There are two words in the English language that when combined will cause immediate joy and skepticism at the same time. Tax Cut, although at first it sounds only good there can be some setbacks. George W. Bush entered his term in office with an aggressive agenda to cut taxes that turned heads in his favor; however, some people don’t think his cuts are fair or effective.
The United States economy is slowly creeping towards a recession. The stock market has shown repeated drops. Consumers are not purchasing and even savings and loans are down for fear of a huge economic crash. The only bright spot is a housing market that refuses to yield as apparently consumers are still positive enough to purchase houses. Despite the actions of the Federal Reserve and Alan Greenspan the economy is in a tailspin that is highlighted by the drooping stock market. Greenspan has cut the interest rates three times since the start of the new year and yet consumer confidence and the nation’s financial situation continue to slip. President Bush has concluded that only a massive tax cut will level out the economy and help to rebuild after the damage done lately. Bush wants to put money back in the hands of the consumer by making sure every social level is included in his cuts. The Presidents tax plan will lower the marginal tax rate for low income parents thus allowing, in theory, lower class citizens to join the middle class. The tax cut plans to give the largest percentage reductions to lower income families. The Federal Income Tax is the highest it’s been during peacetime ever. This puts a major strain on families to work harder to provide for themselves and their children. Bush plans to lower the tax burden on families by reducing tax rates, expanding child credit, and reducing the marriage penalty. Also, to promote charitable giving, the President has allowed for a clause which will allow the taxpayer to deduct his or her charitable donations from their taxes. This budget plan also includes ideas that will allow the common American to pay down his debts thus lowering the consumer debt. When taxes are cut the common man can pay back what debts they may have. This is very important because consumer debt is now over $1.5 trillion and credit card debt alone will be over 600 billion dollars. That equates to, on average, about $2,000 dollars per American...
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...n dollars plus about 268 billion dollars in interest costs in the next years. With that kind of spending there is no way the economy could grow enough to cover the costs of this plan and many established systems like social security could fall to where they are practically non-existent. Consumers may not be to pleased with the cut either. The cut may have the effect of just balancing the economy not giving it the thrust it needs to begin to grow at an extended rate. Thus the cuts would be only a temporary cure for the endangered economy. The two sides of Bush’s budget plans may disagree so much as to not let his plan pass. This could cause chaos for a while within the United States but in the end economists might agree that we’re better off because Bush’s plans may lay waste to an established system that has made the United States the number one world power for so long.
Whether or not Bush’s budget and tax cut plans pass it will be a radical time in the history of the United States. The cuts may save a floundering economy or bring it to it’s knees. What the future holds no one knows for sure but everyone is anxious to see how Bush will fare in office.
Bush came into office in 2001, he inherited a surplus from former President Clinton and left a recession for former President Obama when he left in 2009. In President Bush’s defense, recessions are a part of the business cycle, but certain decisions that he made also did not help our financial and debt situations. According to fiscal policy, our country in 2001 was thriving and Bush should have used an contractionary policy to stabilize the economy. Bush should have increased taxes and decreased government spending; he did the exact opposite. By 2003, Bush had expanded Medicare to include prescription drugs, committed US troops to two separate wars, and introduced two tax cuts. Of course, Bush had little to no control over our wars in Iraq and Afghanistan and the terrorist attacks of 9/11 affected all aspects of the US economy due to a general fear. However, when a horrible event destabilizes the economy of a country and forces the country into two separate conflicts, the country should not spend even more and take burden off of the people that supposed to be paying for
Immediately after being sworn into office, Reagan implemented the first of many tax cuts. The Economic Recovery Tax Act passed in 1981 took 20% off taxes from top income levels and 25% off taxes from all lower income levels. Additional tax cuts, enforced in 1986, lowered taxes for those with high incomes by another 28% and those with lower incomes by 15%. These cuts were enacted based on the principle that tax breaks for the upper echelon of society would encourage investment and spending, creating new jobs for lower income individuals. Though these acts helped America during an economic low, they had consequences which are still being felt today. During Reagan’s presidency the distribution of wealth shifted unfairly towards individuals...
