President-elect Barack Obama’s Economic Policies
As the global economic crisis worsens and as the United States begins to go into recession, United States President-elect Barack Obama’s is left with a Herculean task of resuscitating a devastated economy by his predecessor, outgoing President George W. Bush. Many experts believe that the current crisis is reminiscent of the Great Depression which also devastated economies across the globe. At present the situation is getting worse—the incomes of most Americans have fallen into new lows, the unemployment rate has significantly increased (6. 5 per cent), and the national budget has reached $10 trillion (Sussman n. . ).
In this regard, even at the start of his presidential campaign, President-elect Obama has outlined his economic plans and policies that would help the American economy recover from the crisis. These plans are already in motion even as he has yet to be officially inaugurated as President. According to Obama, the first step to economic recovery is to identify the underlying problems. One major problem of the economy of the United States is that the wages of the people remain stagnant even as prices goods and other necessities continue to rise.
College in-state tuition fees have increased by 35 per cent over the last five years while the cost of health care has increased four times greater than the amount of wages over the past six years (BarackObama. com). Another major problem is that the tax cuts that the Bush administration has provided benefits only the wealthy classes and not the middle and lower classes. As a result, those who earn $1 million receive 160 times greater income than the middle-class Americans (BarackObama. com).
In order to jumpstart the economic recovery, Obama and his Vice President-elect Joe Biden will ratify a windfall profits tax on the excess profits of oil companies that would immediately give American families a $1,000 energy rebate to help them pay their increasing bills. In addition, they would also provide a $50-billion dollar relief plan, half of which would be $25 billion State Growth Fund which would prevent local and state cuts in heating assistance, education, housing, and health care (BarackObama. com).
The other $25 billion would also stop cuts in bridge and road maintenance and help fund the repair of schools. This plan is projected to save the jobs of more or less 1 million Americans (BarackObama. com). Furthermore, Obama’s economic policy would also consist of injecting a $75 billion stimulus into the United States’ economy by pooling resources from tax cuts and spending mostly on the people who need aid the most (Obama. net). The plan would also include a reserve stimulus fund of $45 billion which would only be used in case the American economy continues to worsen in the next years.
However, over-all, Obama and Biden’s economic policies basically revolve around four steps: 1. Immediate Action to create good jobs in the country, 2. Immediate relief to families who are struggling, 3. A direct and immediate assistance to homeowners and not a bailout for mortgage lenders who are irresponsible, and 4. , An aggressive response to the economic crisis by using all the tools that they have (Change. gov). In the first step, a temporary tax credit will be provided to companies in order to add more jobs in the United States.
By doing so, for each additional full-time employee hired in 2009 and in 2010, companies and other businesses would then get a $3,000 refundable tax credit. The investing expense limit of companies would also be raised to $250,000 to provide more funds for them and help them generate more jobs. Furthermore, the plan also includes partnering with American automakers in order to help keep the industry’s jobs and ensure that they produce the most fuel efficient cars, which would help consumers save money (Change. gov).
On the other hand, the second step is mostly meant for Americans who have been hardest hit by the economic crisis. This policy includes a $500 tax cut for workers and a $1,000 cut for families. In addition, unemployment insurance benefits would also be extended and taxes on these said benefits would temporarily be suspended in order to help thousands of jobless Americans across the nation (Change. gov). Moreover, this step would also allow withdrawals of 15% or up to $10,000 from the people’s retirement accounts without any penalty.
Lastly, heating costs of homes would also be reduced through Obama’s $25 billion state fund in order to help families save more (Change. gov). The third step mainly focuses on the aiding the Americans whose homes have devaluated for the past years. In this policy, the Housing and Urban Development and the Secretary of Treasury are instructed to modify the mortgage rules and help coordinate mortgage restructuring (Change. gov).
Other plans included in this step are the enactment of a 90-day moratorium for good homeowners, the creation of a universal tax credit for homeowners, and also the removal of laws that would prevent mortgage restructuring (Change. gov). Finally, the fourth step mainly consists of a systemic response to solve the crisis which includes the participation of the crucial government offices such as the Federal Deposit Insurance Corporation, the Treasury, and the Federal Reserve.
The plan also includes addressing the credit crisis of small businesses, states, and localities while also extending the purchase of assets which would unfreeze sectors that are critical (Change. gov). In short, it can be said that Obama’s economic policies would first focus mainly on helping the United States economy recover from the crisis as this is the most pressing issue that the country is facing at the moment. Although his clear-cut and solid economic policies are not yet in place at present, they will eventually being to take form and shape in the coming years of his presidency.