I’ve been paying a lot of attention to Obama’s reaction to our current econmic state lately (I always so, but more so lately) and I find those who are against him to be quite interesting. Furthermore, I have paid a lot of attention to his budget plan and I have researched quite a bit about it. I’ve always been a person who pays more than usual attention to politics and the economy. But, a big reason that I’m so interested in this budget is that I will be graduating from college in two years, and am interested in what the economic climate will be.
Keynesian Economists, and those that support it, believe that a mixed economy is ideal. A mixed economy means mostly a private sector, with government having a pretty big role and a public sector. Classical economists believe that supply creates its own demand, but this is simply not always true, especially in bad economic times. Take a look at our economy right now– Unemployment is high, which leads to less demand. Therefore, our economy has lost potential output. So what do we do to fix this you ask? Well, we create government policies to increase demand and therefore lower unemployment and inflation. This idea made perfect sense to me when I took my first Economics class. What do classical economists want to do? Nothing. Let the markets fix themselves!
I don’t see the logic in this. Our economy is the worst it has been since the depression and they want to do nothing. They don’t want to raise taxes, yet we have the largest deficit ever, mostly created by Republicans. So, tell me, how can we have tax cuts AND solve the deficit problem? They often say in a bad economy, you can’t raise taxes. Then how do YOU propose we fix the problem? If we can’t raise taxes and get rid of the tax cuts on the rich, then what do we DO? If we don’t try to create more jobs, then what do we do? Sit there and wait for the government to fix itself while you enjoy your comfy rich tax cuts and watch everyone else suffer? I’m not saying the government do everything for us, but our economy needs HELP. Millions out of jobs NEED HELP.
Now, let’s discuss what the President has proposed for his budget, that I hope gets approved by Congress.
First and foremost, we cannot blame the huge deficit on Obama. He inherited a huge deficit thanks to two wars with no increase in taxes, tax cuts, and a prescription plan among several things. Has he increased the deficit since being in office? You bet. But he is also dealing with trying to stimulate a bad economy. We have a high unemployment rate, which means more people are getting unemployment benefits. So, we cannot ignore the situation he is in and what he came in to.
Second, I will still continue to see an increase in my paychecks. It isn’t much, but it still helps. This was part of the Stimulus that certain people hate. While we’re on that topic, take a look at this: http://www.recovery.gov/ . You can track exactly where the money has gone. In California alone, it has created 71,015 jobs. In my city alone, 23. That is 71,000 people who didn’t have jobs before. Now, most of those jobs are NOT contract jobs like some want you to believe. Most of them are through grants. Now, with those jobs created, the unemployment benefits handed out go down. This leads to an increase in available money. Also, with those jobs, 71, 015 now have more money to spend as a consumer. What part of this doesn’t make sense?
Obama’s budget would reduce the deficit by 1.2 trillion in the next ten years.
You can’t ignore this chart. Will the problem get worse before it gets better? Absolutely. The chart doesn’t hide that. He will let certain tax cuts expire, create more jobs, freeze economic spending, and impose a bank tax. Tell me, which part of this is bad? Just because it’s a liberal idea, doesn’t mean you should shoot it down right away. I love the following statement from Fareed Zakaria, an author and foreign affairs analyst:
Because we have a political structure in Washington today, that if one side proposes any solution to these problems, the other side does not ask itself: How can we have a compromise that solves this problem?
Instead they think: How can we demagogue this issue to fundraise, to win votes, to scare people, to polarize the political climate and gain advantage from it? It’s almost that the entire strategy now is how can we take any proposal that anyone makes and turn it into a fundraising opportunity for our extreme wing.
And if you do that, you’re never going to actually solve the problems of the country because every proposal can be demagogued.
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