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