Critique of GDP offers to throw Middle Class and Elderly over the fiscal cliff

As of now the United states of america seems to heading into unchartered ground in terms of the national deficit. It seems for too long we have been in the way "kicking the can down the road" and avoiding the real issues behind the U.S. national debt problem. We are facing a time when the government is going to need to cut some important programs to save other programs that may be more important than others. The U.S. president has decided it would be a good time to overhaul the U.S. health care system, a change that will cause for even greater government spending and higher taxes not only for the rich. It seems like at some point the government is going to look for ways to help lower the deficit and I believe raising the age for people to declare for medicare is a good start. As we now the original program was put into place during the mid sixties, a time when the average life expectancy in the United States was eight years younger than it now is. I know that this may hurt some americans, but we simply have no choice. The effects of the US going over the fiscal cliff will cause much more harm to the average american, than raising the age to apply for medicare would. I find that the new plan created by president Obama is simply unsustainable without making necessary cuts such as this one.

Critique of "Fiscal Cliff could weigh on holiday sales"

            This article presents a very thought provoking point. With the holiday season upon us, a surefire spending frenzy on its way. The fiscal cliff may however have an effect on consumer spending that we do not want. I think the article, and Marc's response, are both successful in identifying the important questions and ramifications. The article however is speculative, and a tad paradoxical. While the fiscal cliff is sure to affect spending when addressed in January, such measures cannot be taken to say the cliff will affect spending this early. A holiday that becomes more commercialized with every year cannot be effected by the fiscal cliff, I do not see Christmas diverting from that plan. 

Marc addresses a very good point in mentioning the ignorance of some people. Many people do not understand what the fiscal cliff entails, or even when it is set to arrive. Not to mention the positive feeling the holiday season brings, consumer confidence is a topic absent in many minds. The most significant point in constructing this opinion, is that made by the National Retail Federation. Even with the worry about the fiscal cliff that Marc clearly identifies, the National Retail Federation predicts an increase. If that is not enough, a record year for Thanksgiving spending should point to an active holiday season as well.

The anticipation of the fiscal cliff has clearly not affected the other holidays of 2012, so there is no need to believe it will affect this season. Perhaps the lurking of the fiscal cliff will even cause people to spend more now, when the conditions are better than the coming years.

The most important question drawn from this post is this, considering there is a substantial amount of worry this year, will unemployment rise because of the doubted success put on this holiday season? Depending how worried one might be about his/her given industry, jobs may be cut in anticipation of less consumer spending and the eventual fiscal cliff. Christmas being a large part of industry sales, may be important enough to have its own effect on the job market, let alone consumer spending.

I expect consumer spending to see yet another increase this season. I believe the amount of spending we have seen this year on other holidays like Thanksgiving can guarantee us a very active holiday season. The preparation for unstable times following the fiscal cliff may even have a positive effect on spending and I feel the job market will see no change. 

Critique: U.S. Fiscal Cliff Could Lead Global Recession

After reading this article I am in complete agreement with the notion that going over the fiscal cliff will most likely result in a global recession and although this will be an unfortunate event it is the best option for the future of the United States. The chances are high that if we dive off of the fiscal cliff the United States will plummet back into a recession. People will lose their jobs and our Gross domestic product will most likely decrease, but going off the cliff will not only have an affect on our country but it will also negatively impact other countries. Since the United States has the largest economy and our global reach is very far so if we go through a recession other countries will experience our recession.  Due to the large amount our country can consume many countries depend on the United States to import from them. But despite our relationship with other countries being in jeopardy our personal finances are in trouble the government expenditures have exceeded our revenue by a huge amount so that means that there will be large amount of government spending cuts made. It is true that we need to drastically reduce our spending but I disagree with the idea that we need to increase our taxes. Increasing our taxes will only have a negative effect on our economic growth, less people will be able to spend money and what we need right now is more money circulating through the economy.  Instead of kicking the can down the road and patching up the problem we need to use expansionary policies to heal our economy. If we kick the can down the road our future generations will have to deal with the problem at much more heightened level so as the author said it would be in the United State’s best interest if we deal with our financial problems now instead of later.  But reducing the amount of money we put into certain things like our net exports, education and other programs may launch the world into a recession.  If we reduce the amount of importing we do from other countries there economy will suffer and the jobs that were created overseas by United States owned companies will start to shut down as well.

