How effective are stimulus packages

How effective are stimulus packages

How Effective are Stimulus Packages

Among a time of a worldwide economic crisis, stimulus packages for citizens and bailouts for many banks and vehicle manufacturers, the deficit continues to grow. Government spending continues to rise while the United States deficit pushes past eleven trillion dollars. The stimulus packages and bailouts are very sensitive subjects that have literally divided the nation into groups. Tax cuts have shown who exactly is considered the low, middle, and upper classes in society. Countries are usually left to manage the recovery largely on their own. The United States will need global cooperation. The recovery will require major shifts in international trade imbalances, technologies, and public budgets. These larger scale changes will have to be coordinated tightly among the major economies. Citizens of the United States are wondering how such a great country came about such a large deficit. The majority of the budget deficit can be traced back to the Bush administration.

Economic spending must be planned very well and also, followed precisely. Jeffrey D. Sachs, a professor at Columbia College, explains, the reckless spending of the Bush administration which caused a great deal of the budget deficit was George W. Bush's idea of economic policy which was to “cut taxes three times while boosting spending on the war…[which resulted in] a massive budget deficit,” (p. 38). Spending, especially in the modern recession citizens find themselves in, has to be wise and for a reasonable reason. First, a strategy needs to be put in place for getting the government's finances in order. To restore government finances, Obama will need to propose a longer term fiscal plan. The United States cannot continue to borrow money from the rest of the world as it has for the past eight years during the Bush administration. Irresponsible spending is hurting the global economic situation, especially retirement accounts and home owners in the United States.

With so many Americans being affected by the current economic situation in the United States, everyone is trying to come up with an idea on how to fix the problem. The problems with the economy cannot be fixed with one simple swipe of a wand. The United States government and officials have to be able to study from the past in order to benefit in the future. Learning from the mistakes the United States has made in past times, such as the great depression, will be crucial to learning what will help fix today's hurting economy. Also, the United States needs to stop depending on short term fixes such as the stimulus package that former President George W. Bush created. Fixes with long term effects are what need to be focused on and have more attention drawn to. The United States cannot continue to borrow money from other countries like it has during the past eight years, because America is not the only factor in this economic equation. This is a worldwide economic crisis and almost every economy across the world is in a bad condition. Many people all over the globe are being affected during this recession and the citizens of the United States would like to know who is responsible and exactly how the greatest country in the world is in such a dilemma. Even some of the individuals that helped build the economy up are being greatly affected by the recent recession.

Homeowners are discovering that trying to pay mortgages during such a harsh recession in not a simple task. While the rate of foreclosures rises, many homes are being left on the market. Although this is buyers market, money is in short supply so the demand for houses is low. In late 2008, President Bush signed into law a “massive bailout/rescue plan passed by the U.S. congress…which allows the government to buy up to $700 billion in assets tied to shaky mortgages” (Anonymous, 2008, p. 4). By passing this law, the idea is that it will clear banks' balance sheets of these awful loans and will unfreeze credit markets and persuade banks to begin lending money to consumers again. Whether or not this scheme will work, it will change the way banks handle their loans.

One of the most negative aspects of the recession is the hit that many retirement accounts have seen. Patrick Tucker, Senior Editor for The Futurist, explains that in a recent poll, “60% of U.S. respondents said they believed an imminent economic depression was ‘likely' [while retirement accounts] lost more than $2 trillion in value over the past year” (p. 7). While retirement accounts continue to lose their value, many workers are left wondering what is going to happen to them. Retirees from General Motors, Ford, and Chrysler are beginning to lose their health coverage leaving them to pay for their prescription drugs and doctors bills. Nick Bunkley, writer for the New York Times tells us that, “for about 100,000 of [General Motors'] white-collar retirees, time is about to run out for G.M.'s gold-plated medical benefits” ( 2). Causing a great deal of grief on these retirees from the Big 3, is a combination of the possible chance of losing their retirement fund that they worked the majority of their lives for, and losing their health care which will cause them to spend much of their own money on hospital bills, prescription drugs, etc. which they may be losing if the Big 3 do not get the bailout package they are fighting so hard for.

In a recession unlike any other seen since the Great Depression, the word bailout now seems to be a household word. Whether it is used to ascend a bank out of trouble, or to keep big businesses from going bankrupt which would then cause a great deal of trouble to the rest of the economy. Government bailouts being handed out are used by the receiving companies to pull their companies out of finance troubles with hopes of brighter days. Although some believe the bailouts are needed to pull the entire government out of the recession and not just the companies, but many believe that the spending of the taxpayers' money by these companies is not only foolish spending, but also not well managed. Numerous companies fitting to the description above are being subpoenaed to court to testify on why they believe the government should give them the bailout money they requested. Following a firing of the Chief Executive Officer of General Motors, president Obama has demanded better management of the money being spent by the companies. United States taxpayers are left flustered over the amount of money in the bailout programs as well as the stimulus packages.

