President Obama Signs Economic Recovery Bill

President Obama on February 17 signed into law the American Recovery and Reinvestment Act of 2009 (HR 1). The president said the $789-billion economic recovery package is "the first step to get our economy on the road to recovery and pave the way to long-term growth." Obama signed the legislation in Denver, Colorado, where he highlighted the number of green jobs that will be created by the stimulus package.

Nearly one-third of the economic package is made up of tax cuts aimed primarily at middle-class taxpayers. The "Make Work Pay" tax credit is the centerpiece of the president's tax-cut plan, providing a tax break of $400 per individual and $800 for joint-filing couples. The credit begins to phase out at adjusted gross income of $75,000 for single filers and $150,000 for couples filing joint returns. About two million Americans will be lifted above the poverty line as a result of the new tax credit, according to an analysis by White House economic advisors.

The president also touted the $2,500 "American Opportunity Tax Credit," which is available in 2009 and 2010. The higher education tax credit previously totaled $1,800 per year.

The $276-billion tax-cut measure also benefits businesses, the environment and state governments. The final legislation drew fire from fiscal conservatives who argued that the measure is bloated with unnecessary spending on pork-barrel projects and did not include enough tax cuts. Many economists and lawmakers, however, contended that the package is not large enough to stimulate the U.S. economy.

The president maintained the new law is a balanced plan with the right mix of tax cuts and investments. However, administration officials have indicated that they would have preferred to see the provision for a $70-billion, one-year alternative minimum tax patch in separate legislation later in 2009.

White House Press Secretary Robert Gibbs did not rule out the possibility of a second stimulus bill in the future. "I think the president is going to do what's necessary to grow this economy," Gibbs said at a press briefing prior to the bill's signing. Gibbs said he would not "foreclose" the idea but the administration is not "readily making plans to do so."

Senate Majority Leader Harry Reid, D-Nev., said enacting the bill is the first step toward economic recovery. "President Obama and this new Democratic Congress heard the demands of the American people to urgently address the worsening economic crisis, and we have acted responsibly to put people back to work, ensure middle-class families can get ahead and invest in our future," said Reid. "The American people understand that we will not solve this crisis overnight. But with the president signing this bill into law today, we can start down the long road toward restoring prosperity."

Source CCH Incorporated