Critique of GOP Offers to Throw Middle Class, Elderly Over the 'Fiscal Cliff'

The fiscal cliff is a very interesting and tough controversy in America today. Our nation has piled up to a number that most people cannot even imagine. We need to take serious measures to reduce this debt and start to climb out of the hole we as a nation have put ourselves in. Congress and President Obama are currently working on a resolution that will steer us away from the massive budget cuts and tax hikes that are put in place once we have gone over the fiscal cliff. Like with most fiscal policy measures of this magnitude Congress has been debating feverishly over what needs to happen in order to avoid the fiscal cliff. Republicans have recently proposed a plan that calls for $800 billion dollar tax reform in health care. While there are many parts of this plan that I disagree with there is one aspect of the plan that makes sense to me. Raising the age at which people file for medicare is a very sensible policy maneuver and could help save the medicare system tons of money. I understand that raising the age of medicare will hurt many Americans as they are trying to save for retirement and have been counting on that money from medicare to help them sustain themselves. On the other hand, to cut the enormous deficit that we currently face there are going to be consequences and people that will be very unhappy with the governments decision and raising the age at which people file for medicare is a sensible policy maneuver that will be beneficial in the long run. Medicare was passed by Congress in 1964 when average life expectancy for an American was 70 years. Since then, average life expectancy has risen to 78 years. Life expectancy is expected to continue to rise as more advances are made in medicine and health care services. At some point raising the age at which people file for medicare will need to be raised in order to keep the entitlement from bankrupting itself. If Congress takes substantial steps in cutting the deficit the American people are going to feel it. Entitlement programs are going to receive less funding and taxes will be higher but the budget needs to be tightened.

Critique: Combating Inequality May Require Broader Tax

           After reading the original article “Combating Inequality May Require Broader Tax” by Eduardo Porter in the New York Times, I found that the author of the blog post did not accurately analyze this news story. Moreover, the analysis lacked evidence to support the provided claims. It was evident that the author of the original blog post did not fully understand the arguments that he was making. In order to correct these flaws, find below a more accurate account of what Porter’s article was trying to convey.

            Porter argues that “raising more money from the wealthy might go a long way toward righting our lopsided economy — which delivered 93 percent of our income growth in the first two years of the economic recovery”— only creates half the picture (2012).  Porter then states that “progressive tax codes are not very effective at raising money.” (2012). His claims, however, are not all true. The US has one of the strongest economies (despite the current recession) and with President Obama’s new tax policy initiatives, many citizens have faith in the economy again. According to a poll reported in The Examiner, approximately 50 percent of Americans agree that “tax cuts should expire in January on earnings over $250,000 but continue for lower incomes” (Junius, 2012). Thus, it is of rising popular support that taxes remain high for those with high incomes.

            Moreover, according to the World Bank, the United States still has the largest economy, ranking number one with a GDP of about $15 million (2011). One point, however, that the blogger does correctly make is that the US is widening the income inequality gap. However, according to Luhby of CNN Money, “but while the U.S ranks low among rich nations, plenty of countries are worse off, particularly in Latin America. Honduras and Guatemala have the most income inequality” (2011).  Therefore, the claim that “we [US] have the largest range in wages” is not completely true.

            Lastly, the blogger claims that “the government cannot create enough tax revenue to create benefits that help the middle and poor classes,” which is also not the case. If the blogger had taken the time to research current US policies for the middle and poor classes, he would have realized that President Obama is working specifically for such classes. “We don’t believe in an economy that grows from the top down,” President Obama has repeatedly said. “We believe in an economy that grows from the middle out.” According to Dechter, furthermore, “as a stronger middle class consumes more goods and services, produces a more talented workforce, and incubates more innovative entrepreneurs, the beneficiaries will include businesses and the people who own and invest in them” (2012).

            Even though Porter’s article does raise some questions about current US income inequalities, it also fails to address the full story. Additionally, because of this article’s obvious bias, the blogger was mislead in his analysis. For these reasons, the above critique hopefully shed light on some of the missing facts.

References

Article Source: http://www.nytimes.com/2012/11/28/business/combatting-inequality-may-require-broader-tax.html?ref=business&_r=0.

Detchter, Gadi. 2012. “Why President Obama’s Victory Is a Victory for the Middle Class.” Center for American Progress. Retrieved from: 

http://www.americanprogress.org/issues/economy/news/2012/11/07/44134/why-president-obamas-victory-is-a-victory-for-the-middle-class/.

Junius, Dennis. 2012. “Poll shows support for raising taxes on the rich.” The Examiner. Retrieved from: http://washingtonexaminer.com/poll-shows-support-for-raising-taxes-on-the-rich/article/feed/2053730#.UL_1kIc72Ag.

Luhby, Tami. 2011. “Global income inequality: Where the U.S. ranks.” Retrieved from: http://money.cnn.com/2011/11/08/news/economy/global_income_inequality/index.htm.

