The Recovery Act Blog

  • Not Business as Usual

    President Obama and Vice President Biden have been clear since they took office that this Administration will not put up with business as usual when it comes to transparency and accountability.  They fundamentally believe that the American people have the right to know how their hard-earned tax dollars are being put to work. 

    That’s why, when the Recovery Act was passed and signed into law, it required tens of thousands of recipients of Recovery Act funds to report every quarter on what exactly they are doing with the money -- and those reports are posted in full view on

    This is unprecedented – never before has this level of transparency been available by the federal government.  When the Recovery Act was passed, the President and Vice President were adamant that we didn’t just take the necessary steps to begin to repair the economy by passing the largest economic recovery package in history – but that, while implementing that package, we made sure every dollar was accounted for and every official was held accountable.

  • How The Recovery Act is Boosting Small Biz – and Ice Cream Production – Across America

    Stories are popping up all over the country of small business start-ups that were made possible by the Recovery Act – stories of companies like The Penny Ice Creamery in Santa Cruz, CA.

    Recently, Kendra Backer and Zach Davis, the owners of The Penny Ice Creamery, made this YouTube video, thanking President Obama, the Administration and Congress for passing the Recovery Act, which helped make their dreams a reality. It tells the story of how their dream of opening an ice cream shop that makes “really great ice cream from scratch; the kind of ice cream that Thomas Jefferson, George Washington and Ben Franklin used to enjoy,” was made possible as a result of a $250,000 Recovery Act small business loan.

    Vice President Joe Biden liked their video so much, that he called Kendra and Zach last week to thank them for sharing their story and to congratulate them on the success of their business.  Watch the video of the Vice President’s call with Zach and Kendra and see the excerpts from the Penny Ice Creamery’s ‘Thank You’ video:

    Download Video: (23.1MB)

  • Celebrating National Weatherization Day

    Ed. Note: Cross posted from the Energy Blog.

    This weekend, communities across the country celebrated National Weatherization Day, highlighting the important work happening nationwide to save money for America’s homeowners by investing in energy efficiency.  As a result of the Recovery Act weatherization program, more than 245,000 low-income families have had their homes upgraded, which means these families are paying lower energy bills every month.  The program has also helped to put thousands of workers on the job every day, helping to grow America’s clean energy economy while improving our energy independence and reducing pollution.  To all those involved in the success of this program, congratulations and we look forward to your continued good work in the months and years ahead.

    Watch the video to get a firsthand look at the work happening in Wilkes-Barre, Pennsylvania under the weatherization program.

    Steven Chu is the Secretary of Energy.

  • Tax Cut Facts: How Obama’s Tax Cuts Are Helping American Families

    A recent article in the New York Times pointed out that a lot of people don’t know that the Recovery Act cut their taxes.

    Well, I’m here to tell them that it did.  A lot.  Or, to be more precise, by $240 billion so far, going up to nearly $290 billion before we’re done (assuming Republicans fail in their efforts to raise your taxes by canceling the rest of the tax breaks, something they’ve pledged to do). 

    Those tax cuts have helped American families make ends meet.  They’ve helped them pay their kids’ college tuition, cover the cost of health care, and even offset the costs of energy-efficiency improvements to their homes.  And they’ve helped move the economy from free fall to growth.

    As the Times article points out, there are good reasons why folks may not be familiar with these tax cuts.  For example, even though the Recovery Act provided states with billions of dollars to help avoid Medicaid cuts and keep teachers on the job, some states were forced to go the other way, raising taxes to help offset their budget shortfalls. 

    Take another example—the Making Work Pay Tax Credit.  It reached 95% of working families—over 100 million American taxpayers, more people than any other tax cut in the history of tax cuts.  Taxpayers received up to $800 through the credit, which came to them incrementally by reducing how much money was withheld from their paychecks for taxes both this year and last.

    This incremental nature probably explains part of the lack of recognition—if you get a tax credit little by little instead of all in one big check, you’re less likely to notice that your income went up.  And of course, there’s been a lot of very tough stuff going on with people’s jobs and paychecks throughout this downturn.  But the data confirm that workers are spending the benefits they got during this period.

    Look at the following graph, which first appeared in this analysis by Gary Burtless of the Brookings Institute (we’ve updated it).  As Gary put it:

    The severity of the recession caused private incomes to plunge…[but] Federal government programs and stimulus dollars cushioned the massive blow to private family incomes.  Disposable income fell less than 1 percent after the start of the recession, a stunning fact too often ignored given the severity and length of the current downturn.

    Gary Burtless Disposable Income Chart, October, 2010

    The bottom line shows how much income folks got from the private sector, from paychecks, profits, and capital income.  The top line shows their take-home, after-tax disposable income, including benefits like Social Security and Unemployment Insurance.  And as you can see, even as private income has fallen, disposable income has remained steady, thanks in large part to reduced tax payments and higher benefit payments to folks hit hard by the recession.  

    The gap between the two lines is historically very large, and it’s a great picture of the Recovery Act at work.  To be clear, we’re not claiming—not by a long shot—that these tax breaks offset anything approaching the full spate of economic pain families are experiencing as a result of the Great Recession.  But we are strongly asserting that they helped.  

