One Bad Economy, Two Solutions

The economy has suffered a very serious recession. The housing crisis that resulted in the meltdown was only the beginning of some of the losses the American public has seen as of late. The federal government has responded to this by cutting interest rates, printing more money, and by bailing out several lending institutions and private industries. The government would not have reacted with such urgency had this been a minor concern. President Obama is now several weeks into his term and is pushing one solution to the economy along with his Democratic colleagues. His political opponents in the House and Senate are rallying around another solution. To arrive at an informed conclusion regarding the American Recovery and Reinvestment Act of 2009, one must consider both arguments.

1) Argument for the American Recovery and Reinvestment Act of 2009

To stimulate the American economy, people who are currently out of work must be put to work in order to generate an income. To help generate increased employment, federal tax money can be put to use in employing private citizens in long-term jobs with steady incomes. This money can go toward infrastructure projects for American schools, roads, bridges, and many other areas that need to be addressed given the difficult economy.

Additional money needs to be dedicated to educational needs for public schools that are overburdened and currently struggling to meet the needs of a modern education. Children will then be the direct beneficiaries of the stimulus by having proper and efficient school buildings in which to learn. Teachers will have the facilities available in order to provide the best possible education.

Building new schools, improving roads, and exploring energy alternatives are all ways in which qualified citizens will maintain work and also benefit their communities and nation. Alternative energy sources including wind, solar, and hydrogen power are vital in the future of the nation; therefore action must be taken to put people to work to develop these technologies.

When the people who have lost their jobs and seen their investments become depleted once again have a steady income, they will be more likely to invest again as the economy stabilizes. Banks will be more likely to give loans for first time homebuyers. The stock market will see an increase in investors’ collective confidence. The average citizen’s discretionary income will increase, which will allow them to spend it and benefit other places of business that are currently hurting. While the funding will be public funding, this will ultimately be an investment that will lead to long-term benefits. In order to stimulate the economy, the government must make an investment that will reap great rewards and set the economy on the right path toward a better future.

2) Argument Against the American Recovery and Reinvestment Act of 2009

The federal budget is already running a deficit, inflation is rampant, the value of the U.S. dollar is decreasing, and unemployment is on the rise. Given these circumstances, stimulating the American economy may seem to be an appropriate response. What does stimulating the economy mean? If the stimulus comes from the federal government, it must be from public tax dollars or from borrowing money from other nations. In the case of the American Recovery and Reinvestment Act of 2009, it could very well contain tax money, borrowing money from the Chinese, and then if not enough can be borrowed from the Chinese, the Federal Reserve will need to print more money. The money that would be printed would lead to a devaluation of the dollar.

To spend this much money at a time when the economy is already in a difficult time is similar to a business that is in the red deciding to expand. Only $47 billion is committed to repairing American infrastructure projects. The vast majority of the money in this bill is either committed to the creation of jobs within the government or to special interest groups such as the $335 million committed to STD prevention.

The risk of this bill being implemented will be to have what occurred during Jimmy Carter’s administration when the American public experienced double-digit inflation, unemployment, and interest rates.

The alternative plan is to cut taxes and allow some of the money that would go to the federal government to remain in the hands of the taxpayers. This eliminates borrowing from China, printing more money, and spending more money while the federal budget is running a deficit. Cutting taxes, reducing federal spending, and placing the recovery of the economy on the shoulders of the American people will ultimately lead the United States out of the recession. With additional money and reduced federal spending, people will be more likely to invest their money, expand private businesses, and create jobs independent of public funding. These same private businesses will also develop energy alternatives such as nuclear power, hydrogen power, and hybrid technologies based on the market demands for an alternative energy source.

Such steps, given additional detail, would help reduce the federal budget deficit, strengthen the dollar, and create jobs without reaping a debt that will be felt for generations to come. Instead of compounding the economic crisis, it would instead be absorbed with the chance to recover from it.