The World Bank. 2011. “GDP Ranking.” The World Bank. Retrieved from: http://data.worldbank.org/data-catalog/GDP-ranking-table

Critique of U.S. Fiscal Cliff Could Lead Global Recession, OECD Says -Kate Higginson

I enjoyed reading Kate Higginson’s interpretation of the article she read about the fiscal cliff. She displays a great knowledge of the issue and the best way to go about getting the economy back on track. We have very similar viewpoints on the topic of the fiscal cliff. I agree with her comment about getting Obama to find some sort of budget agreement with the Republicans. I feel that being bipartisan can find a happy medium instead of upsetting one party more than the other. She makes a valid point to increase taxes, cut spending and have a higher debt ceiling. She discusses consumer confidence, but I do not think that it is one of the bigger issues we face with the fiscal cliff. There are a lot of factors that can contribute to consumer confidence, including things like high unemployment rate. In class we have been discussing the unemployment rate, and if we take the fiscal cliff, we could slow down to a healthier unemployment rate by 2014. The article that Kate read says that the labor market is responding very slowly to the unemployment rate, which Kate also talks about how we have been discussing in class that there is a great deal of uncertainty with the unemployment rate. I agree with her opinion on what responsibilities the Federal Reserve would have if we decide to take the fiscal cliff. In order to eventually get things back to normal and level out, bonds and securities would need to be purchased. Once again Kate wrote a great response to her article and seems to take in interest in the fiscal cliff and what could happen from it.

Critique of "GOP Offers to Throw Middle Class, Elderly over the Fiscal Cliff"

By: Nicholas Roch

            Republicans, on an all too often basis, are labeled as out of touch with everyday Americans. Accompanying those beliefs are some rather harsh criticisms of the Republican Party.  The claim that the original author makes is that the GOP “offers to throw middle class, elderly over the fiscal cliff” is preposterous. When your country is facing an imminent financial crisis, sacrifices have to be made to ensure long term financial security and health. With that being said, sacrifices need to be made by both parties. A compromise of revenue increases coupled with expenditure decreases need to be made.

 It is hard to argue the facts. Even Democrats acknowledge the need to reign in health care spending. A Democratic Senator wrote an opinion piece to Politico stating that “health care expenditures in the United States make up nearly 18% of our gross domestic product. The next least- efficient developed country in the world spends 12 percent of its GDP on health care”(Whitehouse, p 2).Senator Whitehouse goes as far to agree with the House Budget Committee Chairman Paul Ryan when he says that the main cause of the fiscal cliff is related to the health care problem. The difference lies within the plan being offered by each party. Senator Whitehouse and my classmate are in agreement that no money should be cut from Medicare regardless. That is just not a viable option.  The argument that my classmate makes when he says “ I personally find it despicable because these are the people who truly need healthcare the most, as both my grandmother and grandfather would both be affected by the Republican proposal (as would thousands of others)” is just a shameless knock against Republicans (Anderson, p 2). Democrats fail to acknowledge that the Affordable Care Act takes over $700 billion out of the Medicare system to fund the new government program which does nothing but introduce new regulations and raise taxes. My classmate is correct when he says that Republicans are pushing for a $600 billion dollar cut to Medicare over the next ten years, but that is with a plan to help streamline Medicare expenditures and ultimately move to a system that allows free market competition. My classmate also needs to be aware when he says that by raising the age to file for Medicare to 67 that “this would cause a great deal of misery and stress to many 65 and 66 year olds who would be forced to seek healthcare on the open market” is another heinous claim since the Republican plan protects those who are already in the program and or those who are near eligibility for Medicare’s benefits (Anderson, p 2). This kind of mudslinging should not be going on at a time when a country’s welfare is at stake and the time is running out.

http://www.politico.com/story/2012/12/health-care-savings-without-medicare-cuts-84579.html

http://paulryan.house.gov/issues/issue/?IssueID=9969

http://www.cnbc.com/id/100276654

Critique on "Fiscal cliff could weigh on holiday sales"

As the blog post mentions we are currently in the mid of the holiday season. While all the thanksgiving craziness is just over, the shops are already loaded with Christmas things. Even though it is the best period of the year, it also makes people to spend a lot of money to buy presents, food etc. The question is if people take the predicted “fiscal cliff” into account while doing all these expenditures. According to actual data the National Retail Federation released this is not the case. The Federation still predicts a 4.1% increase this year in holiday sales. Besides that, the recent Thanksgiving Day sales were so high that we hit a new record of $59 billion in spending.

