Post 4 - Last one!!
This post has been postponed until Friday, March 2nd.
The economy is continually coming up as the top presidential campaign priority for the majority of Americans. What can the president do to actually improve the economy and what do you think the next president should do to help get the US out of this recession?
Your answer should use sources and citations per usual. End the term on a positive note and do a great job. Thanks for your hard work this trimester! M. Aby
Labels: economic policy, presidential campaign
posted by maby-keirstead @ 9:24 AM
22 Comments:
There are only a small number of ways that the government itself can influence the economy. The president himself has even fewer options. The Federal Reserve is the institution that has the largest influence; by buying and selling government bonds, it alters the supply of money and interest rates in the economy. However, the President has only marginal control over the Federal Reserve. Apart from broadcasting his opinions to them, and once every few years appointing the chairman of the Fed, the President cannot instruct them. Thus, monetary policy is not an effective tool for the President (2). Instead, his main instrument is fiscal policy.
Fiscal policy consists of changing tax rates or government spending in order to encourage or restrict economic growth. During a recession, decreasing taxes or raising government spending can help to bring the economy back to full employment. It is the President’s responsibility during hard times to encourage Congress to pass legislation containing these measures. Often, partisan politicking makes this difficult. The President cannot simply prevent fiscal legislation and expect Congress to go along with it. Instead he must utilize his Presidential powers, especially the bully pulpit, to encourage Congress.
Barack Obama did just that in 2009 to pass his trillion dollar stimulus package over Republican opposition. He spent a significant time on the national news networks to sell his ideas to the public (1)
(1)http://www.themq.com/index.php?articles_id=1107&issue=181
(2) http://www.nationaljournal.com/2012-presidential-campaign/romney-attacks-obama-on-taxes-fiscal-policy-20120208
The question of how the president can solve the economy is not a great question. Many Americans believe that the president has some sort of magical control over the economy. I believe the textbook said something to the effect of “if the president had power over job creation, the president would definitely keep it somewhere around 3.5%”. The key word is “if” and so is the subject matter, jobs rather than the economy as a whole. Some seemingly insignificant factors have been observed to have an effect on the economy. The president’s party is, interestingly enough, a factor. Democratic presidents see more leveling in economic equality and Republican presidents have done the opposite (1). Each party has also been accountable for lowering inflation (Republicans) and unemployment (Democrats). The president also has the ability to suggest and pressure Congress to enact legislation affecting the economy, either in the form of tax cuts or stimulus packages (2). Most of these things are, in my opinion, less important than the glaring fact that the president lacks tangible authority over those areas. The best area the president can influence is the budget. The budget is really what can have an effect on the economy (2).
As far as what the president can do to help the economy, I feel that the best thing that can be done is to continue on the same was as now. The economy cannot be fixed overnight and I believe slower progress will create longer lasting stability. This is essentially economic hyper-miling, as in conserving economic fuel by easing into a boom rather than accelerating rapidly in it. There would be less wear on Americans as well, because the gradual change might help keep the more fiscally conservative practices instilled by recession going, thus potentially reducing the impact of a future decline. Each recession faced in the U.S. provides a learning experience for the government to work out how to resolve the problems. Now, with two major recessions under its belt, the U.S. should be able to work through a new recession better.
1 http://www.freakonomics.com/2009/06/09/the-presidents-party-and-the-economy-a-guest-post/
2 http://www.opednews.com/articles/opedne_jared_be_080415_presidential_power_t.htm
According to the economic times one way to improve the economy is to create jobs. Even Federal Reserve Chairman Ben Bernanke expresses concerns to create a higher employment level; he believes that the economy will not recover fully until employment is improved (2). For the economy to reach the high employment levels of 2008, we need to create 5.6 million jobs (1). The more jobs America is able to create will result in Americans spending more; boosting the economy. Even employing the younger generations will promote an increase in the economy, “The youth unemployment rate is now 24% compared with the overall rate of 9.1%. If and when these young people return to work, they’ll earn 20% less over the next 15 to 20 years than peers who are employed. That increases the wealth divide that is one of the root causes of growing political populism in our country” (3). I think better education and internships for young people would help improve this situation by preparing students and increasing more students’ knowledge, so that later in life they will hold higher paying jobs. This I believe is one of America’s biggest problems is that not enough people are qualified enough to hold these jobs, if we increase people’s education they will be able to hold these jobs resulting in more money circulating in the economy.
My personal opinion on what the president can do to actually improve the economy is to develop how businesses work. Federal Reserve Chairman Ben Bernanke says, “The business sector is improving, with capital spending on equipment software expanding, reflecting an improving sales outlook and the increasingly strong growth of demand in foreign markets” (2). The business sector improving is a good for the economy because business will be able to invest in the market if they are doing well. They will even spend more on employees, higher wages and maybe even higher more workers. One other idea the President can do is to encourage nations to trade and help European nations that are struggling. The Europe’s debt crisis is resulting to a negative impact on our nation because America depends on Europe for about one-fifth of U.S. goods exported (1). If European nations start to flourish, America will start to flourish as well. I think it would be a good idea if The President were to not try to buy our way out of the recession. There is too much risk with China being a big creditor of the United States and the risk of “hot-money bubbles” in their economy (3). Along with this point it is not very effective when the U.S. tries to make financing easier for Americans when people do not have jobs to pay for the payments in the first place (3). The last idea for The President was represented in a Times article, which is to fix the housing market by passing laws that would increase better negotiations between homeowners and lenders, if the numbers in the housing market do not improve (3).
