Obama will travel Friday to Baltimore, where the local unemployment rate is nearly 11%, to unveil his tax-cut road map. The $5,000 per-worker tax credit he's calling for would be available to businesses of any size, and would be retroactive to the start of the year. Startups launched in 2010 would be eligible for half of the tax credit.All in all, this is a $33 BILLION dollar project Obama has, and as most of us know, the United States isn't rolling in money right now. What are your opinions on Obama's proposals? Do you think this is economically the best thing for America right now? If not, what do you suggest?Obama is also proposing a reimbursement of the Social Security taxes businesses pay on increases in their payrolls this year. Firms could earn the credit by raising wages or increasing the hours of their current workers, as well as by hiring new employees. The tax credit would be adjusted for inflation, and would not apply to wage increases above the current taxable maximum of $106,800.
Thursday, January 28, 2010
Obama's State of the Union Address
I'm not sure if many people hear heard Obama's State of the Union speech, however what he mainly focused on was America's economy. Obama plans to give businesses a $5,000 tax credit for each new employee they hire next year. This will thus hopefully create more jobs and hopefully pull the United States in the right direction. CNN states
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ReplyDeleteI got it working finally... So I know that this isn't authentic, but I don't understand how any of what Kiran mentioned can help, so just consider President Obama to be speaking for me about his policies:
ReplyDeletehttp://www.youtube.com/watch?v=wpLe47G_HGo&feature=player_embedded
I think the tax credit will help the unemployment rate go down and benefit firms and businesses as well. The biggest problem that America faces is getting its people back to work. Obama is striving to restore the American economy through this project. While I realize that we are taking money from another pot in order to do this, I think there must be some risk taken in whatever we choose to do. (A)
ReplyDeleteI think that one bad outcome of this situation will be that the employers of low-income, unskilled laborers will cut hours for existing workers and hire new workers to fill in for their cut hours in order to get tax credits, which would be bad because it would really widen the gap between firms and workers because workers as individuals would work less and firms would be getting tax credits for it...
ReplyDeleteObama stated that, "Because of the Recovery Act, there are about two million Americans working right now who would otherwise be unemployed." I think this demonstrates that using government money to create more job opportunities is not only a wise decision, but a necessary one. Employing two million people is great, but there are still millions more who are still looking for a job.
ReplyDeleteRight now we're in a lot of debt, so further spending isn't going to affect us too much. Encouraging businesses to hire more people could help the economy by increasing input (due to the larger labor force) and also giving more people an opportunity to earn, and therefore spend, money.
ReplyDeleteThe idea is deficit spending for the future, like FDR did. Obama inherited about eight trillion in debt because Bush added policies to the budget like medicare and affordable housing plans as well as his horrible and unconstitutional education reforms without paying for them. He also started two wars, one of which under false pretenses, and then said we needed to build infrastructure and promote democracy when the original mission was to find Osama bin Laden or eliminate the WMD's. He also allowed a massive trade deficit with china and other countries to accumulate while allowing american companies to outsource jobs under NAFTA and other free trade agreements under Clinton. Bush also cut taxes at a time when the economy was good under the housing bubble, further increasing the cost of his policies. Clinton had higher taxes, which allowed the government to have a surplus of money, which Bush then spent.
ReplyDeleteNick, a few things...
ReplyDelete1. FDR didn't deficit spend for the future in the same way that President Obama is at all; he created programs and agencies that employed people and increased the efficiency of the economy. The CCC secured natural resources, the TVA served as a major power source, and the Social Security act was signed in order to protect retired persons. However, President Obama can't do that because government is a huge bureaucracy now, so he makes incentives. Fully-operational, wage-paying government agencies, like the ones made by Roosevelt in the New Deal, are NOT the same thing as stimulus packages, tax credits, and other incentives.