One explanation for this could be that people are not aware of the serious impact the “fiscal cliff” will have on peoples’ wallet. The “fiscal cliff” is predicted to occur in 2013. This causes an automatic increase in taxes for middle-class families and spending cuts for the government. Currently, the national debt is extremely high. In fact, each United States citizen’s share of the debt is higher than the national average income. This means that we have a real problem. If the parties in the House of Congress can’t agree on a plan to cut soon, all these consequences will happen on one date. This will certainly affect people’s disposable income so you would expect that the consumer confidence drops. However, the current holiday sales show this is not the case which means, according to the blog post, that people are either not aware or don’t worry about the upcoming “fiscal cliff”.

However, I do think that people in the U.S. are aware of the upcoming “fiscal cliff” because it is a hot item in the newspapers, magazines, news etc. I think there are other reasons for the rise in holiday sales. One reason may be that people in the U.S. try to stay as optimistic as possible towards the future. I think this is a characteristic that distinguishes the American people from, for example, the Dutch people. In Holland people always try to be conservative and save as much as they can to prevent any troubles in the future. In the U.S. people are often more positive towards the future, which can explain the rise in holiday sales. Besides that, people may think that buying goods only stimulates the economy. When people buy more the GDP raises, which is good for the economy. Another reason can be that people are aware of the upcoming “fiscal cliff” and therefore know that taxes will increase. As a result, products will be more expensive. This could trigger people to buy more now they can afford it instead of waiting for prices to rise.

Critique of Craigh Hash's Fiscal Cliff

In this post, the author talks about the fiscal cliff that awaits us at the end of 2012. He mainly highlights the negative effects that the policy measures occurring in January 2013 will have on the US economy and on the taxpayers, placing the emphasis on the middle class. Although I agree that the middle class will most likely have to carry the brunt of the weight of whatever decision the government comes to, we should not be focusing so much on the short-term effects of the fiscal cliff, if unchanged. Yes, it will be a blow to the US economy and yes, rough times do lie ahead for the American middle class, but think of how much worse it would be if the debt-ceiling was heightened and the fiscal cliff pushed off.

The US keeps kicking the can down the road and it can’t afford to continue doing that. The US debt has increased to over 100% of the GDP, which is a number that hasn’t occurred since the 1950’s. The effects of such a high national debt on the US economy are not to be ignored. A high national debt means paying more interest, which means that revenues need to go up, resulting in continuous tax increases in the future. Investment will go down as capital is replaced by government bonds in portfolios. Inflation is likely to rise, devaluing our the dollar and thus the worth of the national debt, making our loaners increase interest rates even more to counter this. In short, a national debt this high (and still growing) will pull the US into a vicious circle that it will find hard to break out of.

Not to mention another very important factor in the decision whether or not to jump of the fiscal cliff: America’s international credibility. The economy and stock market are mainly governed by faith. If investors and consumers have face, the markets grow, if they don’t, the markets shrink or stagnate. It is said that the only reason a country like the US has been able to handle such a gigantic national debt is because the world has faith, confidence in the strength of the dollar, in the American government’s capacity the pay the debt. It has been pushing off the payment for years now, and each cumulative decision to extend the tax cuts etc. has decreased the international faith in America. And a loss of credibility can soon turn into higher interest rates for the US. If or when that is to happen, the vicious circle I talked about earlier will get kick-started and the US will be in trouble.

So to conclude my critique, although I think that policymakers need to take some measures and make some compromises that are of short-term interest to make sure the economy doesn’t immediately crash, they mainly need to focus on the long-term impact of their decisions, because you can’t kick the can down the road forever. Think of the future generations that will have to pick up the debt we’re leaving them.

http://www.usgovernmentspending.com/downchart_gs.php?year=1792_2012&view=9&expand=&units=p&log=linear&fy=fy12&chart=H0-fed&bar=0&stack=1&size=m&title=US%20National%20Debt%20As%20Percent%20Of%20GDP&state=US&color=c&local=s

Critique of: “Bernanke Challenges Lawmakers To Address Nation's Fiscal Problem”

           Definitely an interesting article in regards to interpreting how large this financial crisis actually is. In this article you have a very powerful source being discussed. The main eye opener from this article is the fact that Bernanke, on behalf of the Federal Reserve, needs to ask for help. I believe it provides a good example of how one group or organization simply cannot come up with a reasonable solution to this multifaceted problem. Years ago, one would have thought that the Federal Reserve could indeed find a solution to what seems like a fiscal dilemma, but as times have changed and reliable economic models continue to become erroneous, it is apparent that a solution needs to be made quickly. As the deadline for the fiscal cliff approaches, it is crucial that the President, Bernanke, and congress need to start making headway on this problem.

