US Economic Problems and Strategies to Solve Them - Research Paper Example

U.S economic problems: The recent recession that hit the entire world was the most severe in nearly a decade, the first of its kind after the times of Great depression in 1920s- 1930s. It engulfed every industry, every capital, and every sector. United Sates of America was no exception in this regard, rather being the front line trade partner in many parts of the world, it was hit badly as a result the entire world felt the impact. It is rightly being said that when America sneezes the rest of the world catches a cold. As a result of the entire slump, the European Market is still in shambles and struggling to come to terms with the consequences and aftermath of the economic recession. A positive trend was seen in recent times after President Barack Obama took over, and now with the midterm elections on head new hopes are being raised by the people since both the main candidates Barack Obama and Mitt Romney give a new hope to the people of the land and ensure policies that are both economy and people friendly, a serious workout strategy must be defined. President Obama did his utmost to bail out the most vital organs of the economic sector of the country by granting them artificial relive in one way or other, however it cannot go on like this for ever. The strategy should be such that it can adjust and accommodate the trade deficits, the job opportunities, rising inflation, at the same time maintaining the military expenditure and other necessary considerations. According to some analysts, other core issues have been pushed aside due to the economic crunch. Factors like internal safety, health care consideration, medical and safety, terrorism don’t hold as much attention as the financial crunch has in recent debates, and the prime reason to it is the fact that an individual American is directly affected by the financial health of the government and the subsequent decisions taken in that regard. All the probable candidates introduced by respective parties hold strength and value in financial discussions, which leads to the idea that financial discussions are of immense value in this year’s election campaign and all in an indirect manner speak of the financial crisis United States of America is faced with. The annual debt is at a staggering high rate of over 70 percent of the gross domestic product (G.D.P). The situation is further worsened by the fact that nearly 20 percent of the entire G.D.P is revolving around the G.D.P. The sum of all taxes rises up to the level highest recorded since the middle of 20th century around 1950s. At that time the rate of taxes recorded was nearly 25 percent and in present day it stands at 30 plus percent. Federal budget and deficit between 2004 and 2011 2004: 412.7 billion dollars 2005: 319 billion dollars 2006: 248.2 billion dollars 2007: 162 billion dollars 2008: 10 trillion dollars 2009: 12 trillion dollars 2010: 13 trillion dollars 2011: 15 trillion dollars 2012: 16 trillion dollars estm. . (NDAC) The deficit is on ever high steep every year and it is due to the forceful spending process undertaken by the government just to bail out and keep the industries running. According to the survey conducted by Gallup in recent months in quest of knowing the people’s concerns about various sectors and their impact on their life and earnings, the highest percentage of responses recorded were that in economic state. People are more worried about the dooming economy more than any other factor. Other factors that ranked next to them were of the consequence of the ill state of economy. This came in form of the rising prices of crude oil, the overall unemployment which again is a gift of economic condition (Saad). The factor of terrorism that dominated the Presidential elections in past and also the concerns of people have gone down by a large percentage in the entire ranking of concerns published by Gallup. It ranges nearly equal to the concerns regarding the illegal immigrations and other factors which are of no or little direct impact on the common citizens. Reference: (NDAC) Need of the hour: Increase revenues: The first and foremost thing that needs to be done is that of generating the revenues and enabling the organizations and industries to stand on their feet and come out of the bail state. Revenue generation would enable job creation and inflation reduction. Reducing the governmental spending: A strong slash should be imposed on the major governmental spending that is of little value to the common man and the economy. Policies should be devised for this purpose to manifest proper spending. This can also help overcoming the ever mounting deficit level. A trade off has to be made and bold and critical decisions would need to be made since everything can’t be saved and an equation should be established that ensures best of the both worlds scenario. Comparison of policies of Mitt Romney and Barack Obama: An Analysis of the debates Mitt Romney the Republican candidate and President Barack Obama the Democrat candidate are contesting for the presidential seat and have mixed opinions over some and common opinion over other issues ranging from domestic to international and regional issues. For example both have a different view when it comes to the views on abortion; one speaks in its favor (Obama) while the