Stimulating the Economy

By: Jackie Borzillo, Kelsey Silvius and Laurel Young

Intro/ History: 20s

1920s automobiles became the country's largest industry, led the way to other inventions.

stock market crash of 1929 30s

Great depression 40s

Government responsibility to maintain high employment, growth, and stable prices

WWII (war time economy) 50s

Korean War the government enacted few major policies

economy was fairly good

Intro/ History: 60s

LBJ building of the Great Society larger societal shifts, such as the evolving

role of women in the economy and changing consumption patterns 70s

Stagflation lingered throughout the 1970s: two recessions and the creation of price controls, floating exchange rates, and expanding global trade.

Productivity slowed had terrible effects on the U.S. economy. 80s

changing market structure and its effects on deregulation 90s

Job insecurity led to economic insecurity

Recent (late-2008 financial crisis)

Often called the Global Recession, Global Financial Crisis or the Credit Crunch

Is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s.

Present day

National level, the discussion moves to government budgeting and growth, employment, and inflation.

America’s smallest companies add up to 50 percent of U.S. GDP. Nearly 60 percent of the private sector workforce is employed by the small-business sector

The recession technically ended as of April 5th 2010

Evidence/ Statistics 2011 Ranking Economy GDP (US dollars)

1) United States 14,582,400 2) China 5,878,629 3) Japan 5,497,813

Inflation rate for the U.S. 3.9 %

Unemployment rate in U.S (As of Oct/20/11) 9.0 Dropped to 8.5 as of Jan 6th 2012

Stock Market loses 2010 at 7608.92, down 13%

Our national debt is now 15 trillion Interest is around 3.7 trillion

Federal Budget deficit is around 1.3 trillion Federal spending is around 3.6 trillion

Recent Developments 2011

Super Committee fails to agree on deficit- reduction plan November 21,2011

Republicans and Democrats were unable to compromise on the tax and spending issues that have divided Congress

Major topic for the presidential election

2 month payroll tax holiday passed by senate

Also unemployment extension

Cato InstituteCato Institute

Conservative Interest GroupConservative Interest Group Against Stimulus planAgainst Stimulus plan More government spending will not help More government spending will not help

the governmentthe government Policymakers should make reforms to Policymakers should make reforms to

remove obstacles that prevent work, remove obstacles that prevent work, savings and investmentssavings and investments

Cato InstituteCato Institute

10 arguments against the Stimulus Plan10 arguments against the Stimulus Plan 1. The Federal Government Is Broke1. The Federal Government Is Broke 2. Spending Is the Problem2. Spending Is the Problem 3. State Infrastructure is Well Funded3. State Infrastructure is Well Funded 4. Keynesian Stimulus Ignores the Long Run4. Keynesian Stimulus Ignores the Long Run 5. Rising Federal Debt Is Fiscal Child Abuse5. Rising Federal Debt Is Fiscal Child Abuse 6. A Bailout Would Flout State Fiscal Traditions6. A Bailout Would Flout State Fiscal Traditions 7. A Bailout Would Delay State Reforms7. A Bailout Would Delay State Reforms 8. State Situations Vary8. State Situations Vary 9. Bailouts Beget More Bailouts9. Bailouts Beget More Bailouts 10. Opportunity for Restructuring10. Opportunity for Restructuring

“There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.”

— PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009

Center on Budget and Policy Center on Budget and Policy PrioritiesPriorities

Liberal interest groupLiberal interest group Unemployment insuranceUnemployment insurance

Helps people who have just lost their jobHelps people who have just lost their job Receive part of their wageReceive part of their wage Up to 26 weeksUp to 26 weeks

Promotes ways to eliminate povertyPromotes ways to eliminate poverty Organizes programs for low income housesOrganizes programs for low income houses

Center on Budget and Policy Priorities Works on issues related to and Works on issues related to and

includingincluding Medicaid and the Children’s Health

Insurance Program Food stamps Temporary Assistance for Needy

Families Supplemental Security Income WIC and child nutrition Low-income housing programs

Low-income tax credits

Republican PositionRepublican Position

DeregulateDeregulate Complete free market economyComplete free market economy Want government spending cuts Want government spending cuts

across the boardacross the board Fiscal accountabilityFiscal accountability

Policymakers should be accountable for Policymakers should be accountable for spendingspending

Typically want a balanced budgetTypically want a balanced budget Cannot spend more than they take inCannot spend more than they take in

Democratic PositionDemocratic Position The Stimulus PlanThe Stimulus Plan

Tax cutsTax cuts More jobs createdMore jobs created Unemployment benefitsUnemployment benefits EducationEducation Health CareHealth Care

More regulation in financial marketsMore regulation in financial markets Want to use government spending Want to use government spending

to create more jobsto create more jobs Want to reassure confidence in the Want to reassure confidence in the

economy to promote growtheconomy to promote growth

Libertarian PositionLibertarian Position

Everyone is looking for a handout Everyone is looking for a handout Government only has the right to Government only has the right to

ensure the protection of property ensure the protection of property rights, judge disputes, and provide rights, judge disputes, and provide a legal framework a legal framework

Government does not have the Government does not have the right to control wealth or traderight to control wealth or trade

VideoVideo

GOP Plans to Stimulate the EconomyGOP Plans to Stimulate the Economy http://www.cbsnews.com/video/watch/?http://www.cbsnews.com/video/watch/?

id=7370028nid=7370028n

Democrats – Obama’s Jobs Plan

• Progressive income tax Pro: more tax revenue

Con: not fair to wealthy; many loopholes to get out of paying full tax amount

Tax credit for first-time

home buyers Pro: improves housing market

Con: expensive in short run

Obama’s Jobs Plan (cont’d)