            On another note, the Federal Reserve does and will continue to hold a large amount of power in terms of fiscal policy making. The reason this feeling of the Federal Reserve being inept essentially exists because of the amount of outside variables that are also contributing. The Federal Reserve is very capable of formulating a logical answer to this problem on it’s own behalf, but it may not be the best fitting solution for the entire country as a whole. The plot thickens to this never-ending problem when politics also come into play. Democrats and Republicans are vexed in their decision making of what is the best decision for the country. The power the Federal Reserve has is still a strong presence in making the best fiscal decisions and should be recognized as so. If other organizations started cooperating more directly in favor of the Federal Reserve and their needs, I believe stronger efforts would be directed towards the solution of this fiscal problem, rather than adding gas to the fire, so to speak. 

Steven Christopher- Critique to Nicholas Roch's Blog Post

Steven Christopher

Critique of Nicholas Roch

            After reading Nicholas Roch’s blog I can agree that the American economy is spiraling downward as we continue to increase the federal deficit and accumulate additional national debt. It is scary to see that the current national debt is in the trillions. An interesting fact that Nick pointed out is that each citizen’s share of the debt is 51,693. I cannot believe that we would let such a huge deficit gather like that. It would take families tens of years to pay off a debt like that, if each person contributed the same amount. I believe that in order to make this fair, people should not have to, “share” the same amount of debt. Taxes need to be regulated accordingly so that poor people do not have to pay so much of the debt, and that the rich participate more. Nick also states that the average American salary is 42,979.61 as of 2011 according to the Social Security Administration. There is no way that the average American can pay off this kind of debt in their life time

Republicans and Democrats each have separate ideas on how to handle the debt crisis, which has created a standstill in congress. The republicans believe in less government interference in the private sector and lower taxes, which I personally believe will not work. I think that we need high taxes in order for us to pay off the debt. This might create a hard burden on United States citizens, but this is a high priority of the USA. We need to make the deficit lower no matter what it takes. President Obama doesn’t want to extend the Bush tax cuts that make over 250,000 dollars and I think that is the right decision. I believe that the thought of the tax cuts being diminished should not put the Republican Party into frenzy. All parties should be happy that this potential tax increase in specific income targeted areas could help us reduce our deficit a little faster.

            I don’t think that with this point of view the Republicans can say that they care about the middle class. We need to increase taxes on the rich and put the money back into the middle class in order to generate jobs and growth. I do agree with Nicks statement that it is time for both parties to return to a bill similar to that of the Simpson-Bowles Act in which Congress would cut $10 of government expenditures for every $1 dollar in tax revenue raised. It is worth temporarily delaying an economic recovery to ensure that we have a firm financial foundation for the future, particularly the middle class.

Critique: Kayla Janney critique of Steven Christopher Unemployment Rate

Kayla Janney Critique: Steven Christopher Blog

After reviewing the cartoon articles 4 & 5, that Steven provided in his blog I agree that in his blog he spoke of how Americans that have lost their jobs during the recession that began in December of 2007 and ended in June of 2009 have become depressed, they are tired of looking for work, and they also fell into unemployment benefits and were temporarily not searching for jobs.  Since GDP has began to come down from the peak of 10% down to 7.8%, I believe that structural unemployment is the main consideration of unemployment.  There are many individuals out looking for work, and many jobs are coming back around to hiring employees to take the risk at which the economy is going to continue to grow with this low unemployment rate.  Therefore there are many jobs looking for the right individuals to work for their company.  This mismatch has occurred because the demand for one kind of labor is rising while the demand for another kind is falling and markets do not quickly adjust to the difference.  There have been so many individuals unemployed for such a long time that they unfortunately have lost the ability to have the skills that may have been strong say 40 weeks ago, before the individual received unemployment benefits.  I also feel that in our economy we are suffering from frictional unemployment.  There are many American's that are deciding to go back to school to better than education, and in return to graduation they are having a hard time finding employment.  I believe that colleges should have a better education system of how to prepare students for the work world.  The United States unemployment rate is also reflected by cyclical unemployment which is where demand for labor declines in the business-cycle and downturns, as described in the Keynesian business-cycle theory.  Okun's law has played a major consequence in the recession that we face today with unemployment.  As output has fallen, firms need fewer labor inputs, so therefore new workers are not hired and current workers have been laid off.  There is an inverse relationship between output over the business cycle using Okun's law.  An important aspect of Okun's Law is that actual GDP must grow as rapidly as potential GDP just to keep the unemployment rate from rising.  Even though we see a steady GDP rate today, I feel that our economy is making a turnaround from the traumatic history it is going through today. 