other is against the entire concept. Regarding the Iraq and Afghanistan policy, both seem to be on the same page in this regard and believe that the secret lies in timely withdrawl. On the point of immigrants, both have relatively constant views in this regard, while one supported the idea of protection for the young ones until middle of this year, his stance has changed and the record exodus of immigrants has been seen in the tenure of incumbent. Romney on other hand also believes in strict rules towards the illegal immigrants and discouraging of such practices. Stance on Iran and other foreign conflicts: Barack Obama was slightly reluctant to the use of power outside on urgent basis especially in the case of Iran. Considering the toll and impact it castes on the internal situation and the economy Obama believes in indirect means to press Iran, notably the sanctions. Quoting the sanctions impact, he re iterated that use of pressure and diplomacy is the best tool for now unless forced to act otherwise. The use of Libya like measure was ruled out for Syrian ongoing conflict. Romney on other hand believed that military offensive against Iran cannot be ruled out. Both were of the opinion for finding means to escape from the debt at earliest. With a trillion dollar deficit line intact focus was laid on how to reduce that, the possible solutions suggested were that of reducing the expenditures and increasing trade. Romney on the other hand reiterated that bail outs are not the ultimate solution and are mere artificial ventilators. Need is to make long term strategies and equip the organizations with self sufficient means of operation and survival. Economic view: Romney stressed for reduction of taxes on immediate basis. This could be achieved through expanding the domain of trade both locally and internationally. Romney advocated the idea of more tight rules over the financial scams and potential loop holes that might exist in the system and enterprises environment. Barack Obama on the other hand has invested over 800 billion dollars since his takeover as the president in an effort to present any stimulus to the entire scenario. On the factor of the energy and resources both are of the opinion of exploring more means of energy resources and have supported the idea of more investments in this field which could help controlling the rates of oil all around. Barack Obama’s tenure has shown improved states with regard to the standards of fuel economy and generation (Sacbee.com). - Study the lesson of Britain and Japan The financial crisis that the U.S.A is currently undergoing, Japan had a similar share of crisis in the 90s. However it managed to come out of it in an emphatic manner and lead an example for others to follow. According to the analysis of those policies, the sick organizations which have been given sufficient chance or are in a state of no recovery shall be shut down immediately. Audits are being advised in this regard to estimate the entire scenario and the level of intake that might be needed by each of them. According to them, just the policy making won’t help saving the sinking ship, rather strict and bold decisions are the order of the day. Japan further restructured the entire design of banking sector and reduced reliance on the loans and tried reducing the deficits all around. Visionary men and proponents of the field of economy and financial consideration Heizo Takenaka called into action to salvage the ship (Coy). Example of Britain: Britain too felt the heat of international recession that hit the entire globe. It was faced with challenges like unemployment, dip in G.D.P, debts, and bail outs. However it has managed making its way out through the thick times. Though the growth might not be that evident and would take time and it is slowly but surely on track to restoration of growth and progress. The G.D.P growth might show negative trends for now, however mid 2013 onwards according to the field experts depicts a colorful time for the Britain economy and possibly more job openings and reduced inflation rates. This all has been achieved through winning the customers trust, reducing the taxes, and slashing on the governmental spending and helping the industries to stand firm despite the thick of times. To some experts Britain has surprised them in many ways in the manner in which it has come out of the double figure slump it was engulfed in, in recent times, While some experts term this as a gift of the Olympics, others attribute them to the good policies and wise moves in appropriate time to bring the country back to the normal (B.B.C). 3-Recommendations to the next president of country Recommendations would be: Reduce taxes Job opportunities Overcome the staggeringly high rates of inflation Better and Flexible Health insurance policies Protection against external threats Works cited: B.B.C. UK economy's return to growth gets cautious welcome. 25 Oct 2012.Web. Retrived 30 Oct 2012 . Coy, Peter. What the U.S. Can Learn from Japan's Lost Decade. 9th January 2009. Web. Retrieved 30 Oct 2012 . NDAC. National Debt Awareness Center. 22 Oct 2012. Web. Retrieved 30 Oct 2012 . Saad, Lydia. Economic Issues Still Dominate Americans' National Worries. March 2012. Web. Retrieved 30 October 2012 . Sacbee.com. OBAMA VS. ROMNEY: WHERE THEY STAND ON 12 ISSUES. 30 Oct 2012. Web Retrieved Oct 2012 . Read More