Government Spending Vs. Tax Cuts (Less Spending)
Lately, it is hard to walk into somebody on the street and not strike up a casual conversation about the economy. Everybody is worried about the economy. According to the latest Gallup poll over 70% of Americans trust President Obama's plan for economic recovery. However, do people really understand what the Government is trying to achieve? If we don't have an answer for that question then we definitely don't have an answer for the next question: is it fair to criticize the Government Spending approach to stimulate our economy then give more tax cuts to higher-income Americans?
There are two major indicators of the economy:
There are two ways to stimulate the economy and they both move the labor productivity curve and consumption curve in the same direction. Both ways work to a certain extent.
The two models are
1) Tax Cuts
2) Increase Spending
We had seen two tax cuts during President Bush's administration. A tax cut is NOT a freebie, and after we get a Tax Cut we will see the Tax Increase at some point in the future because Taxes are a very important source of revenue and it is the right of the Government to collect Tax. Tax cuts come with the cost and as I said earlier, you can only make an adjustment to a certain extent.
Now let’s talk about the Government. The ideal government tries to satisfy this formula:
G stands for Govt. Spending
T stands for Tax
R is Interest Rate
In simple terms we call that a balanced budget. It can be balanced by changing either variable (tax or govt. spending). I won’t tell you that you are wrong because you like more tax cuts because it has the same effect as increased government spending. I find it necessary to increase government spending because we are already $1.5 Trillion in deficit and the problem is not on the supply side. The problem is with the demand side. People right now do not have money to spend. Only the government can spend money but I totally agree that when the consumption curve starts moving with the labor productivity curve then government spending needs to be stopped. Until then, the government needs to spend, and the majority of economists agree with increasing government spending. People are worried about budget spending, but spending fluctuates depending on how and where the economy is and all this spending in the bill is not a concrete number that needs to be spent. If next year the economy recovers then the government doesn’t have to spend money just because it has written a 1000 page spending bill. My anger is not towards the last administration because they were republicans. My anger is towards their spending pattern and the disparity in spending. Let me give you an example of FY 2008 Spending breakdown by department:
That is where I have a problem: outrageous spending but nothing to grow a better economy. The problem is not with spending. The problem is spending without a plan. If we spend so much money how can we pay for it? What will happen when the war ends? What will it do to the unemployment rate when our troops come home? and When and How will the war end? In the name of protection, money was wasted left and right. It left our economy handicapped with the most devalued currency in a decade. The devaluation of American currency was another big factor contributing to the slowdown of our economy as we couldn't afford foreign-made goods--all of sudden those goods became more expensive. It hurt all the nations that depend on the United States of America for their products including China and the Indian software industry. That has raised the need for another global currency. People are saying President Obama is stealing from their kids and grandkids. What if there is no economy left for their kids if we don’t do anything today? Grand Theft was committed during the Bush Administration in the name of "No Child Left Behind." It is an amazing program without sufficient funding and I already gave you proof of spending above. The results were clear as glass: a record number of college drop outs. When India and China are producing a record number of doctors and engineers, we started producing a record number of HIGH SCHOOL DROP OUTS. I know we are better than this. If we are not better, then why would anybody come to America for higher education? Over 70% of students in higher education are foreign students. I had a hard time finding somebody who speaks clear English before I signed up for my classes in college. My math tutors couldn't even say any body's name. So she used to write names on the black board to take attendance. Without disrespect to any of those students why couldn't we have our American kids go in higher education and build better America? Why do we all have to fight for blue-collar jobs? Seriously, how many Joe the Plumbers are out there who are making more than $250 thousand?
When it comes to Energy, we all know that oil is a limited resource. It will run out with time. But the Sun will always shine, and the wind will always blow. So why is it so hard to pay attention to alternative sources of energy? Why is President Obama called the thief of our children's future when he is the one who is trying to invest in alternative sources of energy?
So if we don't invest in the Economy, Energy and Education today then WHEN?
President Obama's plan to recovery and prosperity offers the solution those core issues such as Economy, Energy and Education.
I am taking a commitment to educate myself, keeping an open mind and understanding first hand about the plan. I would't want any views from hate media specially FOX NEWS. It is time to move forward and get work done. America has great leader with clear vision and plan, and we an American people has done our job by electing right people on the right spot.
As of now the US debt stands at approximately $9.7 trillion, of which $4.0 trillion (41.3%) was created by the current Bush administration in less than 8 years. Let's make some extremely optimistic assumptions: 1.) Magically, the current FY budget comes into balance on 9/30/08, so the growth of the debt stops; 2.) The economy then starts growing at a steady 3.5% per year causing government revenue to grow at a similar rate; 3.) The U.S. government runs a steady surplus of 1% annually. If all of these assumptions were to come true (ridiculous I know), it would take 76 years to pay off the current U.S. debt.
Since we all know that the scenario outlined above is not realistic in any way, I would like to know the specifics of how Senator McCain plans to bring down the debt. It is patently obvious that the country cannot and will not "grow" its way out of this deep hole.
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Dear David Plouffe & David Axelrod:
The campaign is hurtling fast forward but controls are necessary to keep it grounded. Fiscal responsibility will soon become a focus, if not already. McCain is now pushing his less than $100-150 Billion plan versus your closer to $200 Billion plan. I understand that the plans are never quite finished, but this difference should be addressed, if not also modified.
The U.S. population is ready for change, but we are still looking for conservative government spending. Be prepared for disseminating clear concise arguments that demonstrate your plan's RESPONSIBLE spending. The Economy is suffering and George Bush's government spending programs have our U.S. Debt skyrocketing. It is clear that his administration, at the very least, shares strong fault in our present economy woes.
The Obama campaign must show how his plan, at its core, is fundamentally different and better. However, the more expensive Obama's plan is over McCain's plan will make this much more difficult to explain.
How close is Senator Obama to Warren Buffett or Alan Greenspan?
Americans deserve affordable health care. The statement that we need to make health care less expensive is right on target, but it is possible to put a finer point on the argument.
There are two proposals for Universal Health Care, one plan empahsises more insurance and the other plan ephasises more health care for our money. Can we get more Health Care for our money? Absolutely! Can we prove it? The proof is right in front of us.
An important distinction to be made about the phrase “lowering the cost of health care” is whether the candidate is talking about lowering the overall cost or shifting the cost by offering tax credits or subsidies. The Clinton Health plan talks about tax credits as a cornerstone of the argument for making Health Care affordable. Tax Credits may be a necessary stop gap measure, but it does not address the primary problem of skyrocketing total costs of Health Care in the United States.
The World Health Organization publishes health care statistics for countries all over the World. France, Germany, and Italy are doing better than us in many important categories; life expectancy, healthy life expectancy, infant mortality, children dying before the age of five years, deaths between the ages of 15 and 60 years of age. These countries have universal health care and more doctors per capita than we do, so better results are to be expected.
You might expect that Universal Health Care would cost these countries a lot of money, more than we can afford. It doesn't. They simply run their health care system with lower overhead and a better long term approach to health care.