1. http://articles.economictimes.indiatimes.com/2012-02-18/news/31075038_1_payroll-tax-debt-crisis-income-inequality
2. http://iipdigital.usembassy.gov/st/english/article/2011/06/20110608160443eiznekcam0.3359491.html#axzz1nusB53Dm
3. http://www.time.com/time/nation/article/0,8599,2076568-4,00.html
Republics and Democrats alike seem to agree that some of the biggest problems in the economy are inflation and unemployment. Our current trade deficit is almost $600 billion, which is about 3.8% of the GDP. As stated by a Fox economy article, “Each dollar that goes abroad to pay for imports but does not return to purchase U.S. exports equals lost demand and lost jobs.” (1) This is not a very controversial stance. Perhaps the president should be working to decrease our manufacturing abroad. There are many different ways Obama could go about doing this, but some advocate a tax credit for those who do little outsourcing for manufacturing. Another idea is that there could just simply be more subsidies or other incentives for countries to start up manufacturing firms. That is a good way to decrease unemployment in America. Another thing Obama could do now to spur the economy is to end oil and gas subsidies. This would do a few things. First it would decrease the amount of money simply going to these subsidies. (2) Second, it would spur development of alternative energy sources, which could offer a solution to high gas prices as well as some of our environmental woes. It would also create many American jobs. Obama himself is touting these ideas, which I think is wise. The president himself has mainly only fiscal control over the economy. He could take obviously one of two routes in that arena. He could increase government spending, which would benefit the economy due to the multiplier effect. It could also increased the GDP due to increased investment. This would keep the money generally “out of the hands” of the consumer, and instead allow the government to spend it. On the other hand, he could decrease government spending and taxes and give the money back to the consumer. This could help the economy by increasing consumer spending. He could also change wage laws, which would in turn effect the costs of labor and thus unemployment. The next president will clearly act upon their party platform, in terms of the economy and fulfill a small percentage of the promises they have made about the economy recently. However, I think that the next president should probably look to supply-side economics on this one. They should decrease government spending as well as taxes so that consumers can have their own hand at a stimulus package. Huge reforms should be made in terms of entitlement spending. The retirement age/age you receive social security should be moved later due to the obvious expenses as well as increasing life expectancies. Medicaid needs to be reformed so that it is more efficient and perhaps spends more on preventative care than emergency care, because it is simply less expensive and better for our population. If it was me, I would cut defense spending, but then again I am not running for reelection ever so it is less of a concern for me than it would be to a real political candidate.
1. http://www.foxnews.com/opinion/2012/03/01/manufacturing-matters-there-is-no-other-way-out-our-economic-mess/
2. http://www.startribune.com/politics/141127403.html
As a nation’s economy falls into a recession, there are a few options that the government can choose from to help pull the nation out of the recession. However, very few of those options can be done by the President alone. The Federal Reserve is able to control the supply of money by buying or selling government bonds. The President is only really ever influential over the Fed when appointing governors to the Board of Governors and the Board’s chair. (1) The President can always make public his thoughts on what should be done, but since the governors cannot be dismissed from office by the President, they are less susceptible to political whims and the President’s thoughts. (1)
One of the main things that the President can do is to increase job opportunities in hopes of lowering the unemployment rate. President Obama had proposed a bill that would enable the creation of more jobs and such (2) but the bill recently failed in the Senate. (3) The President can also advocate the Congress pass legislation containing tax cuts and/or an increase in government spending. When in a recession, lowering taxes will allow the public more money to spend, which can help improve the economy. Also by increasing government spending, GDP will rise, which will help to pull the economy out of the recession. (4)
One of the biggest things that the President can do is try to improve the public’s confidence in the economy. The confidence in the economy has been rising as the economy has slowly been getting a better. The President can help to reassure the nation that it will only get better, increasing confidence further, which can lead to an increase in investment and spending, thus helping to improve the economy. (5) I think that the next President can continue to increase the confidence in the economy, while also supporting the Federal Reserve and trying to either increase government spending or lower taxes (maybe even changing income tax rates for different groupings) so that the economy continues to rise.