    In fact, as you can see in the chart below, consumer spending is almost back to its pre-recession peak, suggesting that families have been using these tax cuts and benefits to make ends meet.

    Real Consumer Spending Chart, October 2010

    And as I noted, there’s a lot more than Making Work Pay at work here.  Other key Recovery Act tax credits include:

    • The American Opportunity Tax Credit, which gives students and families up to $2,500 in tax savings to help pay for college tuition and other expenses.  The AOTC and other tuition benefits have helped more than 12.5 million students and their families pay for college, an increase in tax benefits for higher education of more than 90 percent from the year before (see here for details).
    • The Earned Income Tax Credit, which helps moderate-income working families make ends meet.  The Recovery Act increased the credit for families with three or more children, bringing the maximum amount to $5,657.
    • The Child Tax Credit, which helps low-and moderate-income families with children.  More families are benefitting from the child tax credit under the Recovery Act, which reduced the minimum amount of earned income used to calculate the additional child tax credit to $3,000 from $12,550.  
    • COBRA and Unemployment Benefits:For those who lost their jobs in the recession, to help them get back on their feet, the Recovery Act provided a 65 percent tax credit to help cover the cost of health care and made the first $2,400 in unemployment benefits tax-free, when normally 100 percent of those benefits are taxable.
    • Energy Efficiency and Renewable Energy Incentives: Taxpayers are eligible for up to $1,500 in tax credits for making some energy-efficiency improvements to their homes such as adding insulation and installing energy efficient windows.

    Moreover, the President continues to support significant new cuts, to middle-class families and to small businesses, to help preserve the gains we’ve made so far and build on the economy’s momentum.  

    Like I said, there’s a lot of moving parts when it comes to taxes, and families have enough to deal with these days without taking a quiz on how changes to the tax code have helped them.  But the facts, supported by clear evidence, are that President Obama has presided over hundreds of billions in tax cuts that continue to help families get through these tough times.

    Jared Bernstein is Chief Economic Advisor to the Vice President

  • TIGER II Grants to 75 Innovative Projects Will Change the Transportation Landscape, Create Jobs in 40 States

    Cross posted from the Department of Transportation's blog.

    Yesterday the Department of Transportation officially announced nearly $600 million in competitively awarded TIGER II grants. The 75 innovative projects this money makes possible will put people to work today building a 21st century foundation for tomorrow's economic growth.

    To mark this important day, I traveled from Atlanta, Georgia, to the bridge between Portsmouth, New Hampshire, and Kittery, Maine, visiting two of the projects these grants support.

  • Keep Putting Them on the Job!

    It’s hard to get more clear-cut about the right thing to do for the economy than the opening of this story from the New York Times this weekend:

    Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.

    In rural Perry County, Tenn., the program helped pay for roughly 400 new jobs in the public and private sectors. But in a county of 7,600 people, those jobs had a big impact: they reduced Perry County’s unemployment rate to less than 14 percent this August, from the Depression-like levels of more than 25 percent that it hit last year after its biggest employer, an auto parts factory, moved to Mexico.

    If the stimulus program ends on schedule next week, Perry County officials said, an estimated 300 people there will lose their jobs — the equivalent of another factory closing.

    The American economy has been growing now for the past four quarters, and private-sector employers have added jobs every month this year.  But the economic hole left by the Great Recession remains very deep, and creating jobs remains the administration’s top priority.

    With that in mind, when one of our programs is effectively and efficiently creating hundreds of thousands of jobs for workers who need them, the last thing we should do is shut the program down.

    But unless Congress acts quickly, that’s exactly what’s going to happen to the Temporary Assistance for Needy Families (TANF) Subsidized Jobs program.  This program is a proven success – more than 30 states are already using the program to put folks back on the job, and if we let it end prematurely, this highly effective job creation infrastructure that’s been created at the state level will go to waste.

    Sadly, Republicans in Congress are playing politics with the future of this program at precisely the time we can least afford to shut it down.

    We’ve been talking about what a great program this is for months now, because it’s been extremely effective.  It lets states use Recovery Act dollars to help employers pay for the cost of hiring unemployed workers, and by lowering hiring costs, it encourages employers to hire more workers and create more jobs.  And because many of these workers are being hired at private-sector businesses, the program is not only creating jobs, but also helping American businesses expand and grow.

    Unfortunately, the program is scheduled to expire just a few days from now, at the end of September, even though the workers who have been placed through the program still badly need these jobs.  That’s why we’ve been fighting so hard to get this program extended.

    The good news is that the program is getting more and more well-deserved attention, like the New York Times article above telling the story of some of the workers and communities that depend on this program and the jobs it’s providing.  And outside of Washington, the program has gotten strong bipartisan support from figures like Haley Barbour, Mississippi’s Republican governor.

    But unfortunately, here in the nation’s capital, politics are still triumphing over common sense as Republicans in Congress block action to extend this highly successful job creation program.

    Look, I understand there are differences of opinion about the best way to create jobs in this country, but there’s a time and a place for those disagreements.  We should all be able to agree not to shut down programs that are successfully putting workers on the job at private-sector businesses across the country.

    So I hope Republicans in Congress will rise above the politics and work with us to extend this program.  We only have a few days left to act.  Let’s keep helping businesses put these folks back on the job.

    Jared Bernstein is Chief Economic Advisor to the Vice President