A Commentary on the Facts of Obama’s Plan for the Economy
President-elect Barack Obama only has five weeks until he is inaugurated into office, and the change he has promised needs to start taking effect. His first move is the economy, according to the President-elect website, Change.gov.
In recent months, the United States has faced a serious and dangerous economic crisis. The only credible thing that it can be compared to is the Great Depression. Retirement savings accounts have lost $2 trillion, and markets have fallen 40% in less than a year. The housing market has decreased dramatically; homeowners who cannot make their mortgage payments are faced with possible foreclosures, while the value of their house excessively depreciates.
Obama, along with Vice President-elect Joe Biden, has created a four step plan to revitalize the economy. First, they will immediately act on creating goods jobs. Second, they will relieve struggling families financially. Third, they will directly and immediately provide assistance for homeowners, but not through a bailout. And finally fourth, they will rapidly and aggressively respond to the financial crisis using every tools and resource available.
The question is: how does Obama expect to do this when we do not have the resources that we need, nor the money that it will take to provide this relief?
They want to immediately take action to create good jobs in the United States. This year alone, the economy has lost over 760,000 jobs, and it’s estimated that by next year, the unemployment rate will exceed eight percent. How will they create jobs that cannot be paid for? How can they work to create more businesses to provide these jobs when we’re struggling to maintain the ones we already have? Won’t this just put the economy in an even worse situation?
Yes, we need to jump-start job creation but the United States does not have the money it takes to do so. They want to provide a temporary tax credit to companies to add jobs, but the big companies and their taxes are what are keeps our economy from not going completely under. It seems as if this plan will make the economy worse.
Obama and Biden want to save one million jobs through investments to rebuilt the countries roads, bridges, and repair the schools. $25 billion would immediately be available in a Job and Growth Fund, to ensure that schools can meet their energy costs and undertake repairs in the fall. Energy efficiency would be implemented to help in the future.
Another $50 million would be invested to create more eco-friendly vehicle. This ensures a healthier lifestyle, as well as helps the auto-companies out of the crisis they’re in.
Also, there would be immediate relief for struggling families. This involves a tax cut for 95 percent of workers and their families, including seniors. Unemployment insurance benefits and temporarily suspends taxes on unemployment. Also, extending unemployment checks, an additional 13 weeks will be added because of the recent increase in unemployment.
This could be beneficial, but at the same time a downfall for the United States. It could make some people not have motivation to go and get a job because they know that they will be receiving a check from the government for an additional 13 weeks. Also, an additional 13 weeks of unemployment can negatively rack up on the governmental expenses.
The tax cuts for 95 percent of workers would be helpful for the struggling families, and is definitely a great idea to help the unemployed and the people struggling to keep up with bills and the economy.
There will also be direct and immediate assistance for homeowners, but not through a bailout plan. Over the past two years, Americans have lost 20 percent of the value of their homes and many who want to take out mortgages cannot take them out, and many who have mortgages cannot pay them back.
Obama and Biden also want to create a universal mortgage tax credit for homeowners, which would be a 10 percent refundable tax credit on the mortgage interest paid by American families who do not itemize their taxes. This will help out 10 million mortgage paying homeowners.
They also want to use the tools and resources we have to respond and act on the financial crisis. These tools include small businesses, and state and local governments including the knowledge that we attain on the financial market around the world. Also, the Treasury should use its authority to help unfreeze markets for individual mortgages, student loans, car loans, loans for multi-family dwellings, and credit card loans.
Trade will also be implemented with foreign nations to try to strengthen the American economy. This would also help our relationships with other countries, and could possibly bring an end to the War on Terror.
Though all of these investments seem great to the naked eye, it is apparent that all of this cannot be done right away, and may not be done in Obama’s first four years as President. Obama’s promises to the country would be more believable if they weren’t so vast.
Obama will be a great president, once he realized that what he is promising right now is him biting off more than he can chew. He needs to focus on two or three different ways to improve the economy, and these focuses needs to be financially smart and ready to take action right away.