John Harwood’s New York Times article, For Obama, Investing in Brighter Futures Remains a Tough Sell,
discusses President Obama’s plans to boost the economy. Obama is hopeful that
increasing government spending will create a better standard of living. He wants
to spending money on infrastructure, research and development initiatives,
education, job training and more. He wants to invest in business using stimulus
packages. Obama hopes employers can use the funds to raise employee wages. An
increase in government spending seems to be the fiscal policy that Obama wants
to employ. However, Congress is not on board with these plans; they are more
concerned with reducing the country’s deficit. Obama believes his ideas are
“critical to lifting stagnation’. Republicans think it is the individuals
responsibility, and Obama should reduce government spending and cut programs.
Now that the baby boomers are retiring, choosing the right policy is more
important than ever.
I feel that both the President and Congress have valid stances, and I think that a happy medium could be reached. With our economy still in recovery, some stimulus isn't a bad thing if it is used in an effective way. If the money pumps right back into the economy and helps the economy grow, everyone is in a better position. However, Congress has the right to be concerned because if the stimulus money is wasted then our already enormous debt would just continue to grow.
ReplyDeleteI feel that it would make more sense to make cutting the deficit a higher priority because there is really not a point in spending more money that the fed doesn't actually have. If Obama were to cut some programs and reduce spending as Congress says, we would have more success in jump starting the economy and would be off on a better foot.
DeleteEven though the President's intention of increasing government spending is to increase economic activity in the United States, it is not necessary that employers or companies will use this money to increase employer wages. The money could be used to expand and that would create jobs but that too is not guaranteed. Looking at other developed economies such as Japan and Greece, it is safe to say that increases in debt can drive up interest rates and drive out private investment. The government's inability to manage itself financially could make investors lose interest in the economy and at the same time the government will not be able to borrow at affordable rates. Such a crisis would have a negative impact on the US economy and Obama's plans could be counterproductive.
ReplyDeleteWhen talking expansionary fiscal policy, we cannot ignore the issue of taxes. It is true that excess government spending does not mean the money will be used to increase wages, just as it is true that when taxes are cut, there is no guarantee that spending will occur. I think fiscal policy now is focused too much on big business, and employee wages when we should be concerned about the small business world of america. When it is so hard to make a profit, decreasing taxes on the wealthy, small business owners provides the best way to create more jobs and expand the economy.
ReplyDeleteI agree with Tyler that there are other methods of expansionary fiscal policy that we can consider, such as decreasing taxes. I agree with the President, however, that it is important to increase spending in areas such as education to make America more competitive with a more educated workforce. However, it is not necessary to increase overall government spending. It is possible to reduce spending in another area such as military spending and then increase spending in education. This is just one area that can be reduced to an extent, but it is important to have a more skilled workforce for the future.
ReplyDeleteYou would think by now he would figure out that the government cannot spend its way out of every economic problem. The economy is improving and interest rates are low, soon the small businesses will invest on their own. No need to ramp up spending again when the market is moving in the right direction.
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