Critique of Is the U.S. Economy Protected from the Euro Crisis?

This article analysis of the Euro crisis problems seems to simplify Europe's issues and indicates that the continent will have very little effect on the United States economy. 

The writer does not provide any analysis of why Western Europe is in the dilemma that it is—the entitlement state model of the past 40 years no longer works in a competitive, globalized world. Furthermore, no country can continue to sustain its economy in this era when workers receive vacations, retirement pensions for multiple decades, free childcare and education, subsidies for farmers, among many other things. The European leaders have not really addressed the cause of their crisis with gigantic debt to try to maintain this governmental structure. In general, they are not making the sorts of cuts, which need to be made to encourage future private sector growth.

Additionally, the actual euro currency itself is overvalued, which makes their products somewhat uncompetitive on world export markets. The reason the euro is overvalued thus far is because there is not one central bank, like our Federal Reserve, which can continually print euros and demean the value like our dollar. Also, with 17 member nations there is really no central financial allocation, regulation, banking or taxing authority. 

The writer mentions that because American banks are healthy, the United States will not feel as much of a negative effect from Europe being in a crisis. American banks do have European investments which would be affected should the euro crisis escalate. In addition, American capital is allocated in the financial centers of Europe like London and Zurich, even though either respective nation uses the euro, their trading partnerships are affected. Also, many European companies are traded on the U.S. stock exchanges as American Depository Reserves, which could greatly affect our stock markets. The European banks are also shoring up their capital requirements and paring down their overall staff numbers so as to be competitive, and increase their profit margins. Furthermore, only a portion of the European banks suffered the real estate meltdown like the U.S. counterparts—Ireland, Spain, Portugal, Iceland, and Greece. Greece can never pay its debts, Spain and Portugal are circumspect, Iceland has gotten its banking system back on track and Ireland is working on taking its strong medicine to bring its economy back to the boom years.

The writer wisely asks the question of “What will happen to the U.S. economy when they are unable to pay off their national debt?” Unfortunately, the U.S. has no intention of ever being able to pay off its debt, along with a number of other countries, and what economic chaos will occur is uncertain. Greece certainly will never pay back the EU. The EU seems willing to allow Greece to remain a member if they will adhere to cutting their present budget and also adhere to the austerity program prescribed by the EU and IMF.

Perhaps the writer could have also added that there is considerable conversation and thought that some of the southern European nations should just leave the euro currency and let the stronger economies like the Nordic countries and Germany remain in the organization.

This article response, while sensible, seems too simplified and optimistic. Europe is a major trading and political partner to the United States and if their major currency were to fail or flounder, then the markets and economy here would be affected far more than what the writer stated in her analysis. The European region is undergoing slower growth at present while some countries are in deep recession, or even depression. Unemployment in Spain and Portugal is 25 percent, with 50 percent of citizens under the age of 30 not working. To me these are symptoms of very ill economies and regions, and with exorbitant debt, high taxation and no growth policies (which we also see here in the U.S.), a nation cannot see any kind of positive future. This will affect all those nations that surround them and all of their trading partners.

Critque: A bit of good news at least

Critique of "Is the US protected for the Euro Crisis?"

An amusing interpretation of the financial crisis from both sides of the pond, this entry provides a rather eye-opening truth which has shown the effects of globalization, especially on the US’s economy. Suffering from a 5 year crisis, America has limped for the past few years, rolling with the punches of consumption faltering and perking cyclically as well as investor and business volatility based on weather, politics, and anything else we can remotely make relation to in the way the markets dip, inch up, and flat-line. But ever so rarely does the American media ever look outside of North America and pay attention to the increasing turmoil of the EU.  

In 2009-2010, news of Greece, Spain, and Italy’s bank troubles briefly ran in the news. Financiers proceeded cautiously, but little changed, even after Ireland’s banks ran into trouble later on, on the US’s side. So, what does this say about the US’s current situation? It only confirms that its financial standing is not built upon those of the countries which once colonized it. However, unsettling parallels can be drawn between America and the EU. Talk of EU dissolution and the reversion back to previous currencies is mirrored in the way that the states function much like their own countries. It is ever so tempting to pull a Germany, cut ties, and rebuild internally, but the Federal Government has kept a strong-hold to prevent such extreme actions.

Another parallel already brought to the table is the US’s overspending and how Greece got itself into a fix. If the US continues to push deficits to long-term debts, inflation or bank failure is bound to be the result.

