The Great Recession and Policy Response - Research Paper Example

?The Great Recession and Policy Response Explain the cause of the crisis: America has always had one of the most stable, if not the most stable economy in the world. After the Great Depression that beset the country during World War II, it seemed like lessons were learned about the causes of the financial crunch and how to avoid a repeat of that decade's debacle. However, it seems that the lessons learned from that trying era of America;s history have been forgotten as the generations evolved and American came into an economic boom in the 80's. The progress of the American economy has always been on the uptrend which is why when the Financial Crisis of 2007 struck, Americans were caught unaware and without a safety net in sight. This paper serves to look into the causes of the Great Recession of 2007 as the history books call it and the policy response of President Barack Obama's administration to the crisis. More importantly, I will try to answer the question “Where does America go from here?” Evaluate the Obama administration's policies to respond to the crisis America is a country whose economy has always been based upon the trust factor. The trust that the other nations place upon the credibility of the name of the country and our ability to pay off our country's debt on time allowed the country function like a family that was living beyond its means. We were a country living off “massive foreign borrowing, excessively loose monetary policy, reckless lending practices, lax regulation, and other factors”. As a country, we were borrowing trillions of dollars from other nations every year. Such money inflow triggers rapid and uncontrollable economic growth due to the artificial spending boom that the country was experiencing. This resulted in a real estate boom that would eventually cause the economy to falter as mortgages began to go unpaid. The United States was suffering from a macroeconomic imbalance that had the rest of the world worrying about America, but the Americans were oblivious to what was happening right under their very noses. Economic experts knew that the needle that would burst the economic bubble was sure to come. It was just that nobody could predict when it would actually hit. When it did hit the economy in 2007, there was no place for anyone to hide financially. The U.S economy was officially in shambles and in bad need of rebuilding. What more should the administration do to continue to mend the economy, create jobs, ease credit, etc.? While the U.S was still fighting a war on 2 fronts and struggling to keep up with its debt payments, a new government took over the White House. Pres. Barack Obama rode the wings of change into the White House with the promise that he would end the Great Recession as soon as possible. Everyone applauded and chose to believe that he could do it. But now, 6 years later, the question still remains about what his government policy really was to end the problem and whether it was effective or not. The response of the new Obama administration was swift and clear. He encouraged the adoption of an “accomodative federal fiscal policy”. It is a policy that, even with the great recession having ended in 2010, has failed to help reinvigorate the U.S. economy to the point where economic growth can be said to have spurred to a steady basis. In fact, the growth of the U.S. economy at this point remains suspect because of the lack of effective economic and tax programs on the part of the Obama administration. (Bivens, Josh, Fieldhouse, Andrew , Shierholz Heidi “From Free Fall to Stagnation”). Rather, the Obama government seems to be locked in a battle of political wills with the Republican party as they hold the U.S. economy hostage, a pawn in their political game of survival, without any clear winner. The loser however, thanks to the Obama administration's less than well thought out plans, is definitely the American public. Let's face it, Washington is going to be in a constant state of political gridlock for a long time to come. But our economy does not have forever to wait for our politicians to get back to work and help it survive the beating that it took from the recession. Surely there is something the Obama people can do to help stir the economy without raising the ire of his political opponents. On the most basic level, the president and his team must be able to spur economic growth, no matter how small, by being able to provide jobs to those who badly need them. Matt McDonald of Hamilton Place Strategies has been quoted as saying that; The president can improve the jobs environment short term... At a basic level, there needs to be more certainty for job creators, and a view that the U.S. has a long-term plan to deal with the debt. But the economic strategy they are left with at this point is the same as their campaign strategy: hope. (qtd. in White) It is important to note that the American people cannot live on hope alone. We have one great orator of a president in the White House but the public