Money to improve infrastructure Pro: repairs old structures; creates jobs

Con: lengthens projects to maintain jobs; expensive

Personal tax cuts Pro: increases spending

Con: much of what we buy comes from outside U.S. → positive effects weakened

Republicans

Reduce federal regulations until unemployment drops

Pro: eliminates regulations that are stifling job creation Con: too few regulations could cause problems like corruption

Eliminate Environmental Protection Agency Pro: extremely expensive to fund all of the EPA

projects (i.e. greener factories) Con: environment facing many problems, like global warming, that we need to fix before its too late

Republicans – Cain’s 9-9-9 Plan

9% personal income tax, 9% sales tax and 9% corporate income tax

Pro: simpler than current tax system; flat tax for individuals & businesses; shifts taxation from production to consumption

Con: adds national retail sales tax on top of income tax; creates possibility of adding a Value Added Tax , which is unknowingly built into the price of everything

Response All voters Republicans Democrats Independents

Approve 39% 63% 14% 43%

Disapprove 51% 30% 73% 49%

Not sure 10% 7% 14% 7%

Republican Presidential candidate Herman Cain is proposing a change in the federal tax code to replace current personal income and business tax rates with a flat 9% rate on both, and to also have a 9% national sales tax. Do you approve or disapprove of this plan Cain calls "9-9-9"?

Zogby©

Bibliography Bivins, Larry. "Lawmakers See Pros, Cons in President Barack Obama's

Debt-reduction Plan." Postcrescent.com. Gannett, 20 Sept. 2011. Web. 2 Jan. 2012. <http://www.postcrescent.com/article/20110920/APC0101/1092004 28/Lawmakers-see-pros-cons-President-Barack-Obama-s-debt- reduction-plan>.

Center on Budget and Policy Priorities. Center on Budget and Policy Priorities, 2012. Web. 03 Jan. 2012. <http://www.cbpp.org/>.

Clancy, Dean. "Herman Cain's "999 Plan": The Good, the Bad, and the Ugly." FreedomWorks | Lower Taxes, Less Government, More Freedom. FreedomWorks, 6 Oct. 2011. Web. 02 Jan. 2012. <http://www.freedomworks.org/blog/dean-clancy/herman-cains-999-plan-the-good-the-bad-and-the-ugl>.

DNC Services Corporation. Democrats - Change That Matters. Democratic National Committee, 2011. Web. 03 Jan. 2012.<http://www.democrats.org/>.

Lincoln, Blanche, and Dan Danner. "Open Letter to President Obama." Small Businesses for Sensible Regulations. National Federations of Independent Business, 1 Nov. 2011. Web. 03 Jan. 2012. <http://www.sensibleregulations.org/2011/11/open-letter-to-president- obama/>.

Bibliography (cont’d)

Mascaro, Lisa. "Super Committee Fails to Agree on Deficit-reduction Plan." Featured Articles From The Los Angeles Times. 21 Nov. 2011.

Web. 03 Jan. 2012. <http://articles.latimes.com/2011/nov/21/news/la-pn-super-committee-20111121>. 

Newport, Frank. "Americans Favor Obama Jobs Plan by 45% to 32%." Gallup.Com. Gallup, Inc, 14 Sept. 2011. Web. 02 Jan. 2012. <http://www.gallup.com/poll/149447/Americans-Favor- Obama-Jobs-Plan.aspx>.

RNC: Republican National Committee | RNC: Republican National Committee | GOP. Republican National Committee, 2011. Web. 03 Jan. 2012. <http://www.gop.com/index.php>.

Roth, Zachary. "Cain Tweaks 9-9-9 Plan — for Poor, It’s 9-0-9." Yahoo! News. Yahoo! Inc, 21 Oct. 2011. Web. 02 Jan. 2012. <http://news.yahoo.com/blogs/lookout/cain-tweaks-9-9-9-plan-poor-9-180537832.html>.

Schiermeyer, Corry. "IBOPE Zogby Poll: 51% Disapprove of Cain's 9- 9-9 Tax Plan & 48% Believe It Would Raise Their Taxes." IBOPE | Zogby International. Zogby International, 27 Oct. 2011. Web. 02 Jan. 2012. <http://www.zogby.com/news/2011/10/27/ibope-zogby-poll-51- disapprove-cains-9-9-9-tax-plan-48-believe-it-would-raise-their- taxes/>.

Bibliography (cont’d) Taylor, Timothy. "History of the U.S. Economy in the 20th Century." The Great

Courses. The Teaching Company, LLC. Web. 03 Jan. 2012. <http://www.thegreatcourses.com/tgc/courses/course_detail.aspx?cid =529>.The Cato Institute. Cato Institute, 03 Jan. 2012. Web. 03 Jan. 2012. <http://www.cato.org/>.U.S. Congress Joint Economic Committee. United States Congress, 2010.

Web. 03 Jan. 2012. <http://jec.senate.gov/public/>.U.S. National Debt Clock : Real Time. Usdebtclock.org, 2012. Web. 03 Jan.

2012. <http://www.usdebtclock.org/index.html>.World Development Indicators Database. "Gross Domestic Product 2010."

World Bank, 1 July 2011. Web. 3 Jan. 2012. <http://siteresources.worldbank.org/DATASTATISTICS/Resources/ GDP.pdfWyss, David. "Obama's Stimulus Plan: Hits and Misses." Businessweek.

18 Feb. 2009. Web. 02 Jan. 2012.<http://www.businessweek.com/investor/content/feb2009/pi20090218_706099.htm>."Year-End Review." Business News & Financial News - The Wall Street

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