Following the stimulus package in 2008 by the Bush administration, the American Recovery and Reinvestment Act of 2009 was placed in effect February 17th, 2009 by the Obama administration. The act consisted of many outrageous earmarks as well as brilliant spending for the United States. The stimulus put in effect by the Bush administration was meant to improve the economic situation by sending tax rebate checks to many Americans and providing tax breaks for struggling businesses, the result was anything but. Causing an even greater decline in the United States budget deficit, President Obama chose a different approach to stimulating the economy. Although much larger than the previous stimulus package and does not consist of tax rebate checks, President Obama's will directly affect the nation over time. Consisting of federal tax cuts and domestic spending in education, health care, energy, and the nation's infrastructure, the act is intended to provide a stimulus to the United States economy by creating over 100,000 jobs in the wake of an economic downturn. How well is the taxpayers' money being spent in a time of a worldwide economic crisis? The United States is obliviously in need of some sort of stimulus to the economy, but are the stimulus packages being handled in an orderly fashion or is the money being spent increasing the deficit on the United States budget?

The downside of stimulus packages

When the world is in a state of economic emergency, it is up to every individual nation to create a plan in which to pull themselves out of their economic problems. In the United States, the term most used with our approach to rising out of the economic crisis of the recession is stimulus packages to stimulate to economy. Stimulus packages created by the Bush administration and the Obama administration respectfully are different but both aimed at fixing the economy in a time of great hurt. Although both packages by the two administrations were completely different, both can be argued as a good idea or a not so great idea. The more recent of the two, being the American Recovery and Reinvestment Act, is arguably the biggest stimulus package put in place in the United States.

The current state of recession the United States finds itself in is unlike any seen since the great depression. This means that the efforts to raise the country out of this economic crisis have to be major as well as long term. The country has never seen a economic problem such as this explains Martin Cantor, Director of the Long Island Economic and Social Policy Institute at Dowling College, “recession [which is] different from past recessions and has a federal stimulus package unlike any since the Great Depression” (1). Having a recession unlike any other just does not sit well with many Americans, mentally or physically. Moral is down and many are left wondering what the next step for the United States is exactly. The recession has caused many small business owners to close down their businesses due to a bad supply and demand in America. Some aspects of President Obama's stimulus package may impact the small businessman in a way that will not be superior to them. According to Harry Austin, Editor for the Chattanooga Times/Free Press newspaper, that if the government “restored higher income [as well as] investment tax rates, this will hurt the small businessmen” (7). Hurting the small businessmen is causing them to lose their houses which leave their mortgages unpaid. Also included in President Obama's stimulus package as well as Bush's law to have the government buy up the mortgages to empty houses to free up bank sheets to encourage banks to continue to lend money to consumers, is a plan to have taxpayers basically pay the mortgage on the houses.

During the time congress was still deciding on the bill proposed by President Obama, citizens across the United States protested the federal stimulus package and mortgage bailout. In one of the biggest demonstrations of protest occurred in Fayetteville, North Carolina. Agreeing with Harry Austin, critics at the demonstration argued that the “package was festooned with wasteful spending and new programs that will dramatically raise government spending” (10). Signs baring such things as “Honk if I'm paying your mortgage” (2) and “Stop mortgaging our children's future” (8) filled the streets. Taxpayers are fed up with paying someone else's mortgage on a house that they should have never made in the first place. While the amount of foreclosures rises and the amount of unemployed continues to rise, more mortgages continue to get paid by those that did not own the house. President Obama's mortgage package has outraged many across the United States and the numerous demonstrations protesting the passing of the bill are the proof. Later generations are going to have to pay the price for the mistakes the government makes today.

Although the children are the future, today's youth is going to be faced with a great deal of debt when they become adults. Placing the burden of paying back a major debt upon the futures youth is an absurd idea. Most of the stimulus inserted into the United States seems only to be short-term fixes that will affect the future generations of Americans. The government needs to begin thinking in terms of the big picture, by installing long term fixes into the community that will not leave today's debt on the later generations. The burden of fixing the economy should be that of the generations that have caused it, not the generation that has barely been around.