1. http://www.udel.edu/htr/American/Texts/fed.html
2. http://www.freakonomics.com/2011/09/09/obamas-jobs-bill-a-reasonable-plan/
3. http://www.foxnews.com/politics/2011/10/11/white-house-pushes-for-passage-job-bill-in-face-likely-senate-defeat/
4. http://www.infoplease.com/cig/economics/government-unique-situation.html
5. http://elections.firedoglake.com/2011/12/27/people-feeling-more-confident-about-the-economy-and-obama/
The President will need Congress to approve any laws intended to improve the economy. It takes Congress an extended period of time - months ,sometimes years - to agree on even the most non-controversial legislation. For something as controversial as how to improve the economy, for example, should we look to tax cuts, adoption of trade barriers, elimination of trade barriers, worker re-training, eliminating tax subsidies for companies that out-source jobs, etc. It would take years for such a bill to work its way through Congress. By the time the legislation was eventually approved the final product would not only have little resemblance to what was proposed by the President but due to the extensive time the bill was being considered by Congress, the condition of the economy would have changed so that the solutions in the legislation would no longer be appropriate for the fixing the economy. The current Congress has proven time and again that it is incapable of setting aside its party differences in order to pass laws for the betterment of our country (2). Therefore, no matter what plan the President proposes to help get the U.S. out of the recession, the plan will likely not make it through congress.
Another reason the President would not be able to get any laws passed by the current Congress in an effort to improve the economy is due to the upcoming election. Republicans hold the majority in the House and hold enough seats in the Senate to prevent any legislation from being approved. The Republicans also believe that the best issue for them to win the presidential election this year is the economy; if the economy is struggling, the voters may choose to elect the Republican candidate for president rather re-elect President Obama. If, on the other hand, the economy continues to show improvement between now and the election this November, President Obama would have a much better chance of being re-elected. Therefore, the Republicans in Congress are not going to pass any legislation that may help the improve economy because they know that to do so may doom their chances of winning the White House this November.
I doubt the next president, whether it is President Obama or the Republican candidate, will have much success in passing legislation to improve the economy. The reason for this is that the Tea Party candidates elected to the House of Representatives in 2010 have been very successful in keeping various pieces of legislation from passing. The Tea Party Caucus consists of approximately 60 members of the House of Representatives out of a total of 435 House members. The Tea Party represents less than 13% of the total House membership, but they hold a lot of power on the House floor. For example, in December 2011 leaders of both parties in the Senate reached an agreement to extend the payroll tax cut (1). It was agreed that extension of the tax cut was important for the U.S. economy. However, when the bill reached the House, the Tea Party refused to approve the extension. In this instance, the Republican Party controlled the House (1). This shows that it does not matter who is president – whether it is a Democrat or Republican – the 60 members of the Tea Party Caucus in the House can will stand firm against legislation that could possibly have a very positive affect on our country if they are not getting what they want.
1. http://www.newsmax.com/Newsfront/tea-party-payroll-tax/2012/02/15/id/429580
2. http://articles.businessinsider.com/2011-12-28/politics/30564266_1_npr-historians-fights
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While current economic reports are encouraging, showing the best February the stock market has had in 14 years [1], the government must remain cautious, and continue to enact expansionary fiscal policy. Prices and wages are slow to adjust in the short-run, and although there may be some long-term economic consequences such as a higher price level or interest rates, the economy is not yet on a promising enough path for us to assume that it will return to full employment on its own. There are a few things that I believe the president can do to improve the economy, and get the U.S. out of the recession.
First, I think that the current President should continue to leverage congress by using the bully pulpit, appealing directly to the american people for more stimulus packages, government spending projects, and tax cuts. It may temporarily increase the federal deficit, but it is critical to pull the economy out of the recession. Besides, investors are eager to invest in the U.S. government, because of the volatile nature of the european economies. This means that the U.S. is able to borrow money for very low interest rates, at least for the time being.
Second, I think the president should put a priority on continuing to support green initiatives, despite his significant failures [2]. Not only will a reduced dependance on foreign oil be advantageous in the inevitable upcoming conflict with Iran, but it will also create U.S. domestic jobs, and stimulate the economy. In this way, the President can create a legacy of funding projects that will propel the U.S. into the future.
Third, the President should persuade the leadership of the Federal Reserve to enact minor expansionary monetary policies. Loose money decisions, although with some minor long-term consequences (that can be corrected later), will have a synergistic effect when combined with fiscal policy. However, I say minor because the Fed must continue to be vigilant in its most important job—controlling inflation.
The U.S. economy is showing small but steady signs of improvement—but this does not mean that the U.S. should back off from its significant role in creating expansionary policies. We must continue to do what we have been doing, simply because it has worked. A new president with new ideologies could tip the scale, sending Americans back to the recession they know so well. We cannot afford to take that risk.
[1]
http://www.washingtonpost.com/politics/drop-in-unemployment-claims-points-to-strong-february-hiring-but-spending-incomes-still-weak/2012/03/01/gIQA3L8hkR_story.html
[2] http://news.investors.com/article/602843/201203011830/stimulus-recipient-abound-lays-off-workers-.htm
The next president is in for a world of economic troubles. Americas are looking to the presidency for economic solutions, yet the presidency actually has very little power in this regard. The next president will have two tools at his disposal to influence the economy, and neither of them is going to be good. Congress may be willing to work with a popular president, but I predict an extremely tight election that is not going to give the next president much momentum come 2013. The Federal Reserve has done what they can in this economic crisis, but they are beginning to run out of tools that they can use safely. And a lot of our economic woes don't even come from within the country. I do not envy the next president their job.
