Recovery Act Helped Prevent a Rise in Poverty

Here’s more good news about the impact of the American Recovery and Reinvestment Act of 2009 (ARRA) during the longest and deepest recession in the post-World War II era: Several provisions of the ARRA, including increased Unemployment Insurance (UI) benefits and the expansion of tax credits for working families, helped prevent any rise in poverty in 2009, even as the nation’s unemployment rate reached into the double digits. This finding comes from the Center on Budget and Policy Priorities’ (CBPP) analysis of the US Census Bureau’s alternative poverty measures. These measures differ from the official poverty rate in several ways. For example, while the official measure determines whether families are living below the poverty line based solely on their cash income, the alternative measures count a broader array of income sources, including tax credits and non-cash assistance, such as that of the Supplemental Nutrition Assistance Program (SNAP), formerly called food stamps. The recommendations for improving poverty measures were made by a blue-ribbon National Academy of Sciences panel in the mid-1990s.

The CBPP’s analysis shows that the ARRA kept more than 4.5 million people out of poverty in 2009, including:

  • 1.3 million people through federal extensions and expansions of UI benefits;
  • 1.5 million people through improvements in the Child Tax Credit and Earned Income Tax Credit;
  • Nearly 1 million people through the Making Work Pay Credit; and
  • 700,000 people through an increase in SNAP benefit levels.

While these findings do not mean that 2009 was a stellar year for low-income families, they provide further evidence that the ARRA helped to mitigate the impact of the Great Recession. In fact, based on these findings, the CBPP concludes that the ARRA was “one of the single most effective pieces of antipoverty legislation in decades.”

— Alissa Anderson