Obama’s American Recovery Act – More Jobs, More Money in Your Pocket

by Ryan Guina

President elect Obama recently announced his economic recovery plan, the American Recovery and Reinvestment Plan. It doesn’t appear that his plan includes a second economic stimulus check, at least not like the last stimulus check. But Obama’s plan just may put more money in your pocket anyway. Obama’s plan calls for several major projects that he hopes will create upward of 3 million jobs, improve our nation’s schools and infrastructure, computerize the health care system, decrease our dependency on foreign energy and lower taxes for American workers. This is a series of lofty goals, but our economy is in a recession, and it will take bold moves to set us on the path toward recovery.

Here is what Obama’s new economic stimulus plan calls for:

Double renewable energy

President Obama Administration American Recovery Plan

The American Recovery Plan

I’m a big fan of renewable energy, as well as increasing reliance on more energy efficient items such as CFLs and more energy efficient vehicles. Obama’s plan calls for doubling renewable energy sources in the US, and increasing the energy efficiency of government buildings. I support this 100% and think we should have started it years ago. The more we use our free resources such as wind, sun, and hydroelectric power to provide power our homes, the less we need to rely on digging coal and importing foreign fossil fuels. I haven’t heard any mention of it, but I also support the building of nuclear power plants, which provide a cleaner, safer, cheaper, and more efficient means of producing electricity. France has been a world leader in nuclear power for years, and now supplies much of Europe with their excess electricity.

Rebuild roads and schools and modernize classrooms

There are many highway systems and bridges across the US that are becoming dangerous.Creating jobs to repair our infrastructure will increase safety and provide hundreds of thousands of jobs. And those workers will spend the money they earn, which should work well for our economy.

Modernize classrooms, labs, and libraries. Many schools are funded at a state or local level, and many states and cities are currently running on a deficit, as their funds are running low due to decreased tax income, job losses, and an overall bad economy. Government funding will help make up that shortfall and make it easier to improve our schools.

Computerize the health care system

The US health care system has a lot of room for improvement. One of the biggest areas for improvement is cost and availability. But another major area of concern is our health care system’s complexity. There are literally thousands of different computer systems to track the same information and the problem is that many of these systems do not communicate well with each other. This means there either needs to be an intermediate system used to translate raw data into a form that can be used by another system, or the data needs to be manually input into the other system. This causes a lot of costly and sometimes dangerous errors to be made and creates delays to filing claims for health care. The government would be well served to create and Enterprise Resource Planning System to integrate health care information and claims systems to reduce errors and other complications that arise from incomplete or incorrect data.

Cut taxes

While he was campaigning for President, Barack Obama proposed several tax cuts aimed toward reducing the taxes that people in the middle and lower income tax brackets pay. While it doesn’t appear as though Obama is prepared to send tax payers a check like the first economic stimulus check, it does appear as though he favors creating a new tax credit that would be advanced to tax payers, meaning workers would see the money in their checks now instead of as a credit at the end of the year. The proposed plan calls for up to $500 for single people and up to $1000 per married couple.

Will Obama’s American Recovery and Reinvestment Plan work?

First off, this is only a plan; Obama has not yet been sworn into office, and this has not yet been approved by Congress. But I think he wants to get things started quickly, and I commend him for stepping up and taking charge. I think his plan is a step in the right direction, but even if it is approved and implemented, our economy faces an uphill battle, and it will likely take a few years before we see major improvements.

The other consideration is the cost of the plan. Initial estimates put the plan cost at $650 billion – $750 billion, but some economists estimate that it could reach as high as $1 trillion. Obama’s recovery plan calls for increased spending, and the only way to pay for increased spending is to decrease spending elsewhere, or increase income (usually in the form of taxes). Obama has not proposed any major program cuts, and has not yet mentioned how he will pay for his recovery plan.

There are obviously many details that need to be worked out, and I think this will be an interesting topic over the next few months.