Now, there is a point made that I have to disagree with: the US does have stronger mini-economies which have kept it afloat, but unlike Europe, the regions of highest GDP-dollar-per-capita are perhaps the most in debt. States such as New York, New Jersey, Connecticut, Massachusetts, Rhode Island, Oregon, California, and Washington have seen a shift in their tax basis as their population has fled for states of lower tax codes (namely the Southeast.) So, the economic powerhouse has become regions of high production potential (no unions) and low property tax and minimum wage.

Despite it being an uphill battle to recovery, at least the exterior European markets will not push the US to belly-up in the long run.

Critique-Fiscal Cliff affecting holiday season

         This article interest me due to the fact of how important Christmas is to our culture and how affects and is a truly important factor in discussing economic growth during this time of the year. As we learned in class and have seen many times on the news, America is approaching a so called 'fiscal cliff' that is rapidly becoming closer in the next couple of weeks. This fiscal cliff is caused by the Bush Administrations tax reforms that are soon coming to an end. Although the author of the article only states one perspective(the White House) to the story by strongly making a statement about the question he poses in the beginning of the article, I do think the piece is well written and poses a serious question about our upcoming current economic situation.
           Having read previous articles about the fiscal cliff and given my current political stand point, I completely agree with what the author has to say. It makes sense that if we do not come to an agreement about taxes and (hopefully) come to a sensible solution on lowering taxes for middle classes, then consumer confidence will decrease causing people to spend less money on their annual Christmas shop. This including Black Friday which is as we all know one of, if not the busiest days of the year for most firms and corporations. The author brings up several statistics saying that the holiday season "accounts for 1/5th of annual income sales". At this rate we cannot afford to impose tax increases on middle class families or individuals. These middle classes make up well over the majority of our country and it makes absolutely no sense to raise taxes on these people who essentially contribute to the economy more than anyone else on a daily basis. It becomes hard to truly take sides in this argument simply because the numbers do not add up. Fears and rumors about these tax increases on middle class families haven't really brought out fear in consumers with this Thanksgiving weekend hit a record high 59.1 billion dollars. I personally think that when we do spend this money (if and when) that we should try to spend it wisely and try to spend more money through local businesses as opposed to lazily traveling to the nearest Walmart. It is certainly no question that investing money in more local business on a large scale can help move towards a more balanced economy and a more balanced distribution of income. When more of these middle classes (most of whom own these small local businesses and are only in the middle class because of the large corporations that have taken over their neighborhoods and towns) have more income, then they in turn have a higher disposable income which means consumer spending with rise causing an increase in GDP.
     

Anderson response

The article that Gus posted about the fiscal cliff and the effects it has on Christmas shopping. This article was very interesting to me as we all need to do our Christmas shopping soon and it really made me surprised to hear that the amount of money that people will spend will decrease as the consumers “are not confident with purchasing”. It also shocked me that the author was talking about the stock market in this article and how it effects spending. Most of the thoughts that I had about the holiday seasons were only about how people will afford to buy presents and if they can spend money. It never occurred to me how stocks were such a large influence on spending by people like us. It also was interesting to me about how the new tax reforms are set to begin in January. This will have a huge effect on how much someone can spend based on the amount of money they can expect to be taxed. I never thought about how the stock market would have effects on the holiday season. The fact that peoples spending will be affected by the fiscal cliff is a very interesting thing to think about as the holiday season approaches us.

 

It was also amusing to me that the people who are in charge of projecting the fiscal cliff did not mention how people should spend their money in the near future. The advisors that are under Obama have recommended that there should be tax cuts to the middle class which would make them spend more money and feel more confident about their spending. Looking at the numbers, black Friday spending has been increased this year, as this black Friday spending was significantly higher than last year. This makes me very confused as to how consumer confidence in spending can be so low because the purchasing statistics from this year say differently. The spending that has happened lately will be very telling as we go into the season where buying is normally at an all-time high. The people spending the money need to realize that spending will only help the industries as the fiscal cliff would be greatly affected by this spending. Spending more money will help to make the fiscal cliff a little bit less looming as we enter it. Hopefully the industry will pick up to help our economy in the next few months.

 

GOP Offers to Throw Middle Class, Elderly Over the 'Fiscal Cliff'

            It is certainly apparent and acknowledged all throughout this country that we are heading towards a fiscal dilemma. This dilemma, of course, is referred to and recognized as the fiscal cliff. The lack of sensible choices made by the government has driven our economy into a downward whirl as this fiscal cliff approaches. It is common knowledge that Democrats and Republicans are faced with reaching a compromise to avoid this fiscal “cliff” and to reduce America’s budget deficit. The Republican parties view has been made apparent in the last few weeks in which they basically counter offer the President’s suggestion by proposing everything the American people rejected in last months election.