Many older United States citizens will not benefit from the earmarks of President Obama's stimulus package. Due to the time for building the earmarks mentioned in the package, the future citizens will be the majority benefiting from them. A few of the earmarks in President Obama's stimulus package include $1.2 billion for youth activities, including youth summer jobs, as well as $10 million for the inspection of canals in urban areas. One of the most unpopular earmarks is the $110 million given to Farm Service Agency to upgrade their computer systems. Although these earmarks have good intentions, the great deal of spending is just going to further the United States budget deficit, which is already pushing past the billions. An extra $600 million will be used to by hybrid cars for federal employees, who are already enjoying an obese income and could easily purchase their own vehicle without the help of the American Recovery and Reinvestment act of 2009. The house republicans are blaming these earmarks for the majority of the wasteful spending in the stimulus package.

Once again, the intentions of the earmarks are to be good, but are they really necessary in a time in which the economy is like this. The economy is in a recession unlike any seen since the great depression and the government is not spending money wisely. An idea would be to fix the major effects that need to be set with long term fixes, and when the economy pulls out of the recession, come back and put money into the economy to fix what is left, such as after school programs, infrastructure, and other subjects which have the attention of the earmarks.

Decisions made by the Bush administration ignored the ominous signs of economic weakness, casting aside an opportunity to address it. Although similarities exist between the recent economic crisis and the economic crisis that led to the great depression, such as a broad-based unemployment and decreasing gross domestic product, the foundation of this recession is based upon a global collapse of financial markets, consumers, and manufacturing. Adding on top of that, the housing and foreclosure crisis of the United States and there is a deep structural economic weaknesses, the correction of which will take time, longer than any previous recession, since this is unlike any recession seen since that of the one before the great depression. Bitter middle to upper class taxpayer will receive little benefit from President Obama's stimulus package; taxpayers will be wondering why they need to bailout greedy investors who are pleading to keep their house they should have never bought, and bank executives who should be looking for work. Americans are wondering if anyone is safe is the midst of this global economic crisis.

The upside of stimulus packages

In recent times, many are left asking themselves whether or not stimulus packages are what the economy needs. If they are not what the economy needs, they may just be digging the economy an even deeper hole to fall into. Although many speculations surrounding the most recent stimulus package are mixed opinions whether or not it is what the United States needs, it does have a very in depth checklist to fix many financially unstable aspects of the economy. Whether the issue is the decline in education jobs across the nation or the increase in tax cuts to the extremely wealthy, almost every issue within the economy is being affected by the American Recovery and Reinvestment Act of 2009. Studying the past economic issues and how the stimulus packages to fix them affected the economy was a part of the bill writing process that needed to be done in order to build and structure a stimulus package that will not only have short term affects, but also affects for the long term.

In 2008 while the White House and congressional negotiators were nearing agreement on a fiscal stimulus package, could have learned much from the mistakes of the past. At times, the policymakers took too much time to recognize the problem at hand or too long to act and this caused their actions to not be properly targeted. This caused much of the money to not be spent. Sometimes the policies were permanent and the long term damage in terms of increased deficits and debt outweighed the short term benefit. Richard Wolf, writer for USA Today stated, that the tax cuts and, “increased spending enacted in hopes of jump-starting a sluggish economy haven't always worked,” (2). If anything good has come out of this economic crisis is the United States ability to use its hindsight to see how they should attempt to fix the crisis from its past mistakes. Stimulus bills were enacted during the past five of the past seven recessions and, although efforts made in the 1960's and 1970's were relatively ineffective, Wolf states, “policymakers have gotten better at economic stimulus as the decades have passes [in order] to stave off recession,” (5). Although studying the past economic crises and how the efforts to resolve them are needed, to fix the crisis within a select time is needed to keep the economy from sliding into a recession. The shorter time used to address the economic situation and to create a bill to fix it will greatly help the economy from entering the recession. Although the United States can learn from its past mistakes, the government should be willing to try new things such as, letting each individual state choose whether or not they want to accept the money offered by the stimulus package.

In order for each individual state to make their economy better by accepting the money offered by the recent stimulus package, they must track the money and ensure that funds are being used as intended by the government. Paul Osmundson, editor for The Herald in Rock Hill, South Carolina, stated, that the “infusion of cash to the states [if managed correctly] can create jobs, improve the state's infrastructure, stave off cuts in education [and] prevent layoffs,” (4). This stimulus can give states the valuable breathing room until the recession bottoms out and the economy gradually improves. In the terms of improved infrastructure, such as roads, bridges, and other improvements such as repairs to school, the states will be much better off than they were prior to the recession. “Some critics, including the governor, insist that the infusion of money to South Carolina and other states will fail to prime the pump for new economic activity,” (9). Although many states population do not want to bear the burden of paying back the money the states government took, the sensible choice would be to accept the money and use it to benefit the residents of the state. Even though individual states may see a faster rate at which the economy seems to get better, President Obama warns the United States about the hard work ahead as the nation grapples with the hurting economy.