The first obstacle to any presidential activity is going to be Congress. The president can try to pass a budget promoting usage of fiscal policy, but Congress has the final word. Right now, the thing that is weighing on the minds of the constituents is the budget deficit. Congress knows this and therefore is unlikely to vote up a budget that promotes expansionary fiscal policy. The president has many powers, but he has no ability to force Congress to pass a fiscally expansive budget- and I doubt they will. Barring some major shock, I do not think that any prospective president will be able to win with a large enough majority to justify a popular mandate, and I doubt that Congress will follow a president unless they feel their constituents will it so. In short? The president's going to have to work mighty hard to get Congress to work with him.
Congress is in charge of fiscal policy, one way of stimulating an economy. The organization in charge of monetary policy, the other way to stimulate an economy, is the Federal Reserve. Ben Bernanke has demonstrated quite an ample willingness to assist in stimulating the economy. The biggest problem here is that their hand is nearly played out. The Fed has powerful tools for influencing the economy, but they can only go so far. The principle tool is the Fed's power over interest rates. This tool has been exhausted since 2009. Interest rates are at record low levels- 0.25%! They are promised to continue at this low rate until 2014 (1). Interest rates this low should have majorly stimulated the economy- and they did. But the economy needs more stimulating, and it is too risky to lower interest rates further. The U.S. economy is dangerously near a Keynesian liquidity trap, where interest rates become so low that monetary policy can no longer be used to stimulate the economy. The Fed can also attempt to affect expectations. Reassurances have caused the economy to periodically jump- but none of these reassurances produce lasting change. The Fed has made it extremely easy for money to be loaned out- but banks are still keeping vast amounts of excess reserves rather than letting the money flow into the market (2). The Fed has a few more tools at their disposal, but these could all cause dangerous economic fallout. As safe tools go, they're basically tapped out.
Something else that deserves noting is how much of the United States economy is out of the hands of the United States. I know Greece has been talked about a lot as of late, but the situation is worth reiterating: The austerity packages that Greece has been passing are not enough (3). Greece cannot be saved without severe action and may not be savable at all. Greek citizens are rebelling in the streets and outright civil war may break out if the Greek government takes measures severe enough to have a chance of fixing the problem in a timely manner. Worst case scenario: Greece completely defaults on its debt, sending European banks out of business. Sudden choke up on credit sends banks around the world into a tailspin- pushing the U.S. right back into recession. The president is going to realistically have very little power to affect the outcome of the European debt crisis, yet it is extremely important to our economy. Other worldwide landmines which the president needs to be touchy over: Inciting a trade war with China, or a sudden contraction of oil supply as a result of Iranian actions. The United States economy is dependent on a great many things which the president can only toe carefully around.
In summary: I feel the next president is in big trouble, economically. Presidents do not have too many economic tool, and right now in particular there will be little they can do. Global problems which the U.S. has little influence over may punish us. And through this all the public somehow expects the next president to engineer a miracle turnaround of the economy? I say the public is in for some disappointment.
(1) http://www.tradingeconomics.com/united-states/interest-rate
(2) http://www.clevelandfed.org/research/trends/2011/0511/01finmar.cfm
(3) http://theweek.com/article/index/224310/greeces-austerity-deal-too-little-too-late
“America needs a President who can fix the economy because he understands the economy.” – Mitt Romney’s Google Plus page (1). Here are a couple of things to understand about the economy, ex-Governor: the primary ways for the government to affect the economy are through monetary policy, which is controlled by the Fed, and fiscal policy, which the president can influence to some degree but is also controlled a great deal by Congress (2). Additionally, the economy is significantly determined by a natural cycle that it is extremely difficult for anyone to completely control, and though some are more severe than others, recessions are simply things that will always happen (3). It sure would be nice if America had a president who could “fix the economy,” Mr. Romney, but it’s not going to happen and it certainly won’t be you.
However, while he cannot fix the entire thing with his mystical powers, there certainly are ways that the president can influence and perhaps improve the economy. While he still has a long way to go, President Obama has already made progress. Coming into the presidency, he inherited the worst economic situation since the Great Depression, and many economists believe that despite the criticism he often receives, his $800 billion stimulus package passed almost as soon as he entered office was an excellent start on improving conditions (4). While unemployment did rise after Obama entered office, so did the GDP and the Dow Jones Industrial Average (4).
Almost everyone agrees that one of the most important ways to fix the economy is to create jobs. Bill Clinton, who served as president during one of the greatest economies our nation has seen, emphasizes that there is a wide variety of ways to do this (5). Some of his ideas are using money that isn’t being invested for loans, working to fix the home mortgage crisis, and increasing manufacturing (5). Job creation is undeniably important, as no president has won reelection when unemployment rose prior to Election Day since World War II (6). Clinton also believes strongly in tax reform, saying that the rich should be willing to pay more because they have benefited much more in recent years (5). The broad goals Clinton states as well as some of his specific strategies should definitely be considered by Obama and/or whoever the next president turns out to be.
Republican candidates like Romney and Rick Santorum have been preaching tax cuts and deregulation (7). However, Clinton argues that no successful modern economies are antigovernment (5). Besides, history has shown that despite many of their stated beliefs, most Americans really do want government programs to solve their problems (2). Job creation is most important at this stage, and the presently-unknown future president should focus on that. Decreasing government involvement is unlikely either to happen or to be particularly helpful in the long run, and Republican candidates should keep this in mind.
