This alert contains a comprehensive summary of the key provisions of H.R. 1, the American Recovery and Reinvestment Act ("ARRA"), in a format designed for ongoing reference. Key provisions are highlighted by title, with links to spending tables and an index for key aspects of the bill. This fully searchable document is the latest in a series of updates on the economic recovery initiatives by the Obama Administration and the 111th Congress, all of which are available on Sonnenschein's Special Situations Portal page. We would also invite you to join us this Thursday, Feb. 19, 2009, at 4:00 p.m. EST for a Webinar on the impacts of the stimulus package and an overview of the key sectors affected by both the tax and spending provisions contained in ARRA.

After intense negotiations, partisan acrimony, and aggressive lobbying by the White House, Congress adopted the ARRA on Friday, February 13. President Obama is expected to sign the measure into law this Wednesday. The $787 billion package of new spending and tax relief represents the signature element of the economic recovery plan advanced by President Obama, and is intended to work in tandem with ongoing and enhanced capital markets intervention outlined by Treasury Secretary Geithner one week ago. Unprecedented in its scope, ARRA represents a stimulus equal to five percent of U.S. Gross Domestic Product ("GDP"). The New Deal, by comparison, represented three percent of GDP at the time of its passage. While no Republicans supported the measure in the House, three key moderate Republican Senators played a pivotal role in crafting a compromise that allowed the bill to clear 60-vote Senate procedural thresholds.

The furious pace of Senate and House negotiations over a 48-hour period last week resulted in substantial changes to an already dense and complicated bill. Comprising more than 1,200 pages, the final text of the stimulus measure remains a collection of hand-written edits and in-person agreements. The speed with which negotiators moved to reconcile their competing versions, each of which contained differing priorities and funding levels, led to agreement on aggregate funding numbers for many agencies, with considerable discretion on the final allocations among programs left to agency discretion. As a practical matter, this will lead to ongoing and significant debate over funding priorities, uncertainty for those seeking funding, and continued oversight and involvement of key members of the House and Senate Appropriations Committees with respect to the final use of funds in many areas. In the coming weeks and months, agencies will be required to create entirely new programs for "green technology," establish a national broadband mapping system, roll out a comprehensive deployment plan for Health Information Technology ("HIT"), and deploy hundred of billions of dollars to fund infrastructure projects at the state level. For virtually every federal agency, it now falls to program staff, and, in many cases, career officials serving in "acting" capacities, to achieve the bold vision of this stimulus package.

On the tax side, the final negotiations left on the cutting room floor substantial corporate tax relief and provisions intended to spur demand for new homes and autos. The remaining tax provisions demonstrate a significant investment in renewable energy, a commitment to small business incentives, and enhanced authority for municipal governments and states to finance new projects. ARRA also fulfills a key campaign promise of the President -- delivering a tax cut to 95 percent of all working families. The final tax measure also reflects growing criticism of financial institutions, with language added in the final negotiations that place substantial restrictions on executive compensation for those entities that have received funds from the government under the $700 billion Troubled Assets Relief Program ("TARP"). ARRA also contains provisions designed to assist in stabilizing the real estate market, again demonstrating how the financial market interventions are closely linked to the priorities in the stimulus. As the Obama Administration attempts to chart a course to real economic recovery, stimulus spending under ARRA will undoubtedly remain closely tied to the capital markets programs outlined by Treasury Secretary Geithner and Federal Reserve Chair Bernanke.

While key implementation processes have yet to be fully detailed, the bill passed by the House and Senate demonstrates clear priorities for the "new economy," and creates substantial advantages for a number of industry sectors. These priorities also create competition for federal resources, and represent a new landscape for many companies, non-profits, and other entities that have seen their traditional support curtailed in this legislation. The following are some of the key sectoral impacts:

Education. The final bill provides tens of billions in funding and new bond authority for school modernization, upgrade, and construction and programs for students with disabilities.

Broadband. The final bill provides substantial funding for broadband access in unserved and underserved areas throughout the country as well as to map a national inventory of broadband deployment.

Renewable Energy and Green Building. The final bill provides billions in funding and tax relief for research, development, and deployment of renewable energy production and transmission, as well as energy efficiency and conservation measures. Flexible tax incentives, long term extensions of existing tax credits, and substantial support for alternative fuel vehicles were also central to the final bill with limited cuts in final negotiations.

Physicians, Hospitals, and Research. Despite cuts to spending on health care initiatives in the final negotiations, these three groups stand to see the vast majority of new health care funding under the bill. Physicians and hospitals are eligible for billions in health information technology incentives made available in the bill, while the National Institutes of Health will receive billions in new research funding for research project grants.

State Budgets. While not a complete solution, federal investment in additional unemployment insurance, new bonding authority, and substantial increases Medicaid funding will all ease state budgets in the coming months.

Tribal Governments. The stimulus contains approximately $3 billion for Indian Country, funding that exceeds the annual budget for the Bureau of Indian Affairs, to promote development and provide local assistance.

Key Corporate Sectors. The final bill severely curtailed proposed tax relief for large businesses that would have permitted a five-year carryback for losses. The net operating loss ("NOL") provision was drastically reduced to benefit small businesses with annualized gross revenues under $15 million. With that said, several provisions are likely to benefit a number of public companies and investors. One such provision allows for tax-deferred debt buyback. The "mixed bag" of ARRA provisions for business will require significant attention to implementation. For example, two key economic sectors had tax benefits substantially reduced in the final package:

Homebuilders. The final bill eliminated a proposed $15,000 tax credit for the purchase of a new home; instead, it raised the existing credit for first-time homebuyers to $8,000.

Automakers. The final bill drastically scaled back a proposed tax credit that created an above-the-line deduction for sales tax and loan interest on new cars. The final package contained only a deduction for sales tax, subject to both an income and vehicle cost phase out.