Stimulus Package - Essay Example

Stimulus Package STIMULUS PACKAGE The stimulus package is the United s’ Recovery Act, also known as the American Recovery andReinvestment Act of 2009. An economic Stimulus Package was enacted by the United States’ senate and signed into law on February 17, 2009 by President Barack Obama. The Act was to respond to the 2000s recession in the United States (Bendavid et al, 2011). The law’s primary objective was to create and save jobs in the United States. The side objective was to initiate temporary relief programs for those Americans who had been highly affected by the recession.

The second objective aimed at investing in education, infrastructure, green energy, and health. During the enactment of the Stimulus Package, its cost had been estimated to about $87 billion (Bendavid et al, 2011). The act was to spend directly in the areas highlighted above alongside the expansion of unemployment benefits, federal tax incentive among other social welfare provisions. Moreover, the Act dealt with numerous indirect items Economic Recovery including spending on long-term projects and other items that the congress deemed important.

It is worth noting that the development of the Act was based on Keynesian’s Macroeconomic Theory that states that during any economic recession the government should begin by decreasing the private spending and increase public spending to help save jobs and halt further economic degradation. Therefore, the Stimulus Package Act is understood as a bill that was enacted to save America from the recession, but its foundation and outcome resulted to an Act that aimed at building and increasing the investor confident (Bendavid et al, 2009).

The act was constitutionally allocated a package for the next ten years. The maximum impact of 91.5 percent or $720 billion was to take effect during the first three fiscal years. The Act’s fund was subdivided into $185 billion for the FY 2009, $400 billion for the FY 2010 and $ 135 billion for the FY 2011. What did the act lead to? Notably, the Act did not do better than it had been planned. By the end of FY 2009 $241.9 billion: $86.5 billion in unemployment, $92.8 billion in tax relief and other related benefits, as well as $62.

6 billion in job creation grants. Additionally, by the end of FY 2010 that in March 30, 2011, the program had spent taxpayers’ money worth $ 633.5 billion that is $191.9 billion on grants or loans, contracts, $181.7 billion on entitlements and $259.9 billion on tax relief. The expenditure of such huge sum of money with little success to celebrate about was a waste of taxpayers’ money. Moreover, this was not good for the devastated economy (Bendavid et al, 2009). In addition, the congressional budget office had planned or projected that the stimulus package would have facilitated the growth to the increase in the GDP by 1.4 to 3.8 percent (Bendavid et al, 2009).

This increment was to be achieved by the end of the fiscal year 2009. Despite the fact that the percentage increment was not to be achieved in totality, or fully that is from 1.4 up to 3.8 percent of the actual GDP, remarkable growth could have been realized within the recession period when the act was being implemented. In fact, the CBO had its projection on the economic growth to be at three percent for the same year 2009. Moreover, the economic stimulus bill had speculated that many jobs would be created through the implementation of the Act.

Moreover, the bill had speculated to save over 900,000-2.3 million jobs by the end of 2009. On the contrary, (as per the recent reports on the development of the stimulus package bill) only 640, 329 jobs had been saved; thus, the unemployment was still a threat to curb (Bendavid et al, 2009). The enacted objectives of the Stimulus Package are different with what had been in the mind of its initiator, President Obama. Obama wanted to restore the confident of the public that he would renew the economic growth as he had pledged during his presidential campaigns (Bendavid et al, 2009).

Notably, the Monitory Policy had done its best to boost the economic stimulus; however, there was still a need of a clear fiscal policy was to be in place. Moreover, the confident and trust of the Financial Industries was to be restored; additionally, the bill limited the bonuses for executive companies that were on TARP funds. In fact, the bill was more politically aligned than real economic recovery. Notably, it was part of Obama’s campaign plan to initiate the bill; apparently, the effectiveness or the applicability essence of the bill was not looked into, but political fulfillments played the major role in the enactment of the bill.

Remember, the plans of tax eliminating for the executives that was to make up to $50,000 were an economic plan in Obama’s agenda (Bendavid et al, 2009). Once in the office, Obama faced the biggest challenge of creating a reasonable stimulus that would have softened recession. However, his political effort to resolve the issue created more doubt on the ballooning federal dept. Moreover, Obama’s economic stimulus plan was later blamed for not stimulating the economy enough to curb the unemployment, but only increased debt.

The stimulus package led to expensive monetary policy, as well as led to the emergence of strong markets. Additionally, it increased the needed confidence to stimulate the United States’ economy (Bendavid et al 2009). Nonetheless, it did not meet its underlying objective of curbing the recession. Therefore, stimulus package can be regarded as an Act that aimed at building confidence of the economic players rather than being regarded as economic recession eradicator. Reference Bendavid, N. Williamson E.

& Reddy S. (January 16, 2009). Stimulus Package Unveiled, $825 Billion Plan Includes Business Tax Breaks; Senate Releases Cash for Bank Rescues. Retrieved 27 Nov. 2011 from http://online.wsj.com/article/SB123202946622485595.html