1. https://plus.google.com/113664776160150493710/posts/U4YqjAiZEXT
2. Government in America, a high school AP Government textbook
3. A high school General Economics textbook that I don’t know the title of because I had the class first trimester and I had to turn it in
4. http://www.npr.org/2011/11/16/141762700/can-a-president-really-fix-a-bad-economy
5. http://finance.fortune.cnn.com/2011/10/07/bill-clinton-economy-interview/
6. http://www.usatoday.com/money/perfi/stocks/story/2012-01-29/markets-economy-election-presidential-politics/52872954/1
7. http://www.marketwatch.com/story/michigan-road-tests-campaigns-economy-plans-2012-03-01?reflink=MW_news_stmp
The first thing that needs to happen before any president can do anything to help the economy is for Congress to pass laws that will help the economy. The president can lead the nation in his own way by issuing executive orders. The next thing for the president is that he should promote banks. According to the top bank regulator, banks can now offer more loans and improve the economy (1). The next president should promote small business and competition in the markets. This will decrease the cost of goods and create new jobs. It is essential that the new president increases the number of American jobs and manufacturing. Increasing American manufacturing would create new jobs and new cash flow within the United States. Another thing the next president can do to improve the economy, is to promote education. This would improve the quality of the work and improve the wages of many. The US citizens wouldn’t have as hard of a time competing with foreigners for the same jobs. The next president should also encourage the US to produce more of their own energy. This would make us less dependent of foreign nations for energy, create jobs, and increase money within the US.
(1) http://www.foxbusiness.com/industries/2012/02/28/fdic-banks-can-offer-more-loans-boost-us-economy/
The current economic upturn is of course good for Obama's campaign (1). However there are not a whole lot of policies he can actually enact that will affect the economy. Obama can tell Congress what he would like to see happen but Congress often takes months to debate over even minor legislation. Currently Obama would like his American Jobs act to go into affect which would hopefully bring the economy up to an even higher level of employment. This act would more then likely have a very positive affect on the economy, and Obama would get much of the credit for this bill. While actually Congress and Obama's staff did basically all of the work for this bill. Also the Fed does more to regulate the economy then the President, but he does have some influence on it. The president appoints those in charge of it and the Senate approves these choices. Back to the Jobs bill Obama wants passed. He has the support of the Democrats but as always the Republicans are trying to bring down Obama's Presidency in any way possible. I think that this is a very annoying thing about Congress and government. Congress and even Obama are using this bill more as a political statement then for actually trying to help the economy (2). Obama has said that he will break the bill down into parts if he has to in order to have the act take effect (2). Obama like the others running for the presidency are trying to get as many votes as possible. Obama as president will have an easier time reaching the masses. For instance at the National Prayer Breakfast Obama talked about how his faith is linked to his economic policies (3). While this is a good move for him to use on the christian voters, I feel that economic policies should be based on slightly more logical reasons. Any president will have an easier time dealing with foreign policy then the battlefield of congress. Obama is practiculary well liked by foreign nations. He has had a rather easy time making his opinions known and acted on in Europe and with the G-20 summit meeting (4). The state of the rest of the world does have a great impact on our own economy and I feel that this is the area that the president can do the most in.
1. http://www.time.com/time/magazine/article/0,9171,843692,00.html
2. http://www.foxnews.com/politics/2011/10/11/white-house-pushes-for-passage-job-bill-in-face-likely-senate-defeat/
3.http://www.huffingtonpost.com/2012/02/02/obama-national-prayer-breakfast-speech_n_1249631.html
4. http://www.usatoday.com/news/world/story/2011-11-06/obama-g20-summit-economic-policies-europe/51099438/1
There is no doubt that the economic problems currently facing the United States are of utmost concern to both politicians and the country’s citizens. This makes it a very daunting task for all those involved in turning our current economic woes around. Luckily for everyone, I have come up with the perfect plan for what the federal government can do in order to fix the economy.
To begin, it must be clarified that it is not solely up to the president to fix the economy- for those who believe so, you are truly mistaken. The president, with his counterpart in Congress, is responsible for the fiscal policies of our nation. The monetary policies of our federal government are dictated by the Fed. In order to improve our economy, the president (and future presidents) must focus their efforts on fiscal policies, which include implementing tax and government spending policies. Since our economy is currently in a recession, it is best to practice expansionary fiscal policies which include decreasing taxes and increasing government spending (I will detail exactly how to do this later).
Recently, our economy has been experiencing a slight growth; it is nothing overly substantial, but does provide an optimistic outlook to the future. The economy is expected to grow between 2.5-3% this year, and although this may not get the economy back to its “optimal conditions,” it does signify a change in trends [1]. In addition, the unemployment rate has dropped from 9% to 8.3%, along with jobless claims hit the lowest point within the past four years [2]. Not to mention, the stock market has seen a slight increase in its overall health [3]. These are just a few examples of how our economy is slowly progressing out of this recession, which I attribute in large part to the economic policies that President Obama has enacted while in office.
