Impact on business and society
Having analyzed Obama’s stimulus package, we can conclude that it has the following goals: creating new jobs and preserving old ones, supporting economic activity, ensuring maximum transparency of government operations. By mid-2010 over 379 billion dollars were spent, thereby creating a huge number of jobs (Howsen, & Lile, 2011).
A considerable amount of money was allocated for the assistance to the largest automobile companies and the largest U.S. banks that had declared bankruptcy. In June 2009, the President signed Car Allowance Rebate System. Two billion dollars were allocated from the country’s budget, and directed to customers who got rid of old gas-guzzling cars and replaced them with new more economical ones. One of the largest programs is also the development of alternative energy sources that were called “green technologies”. Another major sphere of government expenditures is the development of the education system: the reconstruction of schools, universities, increased allocations for various grants, as well as improving education level for the disabled persons.
It is difficult to estimate now what the development would have been like, if the “Obama plan” was not adopted in Congress: whether absolutely nothing would have happened and all the apocalyptic predictions of the Democrats would have turned out just a bad and unsuccessful exaggeration or the economic situation would have really deteriorated., one can certainly state that the Obama administration placed big hopes on the plan. However, the effect of the recovery plan did not actualize the optimistic expectations (Wyatt, 2009). It is clearly seen on the following graph:
Graph 1. Unemployment rate with and without the recovery plan
Dark blue displays the expected unemployment rate after the possible implementation of the economic recovery plan, light blue the expected rate without taking any measures. As we can see, the Democrats had hoped that the plan would help overcome the recession with a lower unemployment rate. And it would have been one of the strongest arguments in favor of its adoption. Red dots show the real unemployment rate in the U.S.A. after the adoption of the “Obama Plan”. It, therefore, turned higher than the economists of the President predicted. Consequently, critics of the economic policy of the present administration claim that the steps taken by the Democrats are not working (Johnson, 2009). But the President himself, despite the negative results on unemployment, declared to American voters that the incentive to the economy brought undoubted benefits.
General changes in the GDP growth and unemployment rate, as well as the contribution of separate parts of GDP to its total growth is shown on the below graphs. The analysis of changes in economic growth indicates that the growth in the third quarter of 2009 was the highest in 25 years, and the positive change in the number of unemployed was the highest in 30 years. It is probable that the ARRA played a crucial role in these changes. ARRA had the greatest impact on foreign investment, government expenditures and investment in stocks, which eventually slowed down the unemployment growth rate in such industries as construction, production, trade and various services (Yago, & Li, 2011).
Graph 2. Annual GDP growth rates
Graph 3. Contribution to the GDP growth
Graph 4. Change in the number of the unemployed (tsd)
Graph 5. Contribution to the change in the number of the unemployed (tsd)
At the same time, Obama also stated his satisfaction with the work of the Federal Reserve System. He reported that Ben Bernanke works excellently on fighting the financial crisis and the Federal Reserve System is able to take over additional responsibility for monitoring financial risks, as stated by K2Kapital. According to the plan of the White House, the FRS should be the main supervisor of the major financial institutions which represent the greatest systemic risks to the economy of the country (Howsen and Lile, 2011).
In general, according to the President, in first more than 100 days the recovery act (the bill on the stimulation of the U.S. economy) brought exactly the results which had been assumed to be. Obama pointed out that the bill extended medical insurance coverage on people who lost their jobs during the period of recession, relieved tax payments for households and businesses by $ 43 billion, helped to slow down the unemployment growth rate. In his response to critics Obama emphasized that the incentive package was not designed to solve all the problems in four months, it is scheduled for more than two years. It should be noted that at the end of June 2009, Barack Obama stated that he was not yet ready to introduce another plan to stimulate the U.S. economy, in spite of its further on-going deterioration (Johnson, 2009). At the time, the U.S. leader emphasized that more time should pass in order to see the positive results from the previous stimulus package.