ECONOMIC REPORT OF THE PRESIDENT

Figure 1-8
Global Trade Flows in the Great Depression and Great Recession
Index, 1929/2008=100
120
2008=100
110
100
90
1929=100
80
70
60
0 12 24 36 48 60 72 84 96
Months from January 1929/2008
Note: Orange markers represent annual averages.
Source: CPB World Trade Monitor; Statistical Office of the United Nations; CEA calculations.
tax incentives to encourage business investment. The value of the cuts in the
Act totaled $124 billion over 11 years, with nearly all of the cuts concentrated
in FY 2008. The Act was designed to counteract a short recession by providing
brief, temporary support to consumer spending—including electronic
payments to households that began less than three months after passage
of the Act—but it was insufficient to reverse the emerging distress and, by
design, did not have long-lasting effects.
In December 2008, then-President-elect Obama proposed an outline
of what would become the American Recovery and Reinvestment Act of
2009, also known as the Recovery Act or “ARRA.” The Recovery Act was
the first bill introduced in the House of Representatives just days after the
President’s inauguration, and the President signed it into law less than a
month after he took office. As the name of the Act suggests, the intention
was for the bill to both generate recovery from the crisis and to be an important
investment in the future of the economy.
Several principles guided the new Administration’s fiscal policy. First,
the fiscal effort was to be implemented quickly. Second, it should be large,
given the scope of the economic problem. Finally, it should be a sustained
effort that would not only provide immediate fiscal support over the first
two years, but would also provide smaller levels of temporary support
Eight Years of Recovery and Reinvestment | 31