There are several actions that Obama can take at this current moment, in regards to the economy, in order to keep improving it. First off, Obama must use the bully pulpit to push his ideas and gain the support of the public, hopefully making it so Congress finally feels obliged to take some type of action. Although the policies he has already enacted have been progressing slower and smaller than initially expected, it was unreasonable for everyone to assume and believe that the policies Obama enacted would instantly fix our economy- it simply does not work that way. Second, Obama must pay more serious attention to America’s fiscal policy by lowering taxes and increasing government spending. As stated before, these are known as expansionary policies and are seemingly the best way to overcome a recession. By reducing taxes, consumers will have more money in their hands to spend, thus pouring more money into our economy, this would be the same effect for increasing government spending. However, the increase in government spending must be smart and directed towards areas that will directly benefit our economy. The president must also work more closely with the Fed to coordinate the fiscal and monetary policy in a way the results in the most economic benefits. Coordinate and cooperation amongst all areas of federal government is key in getting anything solved concerning the economy, so it is time that people start working towards helping their citizens instead of themselves.
The next president will obviously have his own agenda on what he plans to do to combat this economic crisis, but by keeping these general ideas in mind I think that it can be useful and benefit the economy no matter what party is being represented. I predict that we will continue to see some rough economic times in the near future, but these recent economic trends have me believing that it might not last as long as some people predict.
[1] http://www.reuters.com/article/2012/03/01/usa-fed-lockhart-idUSL2E8E1AMI20120301
[2] http://www.washingtonpost.com/business/economy/americans-earning-more-but-spending-still-in-question/2012/03/01/gIQAtxLXlR_story.html
[3] http://money.cnn.com/2012/03/01/markets/stocks/index.htm?iid=HP_LN
With the current recession and an upcoming presidential election, many presidential candidates are being forced to come up with solutions to improve the economy. President Obama’s economic platform consists of cutting the government budget, restoring the middle class, using tax dollars to create jobs, and supporting small businesses [1]. Another possible solution for the economy being pushed by environmentalists is to instate a high carbon tax where businesses with a high carbon output would be charged for high amounts of emissions [2]. Furthermore, the next president could focus on improving the economy through the aspect of the housing industry and mortgages [3]. This would help reduce the rate of homelessness and even allows already responsible house owners to feel more trust in the banks. If regulations are place on mortgages, banks could not give loans to those who would be unable to pay them back [3]. Rick Santorum is even creating a new version of FDR’s success to rebuild America during the Great Depression with his “First 100 Days Economic Freedom Agenda” [4]. This ten step plan includes giving the states the power to determine their own energy sources, reverse Obama’s job regulations, and creating a balanced federal budget. Most likely, if a Republican takes office in the next presidential election, Obama’s efforts to aid the economy will be reversed and replaced with more fiscally conservative programs that leave more of the economy in the hands of private businesses and state governments.
I personally believe that the next president should focus on rebuilding the economy from the bottom up. For instance, he could reinstate work programs similar to those of FDR’s New Deal [5]. These programs would not only reduce the unemployment rate, but spark the economy and improve the moral of the country, especially those who have been unable to find a new job. With a new income and hope, workers of these programs will have incentive to spend more money on items other than the bare necessities. Therefore these become a catalyst for increased business revenue and a demand for more employees. Additionally, these projects, based off of the Civil Works Administration and Civilian Conservation Corps, help the economy, they will also improve the United States infrastructure and restore America’s beauty [5]. It would be killing two birds with one stone. Furthermore, there are many long term benefits to this idea. For example, it allows workers to be trained in a job field, make money for the possibility of returning to college, and improve their chances of getting hired by having recent job experience. While this alone will not completely rejuvenate the economy, it would be a solid base to add additional government economic aid.
[1] http://www.whitehouse.gov/economy
[2] http://globalstewards.org/economy.htm
[3] http://www.responsiblelending.org/solutions-for-the-economy.html
[4] http://www.ricksantorum.com/rick-santorums-first-100-days-economic-freedom-agenda
[5] http://www.fdrheritage.org/new_deal.htm
There are multiple things that must be considered when talking about what the president can do to improve the economy. The first thing that must be addressed is Congress’ influence on the president’s work. One of the main things that is holding the president back in his efforts to improve the economy is the United States Congress. Yes, it is important to have a system of checks and balances, but I don’t mean Congress as a whole. I mean the intense separation between the two parties in Congress. Even if the president were to create a plan for fixing the economy, it would take an incredible amount of time for both parties to come to a conclusion on such a controversial topic as bringing the country out of a recession. As we have seen in debates over other issues such as the payroll tax, the slow-moving Congress creates problems for the president when he attempts to make a quick or even regular-speed decision. [3]
With regard to what the president can actually do to improve the economy- there is a short list. The president cannot single-handedly bring the United States out of a recession. The problem is that many Americans do not understand that the president has limited power when it comes to fixing the economy, so voters immediately blame the president for failing. [1] It is clear that there is no easy fix for the economy, but there are a few things that the government can do to try to better the situation that America is now stuck in. One thing that the president must do is make decisions with the good of the country in mind rather than his reelection. Although it is illogical to expect this of a president because it is extremely unlikely that this would ever happen, it is still a strategy that would really be effective. This is because the president would only be looking to do what’s best for the country as a whole rather than doing that the people in his party would prefer. It is crucial that the country be brought out of a recession, so it is important that the president do whatever he can to save the economy. Two more problems that must be dealt with in order to better the nation’s economy are the unemployment rate and the amount of inflation. The United States have already observed signs of progress with the unemployment rating, with the level being lowered from 9% to 8.3%. [2] Bringing both of these levels down even more would be a great thing for our economy. By employing more people, the amount of money spent by the general population will increase which will bring money into the national government.
