Josh's Current Event (Economic Mistakes Obama Has Made)

CURRENT EVENT: Economic Mistakes Made by President Obama

In an article from US News in their opinion section, David Barker, a former Federal Reserve economist and author of Welcome to Free America, writes about how President Obama has made economic mistakes. He talks about how Obama “needs to be smarter about tax cuts, stimulus spending, and his rhetoric towards business.” Barker described how Obama was just inaugurated into office after the “worst financial panic since the Great Depression and the Stock Market Crash.” Despite how the economy is running today, smoothly and getting better, Barker finds that there are just a few mistakes that the Obama Administration is making.

Barker believes that the Administration is making “unnecessary tax cuts.” Barker states how the federal government needs an income source. He states how cutting government spending would be a better alternative than raising taxes. Barker also states how President Obama was supporting the tax reduction of employee payroll from 7.65 percent to 5.65 in one year. The reasoning for the tax cut was to “stimulate spending” so then the workers would get more money. The Administration planned on raising the taxes again the following year. Barker also stated how, although the tax cut would make it so workers got a bigger income, it then cost the government a rough estimate of $93 billion.

Another “mistake” that the Obama Administration has made, according to Barker, was inefficient stimulus spending. Barker stated how the Administration had created stimulus spending cost to about $170,000 and $400,000. The main goal of the stimulus spending was to increase jobs, but according to Barker, “a great deal of money appears to be wasted.” He states how only 7 percent of the spending was budgeted for infrastructure.

With relation to the Great Depression Era and President Franklin Delano Roosevelt, Barker talks about Robert Lucas who wrote about how FDR had an “anti-business rhetoric” where the government wouldn’t worry about “future taxes and regulations, and to cut back on investment plans.” Lucas then spoke of how Obama had the same “rhetoric” bust better than FDR. Obama gave businesses reason to worry about the economy. With the BP oil spill just recently and other drastic events that had happened that the government had to fund to help fix, the money had to go toward fixing these problems and Lucas stated how businesses shouldn’t be worrying about receiving their bonuses and making profits.

The main problem that David Barker talked about was how Obama has “no long term plan” for economics and to “reduce government debt.” Obama’s 2013 fiscal budget proposal predicted that federal dept would end up rising to close to 200 percent of Gross Domestic Product (GDP) or “The total value of goods produced and services provided in a country during one year (Google Dictionary). According to the Department of Treasury, the debt didn’t include the costs the government put into Social Security and Medicare, which debts grew larger. According to Barker, not only does the Obama Administration not have a long term plan, the senate hasn’t passed an annual budget since 2009.

Like after the crash of the Stock Market in 1929, businesses are becoming unwilling to invest because of tax increases and other possibilities to come in the future. However, if businesses knew what was to come in the near future, like tax cuts and government stimulus spending, they’d be more enthused to invest more.

http://www.usnews.com/opinion/articles/2012/04/09/five-economic-mistakes-obama-is-making
http://www.thedailybeast.com/newsweek/2012/04/08/low-approval-and-fragile-economy-spell-obama-reelection-trouble.html


QUESTION FOR THE BLOG: (Choose a scenario) If you were an affected business and had to coexist with the problems of Obama’s “plan,” how would you go about keeping the business alive? Would you have to cut employees or cut wages? If you ran a large business / chain, would you have to shut down businesses? How would you prepare for a crisis like this? OR, if you were Obama, what would your plan be? How would you handle tax cuts or increases, or stimulus spending to help the economy? With there being no “physical plan or budget” since 2009, how would you fix that? Is that why the economy is bad? How do you feel or what is your position on this issue? OR you could answer both.