In his first address to a joint session of Congress, President Barack Obama stressed optimism, seeking to reassure and inspire a stunned and jittery public. Briefly into the term of President Obama, the United States has already seen the passage of a $787 billion stimulus package, the unveiling of a $75 billion plan to fight housing foreclosures, and efforts to rescue ailing banks. Thomas Fitzgerald, writer for Philadelphia Inquirer, stated that President Obama has set down a marker on “deficit reduction, pledging that, despite the new spending in the stimulus and various bailout programs, his administration would halve the federal budget deficit by the end of his first term,” (5). This will be achieved by shutting down the war in Iraq and allowing the Bush administrations tax cuts for the wealthiest American's to expire. President Obama laid out a very ambitious agenda, rather than a laundry list of things to accomplish. “For most of his first month in the White House, Obama's agenda was dominated by the push for the stimulus legislation [which, in turn] required him to talk over and over about the depth of the crisis and the urgency of the moment,” (13). The economic situation could have easily turned from a crisis to a catastrophe if the stimulus package failed to pass. President Obama has talked about trying to bridge the gap between the democratic and republican parties in Washington D.C., but following the passage of the stimulus bill, which received zero republican votes showed the limits of his goal. Ending the tax cuts to America's wealthiest citizens has the possibility to increase funds generated by the government that may have not been there during the Bush administration.

Bailouts for big businesses in the United States have tax payers wondering who is going to be left paying for the negative decisions made by the businesses. In late 2008, the Bush administration had agreed to create a plan which would help prevent foreclosures on mortgages it acquired as a part of the bailout, which was a key demand of the Democrats. An anonymous writer for CBS 5 in southern California stated, “[under the] Democrat's plan, companies who participate in the bailout must agree to limit the executive pay, bonuses, and severance packages,” (5). This is what many American's have been wanting all along. After the chief executive officer of Goldman Sachs made over $70 million in 2007, and the head of Merrill Lynch made $24 million, taxpayers are wondering why they need to bail them out. The government would have to come up a systematic approach for preventing foreclosure on mortgages it would acquire as a part of the bailout package. Although the economic crisis is affecting everyone, taxpayers in the lower income region and almost every aspect of education are being hit the hardest.

Schools that are finding themselves short on funds could see an extraordinary $100 billion combination of federal aid under the massive economic stimulus package created by the House Democrats. More than $100 billion in federal spending for education in the stimulus bill would be nearly double the entire $60 billion budget for the United States Department of Education in the 2008 fiscal year, which is a new era for education funding. Alyson Klein, writer for edweek.org, acknowledged, “…[that the measures taken in the stimulus bill] outline specific aid for school construction, support for early childhood education, and substantial spending boosts for major Education Department programs,” (5) which include education for disadvantaged students and aid for special education. This makes a very strong statement that providing adequate funding for education and modernizing schools is a key part of the solution to this worldwide economic crisis. The stimulus bill will aid education in many ways from teacher training, more funds for spending on the Teacher Incentive Fund, which would provide school districts with extra funds to begin a pay-for-performance program.

Conclusion on Stimulus

Among a time of a worldwide economic crisis, stimulus packages for citizens and bailouts for many banks and vehicle manufacturers, the deficit continues to grow. Government spending continues to rise while the United States deficit pushes past eleven trillion dollars. The stimulus packages and bailouts are very sensitive subjects that have literally divided the nation into groups. These groups, or classes to say, consist of such groups like lower to upper classes, the rich and the poor, the small business man and big business man, and groups such as them. These classes seem to be something that has been considered very un-American, and should not be something that is going on in today's world, let alone should have ever been happening. But there are many issues that President Obama is going to need to face in order to rescue the hurting economy in the United States. He will need to be prepared for the long road ahead that even he had warned the United States about in his first public address to America. Issues left over from the past eight years in America are among the top priorities to be addressed.