Sources:
[1] http://www.politico.com/news/stories/0911/64013.html
[2] http://www.bls.gov/cps/
[3] http://articles.latimes.com/2012/feb/06/nation/la-na-payroll-tax-20120207
The president, contrary to the public’s general opinion, has minimal control over economic fluctuations. Through the last recession, Obama demonstrated a few key aspects that presidents widely use to spur economic growth.
Obama serves as the figurehead for the national government, and most individuals look to him to provide signals on the state of the economy. Obviously, Obama cannot reverse trends simply by lying, but good economic reports during times of slight recovery accelerate the progress. Obama adjusted his goals shortly after entering office as he realized that true economic recovery would come at a higher cost than expected (1). Using his stimulus plan, the slow in the economic recession was enough to bolster consumer confidence. Obama’s economic advisors recognized that getting the public into the right mindset is a crucial element of economic recovery, as it launches a spiral of spending and increased confidence (1). Essentially, Obama served to allocate enough money to boost consumer confidence. Some argue that Congress held the true responsibility for the stimulus plan, but Obama was the public spokesperson for the initial bill, and the backing of the public was crucial to its passage.
The president’s second role in promoting economic improvement is targeting unemployment. This recession focused mainly on the rise of unemployment numbers which meant the government wanted to lower that rate quickly. Obama’s “American Jobs Act” used various techniques to reverse the troubling trends in the job market. Provisions such as tax breaks for hiring veterans, investments for infrastructure, and tax credits for hiring the long-unemployed will hopefully benefit the economy in both the job market as well as business spending (2). Lowering the unemployment rate is something that the president can take action on. It is arguably easier for the president to gain public support for economic bills simply because so many Americans can understand and relate to the issues that the bills will target. The president, in this way, has a slight upper-hand over Congress, as few Congress members are willing to refuse their constituents assistance in a tough recession. Although the unemployment rate is decreasing, many wonder if the president has done enough. The strict “unemployment measure” neglects to include discouraged workers and the underemployed. Those numbers are actually still rising (3). Yet another aspect that is related to unemployment is GDP growth. Although the last quarter demonstrated a net increase of 3%, the rest of the year is simply not enough (3). It is obvious that Obama is trying various methods to stimulate the economy, but as we head into election season voters will still have to consider if it was enough.
The “next president” will still be forced to tackle difficult recession remains. The future will still be measured in “unemployment” terms, but it will be a matter of decision: should the government intervene, or should the market run its course? Either method will work in different ways to combat unemployment. Consumer confidence must still be reinforced by the next president, although I doubt any significant stimulus plans will result.
Sources:
1. http://www.washingtonpost.com/politics/drop-in-unemployment-claims-points-to-strong-february-hiring-but-spending-incomes-still-weak/2012/03/01/gIQA3L8hkR_story.html
2. http://www.whitehouse.gov/sites/default/files/jobs_act.pdf
3. http://www.washingtontimes.com/news/2012/mar/1/high-unemployment-could-fell-obama/
The economy is not a tame beast, and as such, it is very difficult to control. Politicians and economists have for centuries attempted to unravel the mystery of economies, and as far as we have come, in practice, it is still an imperfect science. As such, there is not very much that government can do in actuality to direct the economy. The President has little to no control over monetary policy, or the expansion and contraction of the money supply, but instead relies on the use of fiscal policy to attempt to move the economy in a desirable direction (1). Fiscal policy can be controlled by the president in a variety of ways, although most of them are indirect. Their ability to direct the tide of public opinion can be a president’s most useful tool, as it forces the hand of Congress to act. The role of the bully pulpit is also vital for the president when they attempt to influence fiscal policy. These powers are those that I believe are most important for the next president in their work with the economy. Technically, our economy is no longer in a recession. But this comes as a comfort to no one. The president must use his authority to pressure Congress into establishing some new outlet for the countries efforts, a use that will benefit the country for generations to come. As my default, yet entirely truthful answer, I believe that space is that outlet. By setting the nation another goal regarding spaceflight, if competition can be struck up with another nation, productivity and the general economy will both perk up mightily (2). A permanent agency and space program dedicated to a long-term and identifiable goal is what is required by the president in the next term of office, in my opinion. The most effective tool in overcoming any economic strain is not with manipulating numbers and vague, seemingly meaningless policies, but in concrete projects. The population needs to see what is coming of the spent resources. And that is when the economy can truly be recovered, and in some degree controlled. Not by an elaborate and mystical plan to adjust numbers, but in building the foundation for the future.
