I believe it is bad for America, as it puts too big of a burden on consumers and pushes the economy towards a recession. I believe there can be balance to where both consumers and big oil can achieve equilibrium. As an undergrad, I estimate this equilibrium to be roughly $2.75- $3.00 a gallon, along with oil between $90- $100 a barrel. Gas prices at four-dollars a gallon have thus far proven to be unsustainable, realized by depressions, recessions, and now over supply. When oil and gas prices crash and are low, like in today’s environment, a new question arises- Are historically low oil and gas prices good or bad for America?
I think Reaganomics was a good idea in theory because reducing deficits and cutting back taxes always seems like a great idea. There just always seems to be something else that goes wrong to make it all collapse. In the book Grandin talks about President Jimmy Carter's Federal Reserve Chair, Paul Volcker. Grandin states that, "Paul didn't take his foot off the brakes until 1982 when Mexico defaulted on their international loans. " Before Reagan was elected the American economy was experiencing a decade long recession; with rising unemployment rates and a steady inflation ( stagflation ).
This should be considered a good thing because the government is generating more tax revenue while cutting spending. In the Bush administration, the fiscal cliff was able to save people about 10% of there paycheck due to tax cuts (Calmes). But even though the American people would enjoy temporary short-term decreases in deficit (the amount of something especially a sum of money is too small), the combined effect of the tax increase and reduced government spending will result in a huge fiscal contraction (Nitti). This would mean a decrease in GDP (gross domestic product), and increase in unemployment (Calmes). This is an issue because even though government spending would be down for a while the repercussions for the American people would be greater (Tuchman).
Two major car companies, General Motors (GM) and Chrysler, went bankrupt during the Great Recession. The Government had to make a choice; to get involved with helping them, which would help the economy, or let them fight for themselves. Both choices would leave some American citizens mad at the government. The Government decided to help them by establishing the Auto Bailout along with other programs like TARP. Although some think the Auto Bailout didn’t help small supplier companies, it was the right move for the government to take because it helped stop our economy from going further into a depression.
The reason for this recent drop in consumer confidence is due to several key factors. One factor is the poor performance of the stock market. The Dow Jones is down from its peak that was hit last year, but has now rebounded slightly. The Nasdaq took a dive with the decrease in the prices of tech stocks. The Nasdaq has fallen nearly 56% from its peak in March of 2000.
According to the Commerce Department, the total value of goods and services slowed to 2.3% with a previous rate of 1.8% last year. The gradual decrease in growth indicates that the economy may be reducing to a more sustainable pace, and avoid another intererst rate increase from the Fed. The increase in employment costs may yet sway the Fed to to raise interest rates, but July will be decisive. Consumer consumption has fallen from 6% in increase in 1998 to 4% in 1999. The fall in consumer consumption has had its toll on the GDP as it too has slowed.
The American Recovery and Reinvestment Act has demonstrated success in reducing unemployment, demonstrating the potential for fiscal policy in the current climate. 1. Current Fiscal Stimulus Many economists critical of the Obama administration have argued that sustained deficit spending negatively affects the economy. Prior to the passage of the ARRA, Feldstein stated that “spending should be big, quick, and targeted at increasing aggregate activity and employment.” However, Feldstein later argued that since a large portion of the stimulus package is designed to pay out slowly, it inherently works against the intent of countercyclical policy. John Taylor, creator of the seminal rule of monetary policy, agrees with this assessment, additionally citing the statistical insignificance of the 2001 and 2008 tax rebates at increasing consumer s... ... middle of paper ... ...n inaccessible in the current recession.
America has suffered through recessions time and time again and was able to overcome these economic obstacles in the past. Recently America has faced a recession in which new ideas have not been implemented. Obama as president has been spending money as a means to fix the huge deficit that was handed to him when he took office. Inflation is on the rise and this cannot be blamed on the Obama Administration. This inflation would result in an increase on the price of commodities.
If these high tariffs are left in place it will hurt the U.S by reducing export opportunities. In addition, many of our trading partners tax income earned within their borders only, while we tax the income of U.S. taxpayers regardless of where it is earned, therefore U.S. companies doing business overseas are often subject to a double tax on foreign earnings. * In the recently released World Economic Outlook for 2004, the International Monetary Fund has projected inflation in 2004 to be higher than that witnessed in the previous few years. For instance, inflation in the US is likely to touch a level of 2.1 per cent, larger than 1.6 per cent of 2003 and the past 3-year average of 1.7 per cent. This is seen as a threat because inflation has the ability to impact price levels in the country, which could potentially slowdown economic growth.
In the last couple of years, there have been a number of probable solutions to the economic downfall of America. President Obama is doing his best to manage all aspects of the problem but there are always negatives for each solution. His largest move in this crisis is the Recovery Act in which he spent billions of dollars attempting to create jobs, bail out major companies from bankruptcy, and reimburse American citizens with money. However, our country is so corrupt that the original purpose for the money was abused. Although some improvement was seen in unemployment and foreclosure, it was not enough to save us from economic disaster.