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.
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