Hasen Bao 24/02/2009 16:19
America’s national deficit has been proliferating during the recent economic crisis; with president Obama’s pledge to cut the deficit amount of $1.3 trillion by half during his presidential term can be a difficult task under the current economic calamity. In the outset it is good news to hear about the president’s concern over the nation’s deficit; it gives reassurance that the government is not negligence of the issue and is finding ways to combat the problem.
By initiatives to take responsibility of the current deficit; the president is showing directly his concerns for the next generation, as many of us in the younger generation convict that we should not be liable to pay for deficit created by the previous baby boomers. It is the moment to cease pushing the problem forward and pushing it sideways; waiting for foreigners to help disclose the gap in America’s trade account.
During times of prosperity America has a nation has been spending and shopping as if there is no tomorrow; the people buys on credit only to receive immediate satisfaction, Wall Street leverage outrageously only to make easy money and flee, the government borrows only to fund wars and programs like Medicare and Social Securities that failed because it could not fulfill its own terms.
As President Obama intends to deal with the deficit by spending less on the war in Iraq and raising taxes on those who make more than $250,000 a year. Albeit the reduction of spending on wars; which is totally unnecessary and should be reduced much long time ago, this problem cannot be simply unraveled by raising taxes and cutting government spending; it is almost an impossible task in the current economic climate to reduce national deficit by raising taxes, while jobs are lost, consumer spending is slowing, investors are becoming conservative and businesses are posting quarterly losses, how is raising taxes going to help with anything?
According to experts the outlook on the first half of 2009 is not very promising, with the recession continues to worsen, but signs of solid recovery beginning in 2010. In the meantime the government should focus solely on getting the economy back to its feet; stabilises the housing market and the banking industry and get the economy up and running again with a set of revised and conservative regulations. Of course; this is easily said than done, the Obama administration is doing the best they can at restoring viability to the economy but we should all understand that the current crisis is fundamentally a very complicated mess rooted not only by the housing bubble but by the culture, the history and the habits of the people of this nation.
The most visible role of the government at this moment is the foster parent of all failed corporations that needs taxpayer funding. Even though I do not like the idea of this much government intervention in the economy; but this seems like the role they must take on when capitalism and the geniuses beyond it fails. I also must agree that the national deficit picture will get much worse if the government didn't spend a lot of money to salvage the economy.
President Obama’s proposal on cutting national deficit by half by the end of his presidential term may be too ambitious for me; however this partly depends on how long his presidential term is, 4 years? 8 years? The task of shrinking deficit needs and should be the nation’s long-term commitment; it is important to stress that this will not just be a commitment on the government’s behalf, this requires the commitment of the people of America.
It is also critical that the government stop finding ways to make the deficit look smaller; instead face up to the full exposure of this problem. During this process; the government will need to find ways to either make up for amounts owed on Medicare and Social Securities or restructure or reform the two programs. Setting rules and regulations to limit the level of debt any individual and legal entity can have is the next essential. The government must also be meticulous about which sectors needs to be vastly invested and which needs not to be, we have to allocate government spending accurately and efficiently in order for us to see a real improvement.
