Tuesday, January 12, 2010

Economic Recovery Act Boosts Georgia's Economy With $2.5 Billion in Direct Aid, More to Come

Seven provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) provide billions in direct aid that go right into the hands of Georgians hit hardest by the recession, benefiting local communities as well as protecting families.

These provisions account for only about one-fourth of the Act's total funding, yet they are some of the most effective means for generating economic activity, according to Moody's economist Mark Zandi.

In the first nine months of the Recovery Act, which passed in February, five of the seven direct aid provisions sent almost $2.5 billion to Georgia families, the latest report by the Georgia Budget & Policy Institute shows.

"These are difficult times, but the Recovery Act has kept things from being much worse, as our study shows," said Clare S. Richie, a senior policy analyst for the nonpartisan think tank and one of the report's authors. "Thousands of Georgians are getting help making ends meet despite the worst recession in decades."

The study looked at the Recovery Act's increase in food stamp benefits; expansions of the Child Tax Credit and Earned Income Tax Credit; its new Making Work Pay tax credit for workers; three forms of help for unemployed workers; and its one-time payment to retirees, veterans, and people with disabilities. The report details each aid provision and provides county-by-county data for three of the provisions.

"These Recovery Act dollars are doing double duty," said Richie. "Not only are they keeping an estimated 250,000 Georgians out of poverty, but they are also spent quickly and close to home, boosting local businesses and helping them avoid laying off workers."

The Act's provisions are still in effect and more than $1 billion more in direct aid will reach Georgians in 2010. Policymakers designed these provisions to reach a wide range of low- to middle-income Americans not only because they stand the greatest risk of hardship during recessions, but also because they are the most likely to spend quickly whatever money they receive, thereby pumping it into the economy.

"Congress extended the additional unemployment benefits through mid-February," said the co-author and the Institutes' deputy director, Sarah Beth Gehl. "But with unemployment likely to remain high for some time, it will need to extend them further.

"Congress should also consider extending the Act's refundable tax credits for one additional year so they continue to boost the economy and help families as the recovery gets under way."

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