Individuals benefit less visibly from ARRA

Much of the public attention on the American Recovery and Reinvestment Act has focused on the spending that directly created and protected jobs, such as investments in infrastructure.

However, a large portion of the funding the Recovery Act is injecting into the economy goes straight to families and unemployed workers. Direct benefits account for more than one in five dollars scheduled to be spent through ARRA overall.

These direct benefits have helped mitigate the recession’s impact on Wisconsin families in two ways. First, these forms of direct benefit help keep struggling families afloat by putting money directly into their pockets using several different methods. Second, some of the direct benefits are aimed at people hurt worst by the recession, who are likely to spend the extra income right away and thus bolster the economy. It is worth noting the direct benefits operate largely through existing funding mechanisms, meaning few new delivery systems had to be created and thereby minimizing the cost of administering the benefits.

Six types of direct benefits provided by ARRA generated more than three billion for Wisconsin residents between February 2009 when ARRA was enacted and May 2010, the most recent month for which we have relatively complete information.

The largest benefit is the Making Work Pay tax credit, which benefits a broad population of working families in the state regardless of whether they have been impacted by the recession.

The other five benefits, which together add up to roughly the same size as the Making Work Pay credit, are aimed at low-income families as well as people who are jobless or otherwise not working. On average, Wisconsinites received $532 per person in direct benefits.

The Wisconsin Budget Project has analyzed the county-by-county distribution these six major direct benefits from February 2009 through May 2010.

Personal benefits in Douglas County include about $11.6 million in Making Work Pay tax credit for workers; $3 million in additional weeks of jobless benefits for the long-term unemployed; $1.4 million in from an additional $25 per week of jobless benefits; $2.1 million in one-time “Economic Recovery Payment” to many elderly people, veterans and people with disabilities; $1.6 million in increased FoodShare benefits; and $247,000 in assistance to help workers who lose their jobs during the recession to purchase health care coverage through their employer’s plan under the COBRA law

These six direct benefits are not the only forms of assistance in ARRA for workers and others hurt by the recession. There are several additional forms of direct benefit, including the Child Tax Credit and the Earned Income Tax Credit, that were expanded by ARRA. However, these other direct benefits represent relatively small pots of money and are harder to quantify on a state and county basis, and are therefore not included in this analysis.

In some ways the “shovel-ready” projects funded by The Recovery Act have been the most visible component of the stimulus effort.

Direct benefits may be less visible than a highway repair project or high-speed rail, but together these direct benefits provided more than $3 billion in stimulus funding for Wisconsin residents.

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