needs more than a man who has a way with words at the moment. They need a leader who has some solid ideas as to how to turn the economy around and a sociopolitical situation that will help see those plans to reality. There are still other methods and opportunities that the government can try in order to help spur the economy. After all, unless our economy gets a good jumpstart, it will be difficult to get it to function the way it once did. There are some sectors that believe that: A natural hypothesis concerning the expected role of government is that sentiment in favor of government activism, particularly to help the less fortunate, will increase during economic recessions. An alternate hypothesis is that, even if this occurs, its impact will be outweighed by self-interested reactions of middle- and upper-class taxpayers, who see their own bank accounts shrinking and therefore are less willing than usual to support government redistribution to the needy. (Kenworthy, Lane & Owens Lindsay “Political Attitudes, Public Opinion, and the Great Recession) What has been the impact of the crisis on America people, how have they responded to government efforts to deal with the crisis? . From a behemoth economy that was the envy of the world, American people have been reduced to taking on whatever jobs they can find in the hopes of keeping a roof over their heads. The great travelers that are the American people suddenly have found themselves bound to their existing homes, extended vacations are now out of the question. The economic competition comes from the slower growth that the other Obama programs seem to have implemented. The slowdown of the American economy has caused a life altering effect upon those who are still relying on their future retirement plans. Either one of two things has happened to those people. Either they are unable to retire or those who did manage to retire had to go back to work if only to make ends meet for themselves and their immediate family. (Samuelson, Robert J. “The Great Recession's Aftermath”) It is not longer an uncommon sight to see senior citizens applying for part time jobs that are normally reserved for the students. America is now gripped in the clutches of the economic meltdown residue and nobody knows how to function in the best way at the moment. The American economy forced the people to become bitter and almost hopeless as each day under the Obama Administration passed. Everything that they were to expect from a recession was actually there. Poverty, inequality, opportunity, justice, and stark relief. What the people expect from the government is more leadership and less filibustering or paying attention to things that do not relate to the economic problem on hand. People want to see more “government regulation, government intervention in daily life, and other related items” (Kenworthy, Lane & Owens Lindsay “Political Attitudes, Public Opinion, and the Great Recession) Although the public have a pretty good idea of what they want to see the government do in order to help reverse our recession, they realize that the public cannot get the job done alone. Employment continues to rapidly fall on a daily basis even though the pace of the jobs have slowed don. Unfortunately, the public can only react to the data coming out of the government when it comes to the economy. That is why it is important for them to feel like there is an improvement in their lives somehow. Unfortunately, the hopeful ideas of the press seems to have a stronger effect upon those are directly affected by the great recession. They continue to hope for the government to find the cause of the economic bleeding in the U.S. But political bickering and posturing has prevented the Obama administration from successfully enacting most of their economic stimulus packages from the other countries that wish to help the United States. The Great Recession of the United States is said to have ended in the year 2010. However, the American public are hard pressed to feel any of the economic improvements that the government tauts as having helped to stimulate the economy. Instead, the regular American seems to continue to rake in more debt domestically, and foreign. The only way that the people will feel truly like their economic recovery has finally come will be if they can finally get back to their lifestyles at the same price. Works Cited Bivens, Josh, & Fieldhouse, Andrew, et.al. “From Free Fall to Stagnation” Economic Growth. Economic Policy Institute. 14 Feb. 2013. Web. 9 May 2013. Frieden, Jefferey. “Forseeable and Preventable”. The Opinion Pages. The New York Times. 30 Jan. 2013. Web. 6 May 2013. Kenworthy, Lane & Owens, Lindsay. “Political Attitudes, Public Opinion, and the Geat Recession”. The Russel Sage Foundation. The Stanford Center on Pverty and Equality. Oct. 2012. Web. Samuelson, Robert. “The Great Recession's Aftermath”. Business. Newsweek. 3 Jan, 2010. Web. 7 May 2013. White, Ben. “What Can Barack Obama Do to Fix the Economy? Not Much”. Congress. Politico.com. 6 Mar. 2011. Web. 8 May 2013. Read More