2. The affordable housing plans were not passed during the years of the Bush Administration; in 1996 the Department of Housing and Urban Development (a Congress committee that consisted of predominantly Democratic members) set a goal for Fannie Mae and Freddie Mac to make 42% of their loans subprime. It was increased to 50% and then 52% during Bush's time in office, but at that time HUD was still predominantly Democratic, and thus they controlled the legislative agenda. Since most subprime loans are ARMs (the rates adjust after a period of a few years) Bush just happened to be in office when people's rates began to adjust and they became unable to pay off their mortgages. Also, the mortgage crisis laws were already in full-swing by the time Bush appointed Ben Bernanke as Fed chairman in 2006.
3. President Bush only started one war (Iraq). The War on Terror would have most likely never occurred had 9/11 never occurred, but terrorists made an attack on America and killed 3,000+ people, and so the United States responded (we have entered into a war in response to an attack at least twice before; WWI after the Lusitania was hit by German U-boats and WWII after Pearl Harbor, when your beloved FDR was Commander-in-Chief). By military terms, 9/11 was an "act of war" and, therefore, Bush did not start that war. Oh, and the goal wasn't to, plan and simply, find Osama bin Laden; it was to kill ALL of the terrorists who burn people alive, chop off their ears and tongues, bomb people, and publicly display their hatred of America and its citizens.
4. I don't know enough about NAFTA or US trade with China under President Bush, but if you want to talk about outsourcing consider this: President Obama made a cash for clunkers program to stimulate the AMERICAN economy, and yet people were able to trade in their clunkers for foreign cars? I've heard the concept that foreign car companies have plants in America, but if a program is supposed to stimulate the American economy then ALL of the money spent on it should stay within the United States' economy.
As for Medicare, education reforms, and trade issues I don't know enough to express an opinion. The War in Iraq is so riddled with classified information and possible ulterior motives that I can't even judge that. As for the amount of spending that the Bush Administration did, consider all of the unplanned events that had major costs during his presidency; 9/11, Katrina, and the War on Terrorism (I DO believe that that war was absolutely necessary for so many reasons that I can't list them all here).
Has a tax credit been done before? The tax credit sounds useful in theory, but in practice, it could be detrimental. I am not sure how shifting money around our nation is going to help employment. If there are tax breaks, doesn't it mean that the government will have less money? So what happens to the people counting on that money for income? What will the government use to rebuild roads or fund research? (That's just to name a couple.)
ReplyDeleteI am also confused about how it will be "adjusted for inflation." What does that mean? How does that work?
It seems to me that any money they spend on getting people to hire new employees will be made up over time in things like income tax. A
ReplyDeleteI would not necessarily say that this is the best economic decision for America right now, but I would say it is the best decision for the future. Although America has an incredible amount of debt, investing money in this tax credit project will greatly benefit the economy down the road. It creates an incentive for business's to hire new employees, and with that it will decrease unemployment and also pump money into the business's. In a few years, I believe we will see a great positive impact on the economy because of this project. (A)
ReplyDeleteI don't even know what to think these days. I kind of feel like at this point the US doesn't have much to lose so they might as well try whatever they can think of to turn this economy around. Sometimes it just feels totally hopeless, but who knows maybe this will bring the country a little closer to recovery.
ReplyDeleteRich's second comment is a very good point, that businesses will be going for number of workers rather than supplying them with full-time hours. On the other hand, something needs to be done about unemplyment. Personally, I would try to reverse the trend of converting human jobs into machinery because that has been one of the biggest reasons that the job market has shrunk. Agriculture is a major sector this is true of has a huge potential to employ people if industrial farms are broken up into smaller farms where human labor just makes more sense than machinery. Smaller farms are also more efficient and ecologically sustainable.
ReplyDeleteI feel that this will help our economy a great deal. Although taking money from others to give to less-fortunate is really not fair, it is possibly what is needed in order to get our country back on the right foot. Our employent rate is ridiculously high at this point, and sitting back and doing nothing is really not helping the situation. I applaud President Obama and the initiative take to help our economy.
ReplyDelete