Many argue that Reagan “enacted irresponsible tax giveaways for the rich…[starving] the federal government of revenue [which] led to unprecedented deficits.” There is no doubt that “today’s budget deficits [can] impoverish our descendants.”1
this is going to have a profound affect on the economy of the United States. During the
...n the retirement age. Yet Social Security's fiscal outlook remains strong. (“Next New Deal”, par. 3)
All in all the fiscal cliff is something that will always be controversial. There are benifical parts to it and non- benifical parts. Weather or not it is severly damaging to the economy is yet to be seen. But for now the fiscal cliff is here to stay.
Obama begins by acknowledging that progress has been made. There are “six million new jobs… we buy more American cars than we have in five years, and less foreign oil than we have in 20” (Obama). His assurances suggest that the United States economy is recovering and making large strides toward bouncing back from the recession. This starts things off in a positive direction and inspires pride that our nation is on the path to economic recovery. Afterward, he explains that many Americans’ “hard work and dedication have not yet been rewarded” (Obama), because many Americans cannot attain full-time employment. He emphasizes the fact that those in the top one percent income bracket are enjoying the highest profits while lower incomes haven’t increased much at all in over a decade. This appeals to the working class who feel it’s unfair that their hard work goes unrewarded.
Krugman points out how despite the obvious and ever growing gap between the rich and middle class in terms of wealth increase, Republicans tend to vote for tax cuts for the rich and for decreases in funding for programs that benefit the middle and lower classes of society, such as Social Security, Medicare, and Medicaid. Cutting funds for these services puts the middle and lower classes at even more of a disadvantage than they already were. Meanwhile, the rich receiving more tax cuts means they receive more money, furthering the economic wealth gap and increasing the money they can spend to influence politics. Krugman suggests the solution to the problem is increasing taxes on the
In these current economic times, people have lost jobs. People have lost faith in the economy since the worth of their money keeps falling. Businesses are failing left and right because of the lack of confidence in the system. Banks have folded because of the amount of people who are unable to pay their loans, leaving the banks without funds. The auto industry is failing as people cannot afford the new cars being produced by Detroit. Confidence in the economic system of the United States is very low. How can the country recover from this economic recession? Some economists would say that the government should step in to save the day by pumping funds into the system. President Obama signed a massive stimulus bill in an attempt to turn the economy around. The question is, was this bill actually useful, or is it just a waste of the US taxpayer’s hard earned dollars? Did the economy turn around because of the bill, or would it have recovered just fine on its own? Finally, are the provisions in the bill actually good for the public at large, or is it just a waste of tax dollars on pork barrel spending projects and agendas? These are questions that must be answered to get to the heart of one of the most expensive legislative actions in the history of the United States.
The United States economy is racing ahead at dangerous speeds, and it may be too late to prevent the return of widespread inflation. Ideally the economy should move ahead gradually and grow at a steady manageable rate. Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary agrees. The Secretary announced that due to our increasing surplus and booming economy, instead of having an outsized tax cut, we should use the surplus to further pay down the national debt. A tax cut, though most Americans would favor it initially, would prove counter productive. Cutting taxes would over stimulate an already raging economy, and enhance the possibilities of an increase in the rate of inflation. Paying off the national debt would actually help lower interest rates and boost investments, and therefore further increase the wealth of the population, while keeping inflation at bay.
...s for generations to come, which in essence, needs to start now. Using a conservative economic projection should be one of the steps taken for the growth of future social security. We all know there are no free rides in life; someone is always taking the bill, much less in social security. Any of the changes discussed in this report would impose a real alteration in the level of benefits, taxation and risks. Ultimately, we need to look forward with complete understanding and full acceptance of changes, while keeping faith in a system, which has served us so well.