1) http://www.auburn.edu/~johnspm/gloss/federal_reserve_system
2) http://carnegie.org/fileadmin/Media/Publications/PDF/spaceFuture.pdf
I would say the first thing the president could do is listen to Ben Bernanke. He's an informed man with good ideas and is qualified to speak about the more confusing aspects of the economy [1]. Also, as we learned from Frontline in AP Econ, he worked at a Mexican restaurant at one point, which is pretty cool. The second thing would be to avoid all of the plans currently being touted by Republican candidates. They aren't economically viable and would actually worsen the state of our economy [2]. Beyond that, it's difficult to say as someone who has no economic training exactly what would be effective in the real world to pull the U.S. out of the recession we are in. However, the economy is slowly recovering, so to a certain extent, maintaining our current course may be the best option.
[1]http://www.nytimes.com/2012/03/02/business/bernankes-testimony-to-senate-panel-features-less-steam.html
[2]http://www.nytimes.com/2012/03/02/opinion/krugman-four-fiscal-phonies.html
With the economy the way it is now the next president will defiantly have to have a great plan. I think the president should take a look at the tax codes and adjust them to pull more money out of the top ten percent and hopefully reduce deficits and national debt over the several years. The first immediate thing the president should address that would be I think the most beneficial is the the creation of jobs. The unemployment rate its going down but it could be reduced even more by the passing of new legislation such as the jobs creation bill. After jobs are are created perhaps the president turns his or hers attention to education to get a more skilled work force. Another area that may help us reduce spending is looking at social programs such as social security and medicare and looking at ways to reform them and make them more efficient.
Our economy’s present improvement is definitely positive for Obama’s campaign (1). Unfortunately, there is not a multitude of policies that he can make that will impact the economy. Obama can communicate to Congress what he would like to see take place but Congress usually takes months to deliberate over small bits of legislation. Right now, Obama wants his American Jobs Act to start because it would hopefully boost employment and raise the economy even high. The Jobs Act may have a positive impact on the economy and the president would get a majority of the commendation for this bill while Congress and the president’s staff did a majority of the legwork on this bill. The Fed actually does much more to control the economy than the President does, but he still does influence it. The president designates those who are responsible for it and the Senate endorses these choices.
Obama does possess the support of a majority of the Democratic party but, the Republicans do not want Obama to make any progress. It is very obvious that the Congress and Obama are utilizing this bill as a political expression of their views instead of an attempt to aid the economy (2). Obama has stated that he will divide the bill into smaller pieces if that is what it takes to put this bill into place (2). Obama is running for the presidency and is attempting to snag the most votes that he can, but he has an advantage as president because people are already extremely familiar with him. Even at the National Prayer Breakfast, Obama was campaigning when he related his faith to his economic policies (3). This was an obvious attempt to reach to out to the Christian undecided votes. But Obama has continued to maintain positive relations with foreign countries and is very popular with them. He firmly stated his opinions and definitely acted on them with the G-20 Summit (4). The state of affairs around the globe is affected by our president and does greatly influence our economy and this is an area that the president can do the most in.
1. http://www.time.com/time/magazine/article/0,9171,843692,00.html
2. http://www.foxnews.com/politics/2011/10/11/white-house-pushes-for-passage-job-bill-in-face-likely-senate-defeat/
3.http://www.huffingtonpost.com/2012/02/02/obama-national-prayer-breakfast-speech_n_1249631.html
4. http://www.usatoday.com/news/world/story/2011-11-06/obama-g20-summit-economic-policies-europe/51099438/1
The economy is not something that the president has complete control over and can take actions to simply fix. The economy’s monetary policy is controlled by the Fed. The Fed can alter the money supply, help banks, and give out government bonds. The president doesn’t have control over this. Where he does have more control is in terms of fiscal policy. Here lies where the president is able to put in his influence. He is able to maintain control over departmental leaders in charge of fiscal policy. He can also work to the better the economy by signing bills that look to better the economy. There is not a party split on the big picture of the economy-everyone knows it needs to be fixed. While how that should be gone about is split ticket, both Republicans and Democrats recognize the need for more economic stability, and will hopefully propose legislation that the President is able to pass.
The next president has a lot to work with. While Obama’s economic policies haven’t exactly greatly stimulated or affected the economy yet, he has taken some action, and does have proposals for the future. On his webpage, Obama states that he wants to create jobs, support small business, reform Wall Street, and invest in American manufacturing (1). Romney states that he wants to create jobs, cut regulation red tape in the economy, make spending smaller and simpler, and open markets for trade on terms that work for the United States (2). Obviously it is crucial to create jobs, but therein lies the discrepancies and different ways of going about it. Ben Bernanke has some very interesting and logical appeals on the best way to go about this (3). All the new president, or Obama needs to do is listen to him. Just kidding, but he really does have good ideas. I think as the way of the business cycle, the economy is naturally expected to improve, and the president for next term will surely take that into account when making policy.
(1) http://www.barackobama.com/record/economy
(2) http://www.mittromney.com/jobs
(3) http://www.huffingtonpost.com/2011/11/09/ben-bernanke-urges-banks-_n_1084124.html
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