More information about Obama’s recovery plan can be found here:

Photo credit: jurvetson

Published or updated October 29, 2012.
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{ 6 comments… read them below or add one }

1 sherry

The high cost of gas this past year has seriously destroyed every budget from the average family to the largest of municipalities.The average family went broke at the pump alone, then added to the misery the higher cost of manufacturing and shipping was passed on to us at the checkout for every consumer product. School districts went broke keeping the busses on the road.One police dept in my area required officers to park their car for 15 minutes of every hour just to conserve .Lower prices are not here to stay.OPEC just announced another production cut.With all these bailouts in the billions why doesn’t our nation see the need to bail us out of our dependence on foreign oil? I just read a really interesting new book called The Manhattan Project of 2009 Energy Independence Now by Jeff Wilson.I never realized it would only cost the equivalent of 60 cents per gallon to charge and drive an electric car. Also,The electricity to charge the car could come from solar or wind generated electricity. If all gasoline cars, trucks, and suv’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota.What powerful resources we have been neglected. The last economic stimulus package cost 168 BILLION and did absolutely nothing to stimulate our economy or create jobs.
Bail America out of its dependence on foreign oil. Wouldn’t that make more sense?


2 Ryan

Sherry: I agree 100%. I think we need to decrease our reliance on foreign oil. These low prices we are experiencing right now are great for our pocketbooks, but are misleading as they are sure to rise again. I like the idea of electric cars, but I don’t think the technology is quite where it needs to be to replace the larger vehicles, especially the semis, farm equipment, and other large vehicles that are the least fuel efficient vehicles and offer the largest area for improvement and efficiency.

Wind ans solar power cost a lot of money in initial set up, but then require little ongoing expenses (at least compared to the start up costs). I hope Obama’s initiatives lead to leaps and bounds in wind and solar technology, as well as price reductions that make them a more affordable option.


3 Curious Cat Investing Blog

Whatever plan is adopted is likely to “work” in the sense that it will help the economy in 2009. however whether it helps the economy to a 9% unemployment rate instead of a 12% unemployment rate that we would have had without a package (or to a 11% one in stead of a 14% one or…) is unknown.

Also there is a serious problem. We have lived beyond our mens for decades. This is obvious. As an economy we have been producing much less than we have been consuming. We have taken on big debts to finance this living beyond our means.

So today we see trouble (for the overall economy) and our answer is lets charge more on the credit card (federal debt). Personal finance bloggers have seen bad results of this on a personal level. The view for the overall economy is very similar (though not exactly the same – but more similar than dis-similar).


4 Kirk

Curious Cat hits it on the head. The government blames the free markets for this mess. How do these “do gooders” try to fix the problem? They do it by performing the same actions that got us in this mess to begin with. We have too much debt so they increase government debt. We loaned money to people who werent’ credit worthy so they The banks made bad decisions so we give them more money and ask them to continue making these bad decisions.

The government intervening is like pouring gas on a fire. I hear these Keynesian economists talk about how we need another New Deal. Well, I think they should look at their history books. It didn’t get us out of the Depression. In fact, it made it worse. Every dollar spent by the government is one less that the private sector gets spend. The government is very poor at spending effectively and efficiently compared to the private sector.

As far as the specifics of Obama’s plan, I think half of the ideas are phooey. The federal government has no place in education. A bureaucrat sitting at a desk in DC has no understanding the educational system. Plus, a one class schoolhouse in Montana (yes, they still exist) has different needs than a school in Watts.

I think we need to get green and utilizing it in government facilities makes sense. Should have been done years ago.

Fixing roads and bridges is solid. However, it won’t result in massive jobs. It may help the 1 million construction workers out of work, but only temporarily. Plus, I smell bacon. No way will they run this program with any efficiency. Waste our money.

Bottom line: we had credit crisis’ and depression features in 1896, 1907, and 1920. In each of these crisis’, the government sat back and let the system work. Within 2 years the economy was booming again. We won’t be so lucky this time. Even if the spending helps short term, we face a dollar crisis due to our federal debt ballooning.


5 Jarhead

I just got done reading an article in Time about Nuclear power and while it is cheaper to produce the building of nuclear power plants is quite costly. 12-18 BILLION dollars. So not sure how feasible nuclear is going to be.


6 Dan

I thought the massive federal bailout we had just a couple months ago was supposed to be the remedy?? Didn’t they tell us the economy would collapse without it? Now we hear that the government needs to spend even more! When does it end??


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