Consequently, limiting the spending capacity of the middle class damages the entire economy because it is the middle class that generates the most economic activity. For example, one wealthy person does not need to buy 5,000 new cars, but 5,000 families could certainly aid in stabilizing the auto-industry. Simply put, the extremely rich do not spend enough of their money to sustain an entire economic system. Unfortunately, the trend of lowering taxes for the rich continued under the next presidencies. Interestingly, under the Clinton administration, taxes on the rich were raised, and as a result, we saw the economy stabilize (Hartmann). However, under George Bush Jr., taxes on the rich were once again lowered. This time around, unearned income was now greatly untaxed as well. Lower taxes on unearned income is what enabled billionaires to only pay a 15% tax rate on federal taxes compared to the average American who could pay as much as 30%. Ergo, this cut in taxes led to yet another recession in 2008. Through these trends, we see that when the rich are paying their appropriate shares inequality due to recessions, for example, are generally at their
According to askheritage.org the Washington Post reported that the national debt is no longer unsustainable. It seems like national debt is not government’s high priority anymore. However, there are plenty of reason why reducing the national debt should be the most urgent problem that the president and congress should address in 2017. The effect that the national debt can have on the economy is tremendously impactful. Cost of living will rise because the government will find a way to collect money by putting higher interest rate on anything from credit card from house mortgage. There will be a generational inequality because by not being responsible for the current generation’s debt, people are giving burden of reducing debt to our next generation which will threaten their standard of living and retirement plan. It cause slower wage growth. Instead of making productive investments, money goes to buying government debt. The debt have huge impacts on fiscal policy. Economicshelp.org defines fiscal policy as a policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity. The federal debt cause reduction of fiscal flexibility. Between 2008 and 2013 the GDP increased from 35 percent to 70 percent due to the Great Recession. Because of high debt, our government is not
Drastic action is needed to restore our economic and financial independence and we must begin to rebuild our industries in the United States. The government must make it essential to produce more goods and services in American factories by employing American workers. Well one way we have already starting to do is by taxing the rich more. By raising the taxes on wealthy’s may increase economic production and new innovation if we tax the rich more since that already have a lot of income that most people will never have. Sure the rich might complain but this will the economy drastically if this is done. We should also lower taxes on lower-income people in the United States. Since lower-income people saves less money than a high income earner. By lowering the tax rate to 1% they will save money, invested more wisely and potentially start a business career which will improve the economy with this change. Most of the low-income earners are living month to month with a long list of items they would love to have if they could afford them. Many low-income earners will immediately spend any raise or tax break they receive, which will boost the economy with the increase spending. There also needs to be budget cuts in the economy. The national debt is already very high so you can’t increase the spending and spending has to be reduced much. We should also cut college tuition. With these solutions the economy will not only be better but people will afford the things they need and spending of the people will increase with these
Having more money in pocket does not guarantee all consumers will spend more money. Conversely, it does not guarantee they will not spend money either, but there is no way to predict the number of spenders versus savers and how that will affect the economy. Yes, economists still attempt to create accurate models that try to gauge the impact of these cuts, but even with these modes, there is still no way to fully prepare for or predict what will happen. There have been countless articles and headlines regarding the tax cut that took effect at the beginning of this year (2018), but has anyone truly noticed a difference? Obviously not everyone will benefit right away and we may not be able to tell all of the impacts it has on the economy for a few months or even years, but there does not appear to be the immediate impact that many Americans were expecting. Historically, it has also taken long periods of time to see the impact of tax cut. As the James Stewart reported for the New York Times, “Even 10 years after the 1986 law, “it was very difficult to tease out the impact of tax reform on the economy,” he [Professor Alan Auerbach, Professor of Economics and Law at the University of California Berkley] said. “The best estimate is it didn’t have much effect.” (Stewart) Now, this does not mean that there was or cannot be any benefit from tax reform, far from it. In fact, there