Lessons from the Stimulus Fight
Barnes is skeptical on the effect of less than 40 % stimulus package in the form of tax cuts proposed by President Obama’s administration. He admits that the process of Economic recovery has since delayed with the rates of unemployment registering a 9 percent. The writer predicts that the percentage of unemployment is likely to augment as time goes by. In relation to the persistent housing crisis, Fred Barnes dismisses the remedies adopted by President Obama. He states that ‘ increasing jobless benefits, Medicaid bills for governors, rising fund for educators, state and local government will not improve the life style of the population as purported by Obama’ (Barnes, 2). In other words, the bill was good from the outlook but in reality, it did not have any stimulus package in it.
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The economic effect of Tax cuts was minimally too small. This was the position held by the Republicans while debating against the bill which consequently created a dilemma for Obama. Barnes (3) notes that the strategy employed by President Obama had abundance of spending and not the type that would have an immediate impact on the economy. Too much spending on non-emergency things brought together Republicans in a bid to disregard the stimulus package.
Barnes is specific that for the bill to succeed, then Obama must accept some of the views maintained by the Republicans. This may not be possible since the Democrats would not negotiate with the Republicans. Another important factor to note is the stimulus package in the form of funds diverted to steel and iron which has been disapproved by Canada, EU and other first world nation.
Nevertheless, the stimulus package proposed by the President had approximately 237 billion US dollars in form of tax cuts. Out of this figure, 100 billion US dollars were oriented towards improve the lives of both middle and lower class family units. Workers were to be paid tax credits of 400 and 800 dollars for individuals and couples subsequently. Persons who filed taxable income of more than 100,000 dollars were exempted from tax credit. This is among the best incentives for people to change their lifestyles. In the same vein, child tax credit for low income families assists in up bring of children to become responsible members in the society. This kind of stimulus was in form of 1000 dollars tax credit for each earnings exceeding 3000 dollars. People are therefore motivated to work harder in their area of specialty.
Alternative Tax Burden initiated by Obama was meant to relieve middle class families while putting pressure on the elite to pay more income tax. ATB is usually adjusted yearly for inflation by the congress in order to avoid placing a disincentive on middle class. It is important to recognize that 8,000 dollar tax credit aimed at first-time homeowners is a good motivation for people to invest in home ownership scheme. Small businesses are not exempted from tax benefits. This comes in the form of a delay of 3% withholding tax to business dealing with the government.
Investors in capital gains will also profit from tax cuts if such investment runs for more than five years. In a bid to address unemployment, the unemployed individuals would not have to pay the first 2400 dollars. Furthermore, college students and their parents can qualify for tax credit amounting to 2,500 dollars which is meant to supplement on their educational expenditure. All the factors are not addressed by Fred Barnes in his article but it is worth mentioning as it exclusively captures the stimulus package proposed by the Democrats.
James K. Galbraith Champions the Beast Manifesto
Galbraith clearly enumerates that programs such as Medicare and social security should be expanded instead of trimming them. As detailed in his manifesto, USA lost approximately 8 million jobs whereas few of the jobs have been replaced (Galbraith, 2). 50 % of these jobs were lost in the construction industry and the rest from the manufacturing sector. In relation to racial factor, the number of unemployed blacks, Latinos and Asians have since doubled. The manifesto outlines that the duration for unemployment has risen to about 35 weeks. Galbraith highlighted the direct effects of reducing social care security and Medicare. While elaborating the critical role played by Medicare in paying hospital bills for the aged in the society, Galbraith notes that its rates is lower as compared to private insurance. If a slash on Medicare is executed, it means that the elderly category of individuals would suffer financial stress which will be transferred to family members and other concerned party (Galbraith, 2).
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The article concurs with the argument that social security is meant to assist the working people and their dependants when they are old. One of the advantages to social security is its role in spreading benefits to people who have labored while in the public service. Galbraith (1) agrees that social security adds value to a person’s life by ensuring sustainability in old age. If this kind of fund is scrubbed, then the elderly will suffer from inability to support their dependence when they are old consequently passing over poverty down the chain.
Galbraith proposes that Medicare and social security funds should be made more responsive so that aging employees finds a reason for an early retirement. To give other people an opportunity to wok, retirement age should be reduced which will allow young and productive individuals to serve in either public or private sector. Galbraith (1) notes that employees who have health problems hang on to their jobs because of favorable aspect of employer based insurance. He proposes in his manifesto a health care eligibility age of 55 years which will give rise to early exit and subsequent employment opportunities for young generation.
The manifesto as outline by Galbraith aims at improving the lives of both retired and working people. By encouraging early retirement for older generation, the young and energetic gets a chance to use their brand new skills for productivity purposes. For this reason, new graduates will not waste time searching for jobs but start working immediately. Good Medicare and social security plans would also go along in supplementing on the needs of the older generation when they are retired. Welfare economics lays significance on how the health of citizens contributes to economic growth and development.
Notwithstanding the Medicare and social security, other factors such as income levels, climate, inflation and energy should be addressed. This means that macroeconomic description of a country must be improved. In an attempt to build economic demand and improve on the lives of US citizens, President Obama employed expansionary fiscal measure whereby funds were diverted to various sectors in the economy including health sector. Affordable health care insurance policy and increased Medicaid for each state is part of the policy statement aimed at enhancing the lives of US citizens.
Barnes, Fred. ‘Time for Tax Cuts.’ The weekly standard 2010: 2-5.
Galbraith, James. ‘The Beast Manifesto.’ The Daily Beast. 2010: 1-2.