President Obama will need to propose a longer term fiscal plan. The United States cannot continue to borrow money from the rest of the world as it has for the past eight years during the Bush administration. Irresponsible spending is hurting the global economic situation, especially retirement accounts and home owners in the United States. While the rate of foreclosures rises, many homes are being left on the market. Although this is buyers market, money is in short supply so the demand for houses is low. In a recession unlike any other seen since the Great Depression, the word bailout now seems to be a household word. Whether it is used to ascend a bank out of trouble, or to keep big businesses from going bankrupt which would then cause a great deal of trouble to the rest of the economy. Government bailouts being handed out are used by the receiving companies to pull their companies out of finance troubles with hopes of brighter days.

Following the stimulus package in 2008 by the Bush administration, the American Recovery and Reinvestment Act of 2009 was placed in effect February 17th, 2009 by the Obama administration. The act consisted of many outrageous earmarks as well as brilliant spending for the United States. The stimulus put in effect by the Bush administration was meant to improve the economic situation by sending tax rebate checks to many Americans and providing tax breaks for struggling businesses, the result was anything but. Causing an even greater decline in the United States budget deficit, President Obama chose a different approach to stimulating the economy.

When the world is in a state of economic emergency, it is up to every individual nation to create a plan in which to pull themselves out of their economic problems. In the United States, the term most used with our approach to rising out of the economic crisis of the recession is stimulus packages to stimulate to economy. Stimulus packages created by the Bush administration and the Obama administration respectfully are different but both aimed at fixing the economy in a time of great hurt. The current state of recession the United States finds itself in is unlike any seen since the great depression. This means that the efforts to raise the country out of this economic crisis have to be major as well as long term.

Although the children are the future, today's youth is going to be faced with a great deal of debt when they become adults. Most of the stimulus inserted into the United States seems only to be short-term fixes that will affect the future generations of Americans. The government needs to begin thinking in terms of the big picture, by installing long term fixes into the community that will not leave today's debt on the later generations. The burden of fixing the economy should be that of the generations that have caused it, not the generation that has barely been around. Decisions made by the Bush administration ignored the ominous signs of economic weakness, casting aside an opportunity to address it. Although similarities exist between the recent economic crisis and the economic crisis that led to the great depression, such as a broad-based unemployment and decreasing gross domestic product, the foundation of this recession is based upon a global collapse of financial markets, consumers, and manufacturing. Adding on top of that the housing and foreclosure crisis of the United States and there is a deep structural economic weaknesses, the correction of which will take time, longer than any previous recession. Americans are wondering if anyone is safe is the midst of this global economic crisis.

In recent times, many are left asking themselves whether or not stimulus packages are what the economy needs. If they are not what the economy needs, they may just be digging the economy an even deeper hole to fall into. Although many speculations surrounding the most recent stimulus package are mixed opinions whether or not it is what the United States needs, it does have a very in depth checklist to fix many financially unstable aspects of the economy. Although studying the past economic crises and how the efforts to resolve them are needed, to fix the crisis within a select time is needed to keep the economy from sliding into a recession. The shorter time used to address the economic situation and to create a bill to fix it will greatly help the economy from entering the recession. Although the United States can learn from its past mistakes, the government should be willing to try new things such as, letting each individual state choose whether or not they want to accept the money offered by the stimulus package.

In his first address to a joint session of Congress, President Barack Obama stressed optimism, seeking to reassure and inspire a stunned and jittery public. Briefly into the term of President Obama, the United States has already seen the passage of a $787 billion stimulus package, the unveiling of a $75 billion plan to fight housing foreclosures, and efforts to rescue ailing banks. Bailouts for big businesses in the United States have tax payers wondering who is going to be left paying for the negative decisions made by the businesses. In late 2008, the Bush administration had agreed to create a plan which would help prevent foreclosures on mortgages it acquired as a part of the bailout, which was a key demand of the Democrats.

The global economic crisis is such a terrible state right now, that many of the citizens of the United States do not know whether or not the stimulus packages are the way to make the economy better. Although the ideas behind the two resent stimulus packages have good ideas, the future generations of Americans are those who are going to be suffering. The future generations of America are going to be suffering, paying great amounts of taxes to the government to try and even out a debt put forward by the reckless spending the past eight years by the United States government. Only time will tell if whether or not the stimulus packages will help fix the economy. The majority of the budget deficit can be traced back to the Bush administration. President Obama has put forward a strict list of guidelines which, over time, should help fix the economic situation in America. From the time the United States seen a recession coming, action should have been immediately taken. The quicker the situation is addressed, the greater amount of damage can be averted in the future. Americans are wondering if anyone is safe is the midst of this global economic crisis. The United States is in need of stimulus to the economy, but the spending in these stimulus packages are causing uproar of whether or not the money is being spent wisely by the government.

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