personnel at a qualified zone academy. In general, a qualified zone academy is any public school (or academic program within a public school) below college level that is located in an empowerment zone or enterprise community and is designed to cooperate with businesses to enhance the academic curriculum and increase graduation and employment rates. QZABs are a form of tax credit bonds which offer the holder a federal tax credit instead of interest.

ARRA created a tax credit bond option for state and local governments (Build America Bonds). For 2009 and 2010, the bill provides state and local governments with the option of issuing a tax credit bond instead of a tax-exempt governmental obligation bond. Because the market for tax credits is currently small given current economic conditions, the bill would allow the state or local government to elect to receive a direct payment from the federal government equal to the subsidy that would have otherwise been delivered through the federal tax credit for bonds.

Other Provisions (Division B, Title I, Subtitle G)

ARRA includes an increase in the debt limit, which applies to federal debt held by the public (that is, debt held outside the federal government itself) and to federal debt held by the government's own accounts.

The 2008 economic slowdown, which reduced federal tax revenues and increased federal outlays, caused federal deficit spending to rise, thus bringing forward the projected date when the federal debt will reach its current limit. In July 2008, the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) included a debt limit increase to $10,615 billion. Subsequently, the Emergency Economic Stabilization Act of 2008 (Division A of P.L. 110-343 ) raised the debt limit, for the second time in 2008, to $11,315 billion. The debt limit was raised for the third time in less than a year as a result of passage of ARRA, which raises the debt limit to $12,104 billion.

Grants in lieu of tax credits were enacted and the authorization for those credits was assigned to the Treasury Department. Several provisions—electricity production tax credits, investment tax credits for certain renewable property, and low income housing tax credits—have existed in the tax code with the intent of attracting private capital investment in targeted projects. Concern about insufficient demand led to the enactment in ARRA of an option for certain entities to temporarily request grants instead of the tax credits.

Summary of General Oversight Provisions

Divisions A and B of ARRA contain numerous oversight, accountability, and transparency provisions. Many provisions are specific to individual programs, agencies, and appropriations accounts. Other provisions are more general in nature, applying to multiple programs, agencies, or appropriations. This section concerns the latter type. Most of the general oversight provisions appear to cover activities and provisions associated with Division A rather than the entire law.

The general oversight provisions might be further categorized into two groups:

appropriations to oversight entities including offices of inspector general (IG), the Government Accountability Office (GAO), and a newly established Recovery Accountability and Transparency Board (RATB); and a number of substantive provisions, including establishment of RATB and enumeration of numerous reporting requirements.

Appropriations to IGs, GAO, and RATB are included predominately in Division A. The provisions are distributed among 12 titles in Division A and one title in Division B. In total, 23 IGs receive $254.75 million in 25 separate appropriations. IGs in all 15 executive departments receive appropriations, ranging from the Department of Veterans Affairs on the low side ($1 million in a single appropriation) to the Department of Health and Human Services on the high side ($48.25 million in two appropriations). ARRA provides funding to be available to IGs with widely varying periods of availability. For the IG at the Department of State, for example, funds are available until the end of FY2010. Other IGs variously have funds available until the end of FY2011, FY2012, FY2013, or "until expended" (i.e., "no-year" funds). GAO receives $25 million, available through the end of FY2010, and RATB receives $84 million, available through the end of FY2011. Some appropriations specify that funds are to be used specifically for oversight of ARRA-related activities, but others essentially are supplemental appropriations that do not restrict use of funds to ARRA-related purposes. It should be noted that RATB has authority to transfer up to 100% of its funds to any office of inspector general, the Office of Management and Budget, the General Services Administration, and an advisory panel for RATB that ARRA establishes (Division A, Title XV, Section 1524(f)). In total, the appropriations provided to these oversight-oriented entities sum to $363.75 million.

The second group of general oversight provisions is included only in Division A—chiefly in Titles XV and XVI—albeit in considerable variety. Among other things, these substantive provisions establish new oversight-oriented entities like RATB, enumerate diverse reporting requirements for federal agencies and nonfederal recipients of funds, and task RATB, IGs, and GAO with several duties. Under ARRA's requirements, for example, RATB's purpose is "to coordinate and conduct oversight of covered funds to prevent fraud, waste, and abuse." RATB's membership is to be comprised of at least 10 IGs, in addition to or including a chairperson, who may be designated or appointed by the President according to certain criteria. RATB has several enumerated functions, including to review whether reporting for contracts and grants "meets applicable standards" and "specifies the purpose of the contract or grant and measures of performance." In addition, RATB is required to establish a website. The Obama Administration established a rudimentary Recovery.gov website in anticipation of enactment of stimulus legislation. As agencies implement ARRA, the website is to contain, among many other things, considerable information about how funds are allocated and used. IGs and GAO also are required to conduct certain reviews. State and local governments that receive funds also will have certain certification and reporting requirements, which may be funded, at least in part, by flexibility granted to federal agencies to adjust applicable limits on administrative expenditures for federal awards.

Further requirements and guidance concerning ARRA implementation was forthcoming from the Office of Management and Budget (OMB), some of which went beyond ARRA's statutory requirements. On February 18, 2009, OMB issued "initial implementing guidance" regarding ARRA, including numerous reporting requirements, to agencies in a 62-page document. Some of the required information will be posted on Recovery.gov and agency-specific ARRA-related websites. On March 20, 2009, President Obama issued a five-page presidential memorandum entitled "Ensuring Responsible Spending of Recovery Act Funds." The memorandum directed agencies in how to use "available discretion" when allocating and spending certain ARRA-related funding. On April 3, 2009, OMB issued "updated implementing guidance" to agencies in a 175-page document. Further guidance is expected.

Additional Resources

Many additional resources pertaining to the American Recovery and Reinvestment Act of 2009 are available online. An overview of online resources, particularly with respect to federal, state, and local entities, is provided in CRS Report R40244, Authoritative Resources on the American Recovery and Reinvestment Act (ARRA) , by [author name scrubbed] and [author name scrubbed].

Key Congressional Research Service reports on various funding and policy areas affected by ARRA are grouped together under the Current Legislative Issues term "Economy, Recession, and Financial Sector" on the CRS homepage: http://apps.crs.gov/cli/cli.aspx?PRDS_CLI_ITEM_ID=3405&from=3&fromId=4 .

In addition, reports on the individual annual appropriations bills are listed under the Current Legislative Issues term "Appropriations and Budget" at http://apps.crs.gov/cli/level_2.aspx?PRDS_CLI_ITEM_ID=73 .

"Recovery.gov" is the centerpiece of the Administration's online effort to monitor implementation of the act: http://www.recovery.gov/ . The Administration's website is intended to be a repository for information related to implementation and oversight of the stimulus, with information about available funding, distribution of funds, and major recipients. Under the umbrella of "Recovery.gov," separate websites established by federal agencies and states may be accessed:

Federal agency recovery sites: http://www.recovery.gov/?q=content/agencies ; and State recovery sites: http://www.recovery.gov/?q=content/state-recovery-page .

Finally, the Office of Management and Budget (OMB) has established a "Recovery Act Guidance" page on its website, including OMB memoranda and other documentation providing guidance to federal agencies: http://www.whitehouse.gov/omb/recovery_default/ .