Economic Recovery Act Working in Maine

Augusta: The American Recovery and Reinvestment Act of 2009 (ARRA) has had a tremendous impact on Maine.  ARRA has boosted the Maine economy, created and saved Maine jobs, and kept Mainers out of poverty. Seven provisions of ARRA, passed in February, kept about 22,000 Mainers out of poverty this year, according to a new study from the Washington, DC-based Center on Budget and Policy Priorities (CBPP). The Act’s full effect is likely much higher because these seven provisions account for only about one quarter of the Act’s total funding.


“The importance of the Recovery Act cannot be overstated,” said Dan Coyne, Fiscal Policy Analyst for the Maine Center for Economic Policy. 


“Maine people are struggling during this recession. The Recovery Act has created and saved jobs and kept thousands more Maine families from sliding into poverty,” Coyne said.


“The positive impact of the Act can also be felt in the local economy,” Coyne stated. “Mainers receiving food stamps or jobless benefits spend money in local businesses, which helps those businesses stay open and keep their workers. As bad as things are, things would be a lot worse for households, workers, businesses, and the state economy overall.”


Congress Must Extend Key Provisions of the Act to Prevent Further Economic Woe


The CBPP study looked at several provisions in the Recovery Act intended to make work pay and improve economic security for unemployed people, the elderly, and disabled. These include an increase in food stamp benefits, expansions of the Child Tax Credit and Earned Income Tax Credit, the new Making Work Pay tax credit, two forms of assistance for unemployed workers (extra weeks of jobless benefits for long-term unemployed and an additional $25 per week of jobless benefits), and a one-time payment to many elderly people, veterans and people with disabilities. Other provisions of the Act such as funding for health care and child care were not reviewed due to insufficient data.


“The positive impact of the Act, particularly extra unemployment benefits, on household budgets and the Maine economy is clear,” said Coyne. “Every dollar in benefits has an economic ripple effect that results in more jobs and increased economic activity.”


“Congress has agreed to extend the extra unemployment benefits through February. But, they will need to extend them further early next year given that unemployment is expected to remain high,” said Coyne. “They should also extend the Act’s refundable tax credits next year. Not doing so will put thousands of individuals and families at risk of slipping into poverty and undermine the progress we are making as we climb out of this recession.”


Recovery Act’s Impacts Are Greater Due to Timing and Targeting of Benefits


The report states that the Recovery Act, more than stimulus bills passed in previous recessions, was designed to benefit a wide range of low-, moderate-, and middle-income Americans.  Congress and the Administration included provisions for low-income families because, in addition to facing the greatest risk of economic hardship during a recession, they are the most likely to spend quickly whatever money they receive, thereby putting it into the economy.


In addition, the report suggests that, unlike previous efforts to mitigate the impacts of recessions, the Recovery Act was well-timed to insure maximum benefit.


“Most interventions come after the worst effects of a recession have passed,” stated Coyne. “The Recovery Act came early enough that it likely prevented us from entering an even deeper recession. This is particularly important given the severity of the current recession. Still, we’re not out of the woods yet.”


To read the full report:   State-Level Data Show Recovery Act Protecting Millions from Poverty