            The GOP (or Republican Party) first aimed at attacking our health care system, obviously very similar to what Romney proposed. They want $800 billion in a so called “tax reform”. This reform while certainly lead to the cutting or removal of the tax stipulations that motivate and support health care coverage by employers. They also want to heighten the age as to when you can file for medicare to 67. This would cause a great deal of misery and stress to many 65 and 66 year olds who would be forced to seek healthcare on the open market. By suggesting that they also repeal the new health care law, the elderly would have absolutely no help in the process of finding their own healthcare. I personally find it despicable because these are the people who truly need healthcare the most, as both my grandmother and grandfather would both be affected by the Republican proposal (as would thousands of others).  The author discusses data he studied that said health care costs begin to skyrocket for works as they move from age 55-65 and the cost from this would indeed make companies less likely to hire and of these possibly unemployed older workers. Cuts in social security benefits that have been proposed would also severely affect disabled Americans and children on Social Security. We are taught that this is the land of equal opportunity and that our government is in support of the multitudes of people that inhabit our country, and the GOP suggestions seem to argue quite the opposite.

            This 800 billion dollar “tax reform” that they propose is not only affecting areas such as health care but is also likely to directly hit cuts to current deductions in class that are at this time helping middle class Americans keep their head above water. Being apart of a middle class family, I despise the proposal and believe that the 1% that hold more money to themselves than the remaining 99% should be hit with some type of tax reform instead of pushing towards reforms that affect middle class families, most of whom make up this entire country and put forth their hard work for large corporations.  They are interested in large reductions in funds to antipoverty programs, leading to an obvious large increase in poor and often unemployed Americans.

http://www.huffingtonpost.com/rj-eskow/gop-offers-to-throw-middl_b_2239402.html 

Critique of Republicans and their Fiscal Cliff Dilemma

Lack of accountability is not the only reason for why the American economy is in the situation it is currently in, however it may have also helped induce it. The national debt was allowed to increase to about 9 trillion dollars by the year of 2008, because the slowly accumulating deficits had no immediate implications and because of lack of accountability. Since then, through more reckless spending via stimulus packages, our debt is now just above sixteen trillion dollars. In four short years the national debt has almost doubled. This creates a variety of new problems that did not exist before, ranging from crowding out of private investment to increased funds being used to pay interest on the debt. The lack of accountability that led to the national debt around 2008 was completely a bipartisan problem. However, since 2008 when President Barack Obama was elected, the national debt has doubled, resulting in little economic growth, and therefore the lack of accountability rests on the President and his affiliates who share the same perspectives that have led us down this road. After having spent billions in an effort to boost the economy through stimulus packages, it has only resulted in anemic growth and a slow recovery. Now the republicans and democrats are forced to try to deal with an increased national debt. Of course however, the democrats only want to continue with their failed economic policies of spending more money, and now tax increases in order to solve the debt problem. Both of which are not expansionary fiscal policies and they are not recommended in an economic recession. The republicans, having had little to no part in the stimulus packages, have been very adamant on having more of a say in how to solve the national debt, which has resulted in this “fiscal cliff.” What are they suppose to do when they continue to see the President implement his failed economic policies. Still, the President is proposing ludicrous solutions such as a $1.6 trillion tax increase, $50 billion in spending, and more importantly the unprecedented power of being able to increase the debt ceiling without congressional approval. This does not bode well for fiscal cliff negotiation and it appears as if we will indeed go off the cliff because the party in power refuses to come towards the middle at all and because they believe they can blame the eventual fallout on the republicans. President Obama refuses to offer anything on spending or entitlement cuts. More importantly, however the “increased taxes” on families who make over $250,000 due to the Bush era tax cuts will directly lead to increased costs for many sole proprietorship and other businesses. The businesses, because we are in a recession and they are already barely making by, will have to either increase prices or decrease costs such as materials or labor, which then results in less productivity and output. Not only will the immediate effect of the tax cause their businesses to cut labor, but it will also affect the business that it buys its supplies from because they will see a decrease in sales. President Obama also plans to raise taxes on capital gains and dividends, which will further decrease economic growth because investment will be reduced. These are some of the few reasons, along with Obama care, for why there is so much economic uncertainty right now in the U.S. and are the issues that businesses all over the country are becoming more and more worried about as we reach the fiscal cliff. The democrats and republicans have both, over the years, contributed to the national debt. Now, they both need to come together and compromise on fiscal policy and on a stimulus package in order to avoid the fiscal cliff. They cannot continue to play politics on the fiscal cliff and consequently ignore future discussions if they don’t get everything they want; it must be a compromise between both parties.