Written by: Trevor Greene
The United States encountered a
very crucial and bad time in their economy. In 2008 the US went into a
recession. Prices rose and people stopped spending money as willingly. This
took a toll on everyone. Jobs were lost and many people were left clueless of
what to do. There was no exact reason to why this happened, but there were a
few that were easily identified when coming to a conclusion. One of them was
that there was an overhang of private sector debt that was hard to pay off.
Others say that the government just talks about it and has taken no action to
fix it. These are just a few problems with the American economy.
Many
government officials and economists say that the easy fix to this problem would
be to raise taxes, but that would not be a smart idea, especially during a time
like this. This would just put the people of America into more and more debt.
This is a time that encourages very, very much government spending. With
government spending, the government could produce more and more jobs. Also not
only producing jobs, the government could help people out of debt, by providing
different government plans and different government aids; like social security.
Not
only does the government have to worry about the national debt, but they also
have to worry about the unemployment rate. A solution According to Paul Krugman
of the New York Times is “So what could we do to reduce unemployment? The
answer is, this is a time for above-normal government spending.” This just
shows that government spending is necessary to help America out of the
Recession. With the more amounts of government spending comes more time to
stall Intel the private sector is ready to spend money again.
With
all of this being said, this does not mean that the government is in
competition with the private sector. It just puts unemployed resources to work.
When people are in tough times, they tend to save their money, obviously. The
economy is the money flow throughout the United States and is good when there
is lots of money be spent consistently. When this process slows down this is
when our economy is troubled. The problem is, is how is the government suppose
to get the people to spend more money if they are trying to save it, because of
job loss. This is a very tough situation for the United States of America and
is not quick to resolve.
As
the United States has been in a economic crisis since 2008, the money flow has
been slow, but as time goes on it will be back up. With government aide to
encourage spending the United States will be back on its feet in no time. This
is why it would be a very bad time to cut taxes in America today.
Source:
Paul Krugman. “The Story of Our Time” New York Times. April
28, 2013. Web. April 29, 2013
The United States is in a critical condition right now and it feels like it's been forever since we grew up in the situation. The high unemployment rate seems like it's not going down at all, and because of that other aspects of American economy will decline as well. I think that simply raising taxes would not be the solution to the problem as you said, because it would lead to more debt. Another reason why I think raising taxes wouldn't work is because it will just make the minimum wage go up, and therefore increase inflation. Increasing inflation will lead to more unemployment, thus creating a giant cycle of disaster. I think cutting taxes could have a better effect because it would lead to people having more money to spend, invest, and circulate. It would help out the big business, and it would give more extra money in the low-income family's pocket as well. Although the solution to the problem isn't that easy, it is an idea that America should look into.
ReplyDeleteI like this article Trevor. It's interesting to see how the government will choose to get us out of this economic slump. By raising taxes the government is able to increase their spending and in the long run boost the economy back up. On the other hand, this could take a huge toll on the middle to lower class that don't have much room to wiggle financially. With that being said, it puts our law makers in a pickle coming down to what decision needs to be made. Either way we go, I believe things are going to get worse before they get better. We have to be in it for the long haul, and both options have their pros and cons. If the government spending increases it could kick start the economy by increasing output and jobs, but if the government cuts taxes it could put people that are financially troubled in a tough spot. They could either spend it on luxuries or prioritize and save. If the taxes are cut and people still don't spend their extra revenue, this economic situation could worsen and put us in an even deeper hole. Ultimately, both ways have their benefits and negatives. It'll be interesting to see how things pan out coming into the future.
ReplyDeleteIt will be interesting to see how long it takes for the economy to bounce back after the recession in 2008. The unemployment rate looks like it is starting to come back, but big cities like Detroit Michigan are still struggling until the different industries come back. Hopefully the money the government has been spending on programs will boast the economy back, and it will once again prosper.
ReplyDeleteIf an contractionary fiscal policy was taken, the taxes that burden all Americans would be increased. The increase of tax will then cause a decrease in the amount of disposable income within the families. On the other hand, the government could reduce their spending, which would reduce the funding they have for improvement projects or any other type of government funded activity that was producing jobs. These employees would then face a decreased income, and could even be let go of because their services wouldn't be in demand. This would be an example of Structural Unemployment, as now the worker's skills are not in demand. Although the government has aided our economy since the 2008 recession, there is still work to be done to ensure economic stability.
ReplyDeleteThe government has to start some where. Maybe this is where they are going to start. The economy since 2008 has been slowly getting better, but it will take time and who knows maybe by the end of the year it will be ten times as better as it is now.
ReplyDeleteThis is a very serious economic issue Trevor, and is one that President Obama has been dealing with all of his years in office. You bring up some valid points, and I would agree with you in a sense that the Government should spend more to circulate more money. Although instead of just producing the money they should use all of their money to create jobs so that the population has money to spend and keep the economy running swell.
ReplyDeleteThe United States has been struggling since 2008 and still has some things to fix. I would not completely rule out increasing taxes though. As much as Americans do not like paying taxes that is the only way they are forced to. If they are all saving their money then this is the way to push them into spending money. Taxes do make citizens frustrated though so I would agree with some extra government spending. Excessive spending will lead to more debt but, as of right now we need citizens to see the government trying to fix things by decreasing unemployment. Most solutions to this economic crisis could have complications or contradictions but, something needs to take place in an effort to fix the problem.
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