http://online.wsj.com/news/articles/SB10001424052702303932504579254214290446386
Over the past year, India has been raising its rate of inflation in order to expand its economy, but this method is starting to become a real issue. The reason for this is that many Indian workers live near or below the poverty line, and their wages are not increasing fast enough to keep up with this rising inflation. As a result, these workers are having more and more trouble purchasing basic necessities, which is causing harm for the economy.
Retail inflation, measured by the Consumer Price Index, has risen all the way to 11.24% in November, which was higher than expected and unanticipated as well. In my opinion, India should attempt to curb its inflation and maintain steadier levels of inflation for the time being in order to alleviate economic pressure on its impoverished workers. Also, a steadier rate of inflation will ensure steadier economic growth.
Friday, December 13, 2013
Inflation Still Low as Wholesale Prices Fall for 3rd Straight Month
http://www.latimes.com/business/money/la-fi-mo-producer-prices-inflation-wholesale-economy-20131213,0,6458844.story
In the past several months, the rate of inflation has fallen to 0.7%, which is a very manageable rate. This is due to the fact that the Consumer Price Index has fallen as well, which some are speculating is a result of lower energy prices in the Energy Price Index. The affect of lower energy prices certainly could affect the Consumer Price Index, which could mean that the current rate of inflation is artificially low. In any case, the current rate of inflation is very low, which probably coincides with the still relatively high unemployment rates, which do not include those who have stopped looking for work.
Because the Federal Reserve has kept interest rates so low for the past several years, it is not a surprise that inflation is falling. However, this has not helped the unemployment rate to fall back to the normal levels it saw before the housing market crash in 2008. Keep in mind that the Phillip's curve demonstrates that as inflation rises, unemployment drops. If the Federal Reserve wants to actually help unemployment return to normal levels and aid the economy, it should raise interest rates to effectively increase inflation to higher rate than 0.7%, which is not enough to jumpstart our economy.
In the past several months, the rate of inflation has fallen to 0.7%, which is a very manageable rate. This is due to the fact that the Consumer Price Index has fallen as well, which some are speculating is a result of lower energy prices in the Energy Price Index. The affect of lower energy prices certainly could affect the Consumer Price Index, which could mean that the current rate of inflation is artificially low. In any case, the current rate of inflation is very low, which probably coincides with the still relatively high unemployment rates, which do not include those who have stopped looking for work.
Because the Federal Reserve has kept interest rates so low for the past several years, it is not a surprise that inflation is falling. However, this has not helped the unemployment rate to fall back to the normal levels it saw before the housing market crash in 2008. Keep in mind that the Phillip's curve demonstrates that as inflation rises, unemployment drops. If the Federal Reserve wants to actually help unemployment return to normal levels and aid the economy, it should raise interest rates to effectively increase inflation to higher rate than 0.7%, which is not enough to jumpstart our economy.
Thursday, November 21, 2013
Keystone's hit to the environment
http://money.cnn.com/2013/11/18/news/economy/keystone-pipeline/
For the past several years, the building of the Keystone Pipeline has been a point of contention in congress, as many lawmakers would like to see this ambitious project come to fruition have been pushing for the pipeline to be built, which would create jobs and provide crude oil from Canada to the U.S. But the Obama Administration has been actively blocking the approval of the Keystone Pipeline, citing its environmental impact as a major issue in this debate. But many have speculated that if the sand oil produced in Canada doesn't make its way from Alberta into the U.S. and the Gulf of Mexico, emitting more carbon dioxide and harming the environment, then the same oil will still flow into the United States from a different source, like Venezuela.
I strongly support the construction of the Keystone Pipeline. It is time for the Obama Administration to finally stop dragging their feet and approve the pipeline. If the Keystone Pipeline is built, it will carry 830,000 barrels of oil a day from Alberta, Canada to the Gulf of Mexico, which would undoubtably lower oil prices, and would create thousands of jobs for U.S. workers maintaining the pipeline in the U.S. While this project wouldn't help the U.S. reduce our massive trade deficit, it would reduce our dependence on oil from less desirable sources like Saudi Arabia and Venezuela, and would probably be much cheaper, as the source of oil is much closer to the United States, effectively lowering the cost of transportation for the oil itself. Essentially, the construction of the Keystone Pipeline would result in a very positive economic impact overall, as more jobs would help lower unemployment, and cheaper gas prices would alleviate pressure on consumers, resulting in a consumer surplus.
While the environmental impact of the Keystone Pipeline might not be attractive, it will not be nearly as terrible as the Obama Administration is making it out to be. While oil from oil sands like that produced in Alberta does emit 17% more carbon dioxide than conventional oil, experts speculate that oil sand production will only comprise 4.5% of the oil market by 2030, so according to the author, only "4.5% of the world's oil would be 17% dirtier."In addition to this, only 0.4% of global greenhouse emissions would come from Canadian oil sands by 2030 if the pipeline were built. The marginal benefits of building the Keystone Pipeline would definitely outweigh the marginal costs of doing so, as the resulting jobs created and cheaper oil prices will have a very positive economic impact.
For the past several years, the building of the Keystone Pipeline has been a point of contention in congress, as many lawmakers would like to see this ambitious project come to fruition have been pushing for the pipeline to be built, which would create jobs and provide crude oil from Canada to the U.S. But the Obama Administration has been actively blocking the approval of the Keystone Pipeline, citing its environmental impact as a major issue in this debate. But many have speculated that if the sand oil produced in Canada doesn't make its way from Alberta into the U.S. and the Gulf of Mexico, emitting more carbon dioxide and harming the environment, then the same oil will still flow into the United States from a different source, like Venezuela.
I strongly support the construction of the Keystone Pipeline. It is time for the Obama Administration to finally stop dragging their feet and approve the pipeline. If the Keystone Pipeline is built, it will carry 830,000 barrels of oil a day from Alberta, Canada to the Gulf of Mexico, which would undoubtably lower oil prices, and would create thousands of jobs for U.S. workers maintaining the pipeline in the U.S. While this project wouldn't help the U.S. reduce our massive trade deficit, it would reduce our dependence on oil from less desirable sources like Saudi Arabia and Venezuela, and would probably be much cheaper, as the source of oil is much closer to the United States, effectively lowering the cost of transportation for the oil itself. Essentially, the construction of the Keystone Pipeline would result in a very positive economic impact overall, as more jobs would help lower unemployment, and cheaper gas prices would alleviate pressure on consumers, resulting in a consumer surplus.
While the environmental impact of the Keystone Pipeline might not be attractive, it will not be nearly as terrible as the Obama Administration is making it out to be. While oil from oil sands like that produced in Alberta does emit 17% more carbon dioxide than conventional oil, experts speculate that oil sand production will only comprise 4.5% of the oil market by 2030, so according to the author, only "4.5% of the world's oil would be 17% dirtier."In addition to this, only 0.4% of global greenhouse emissions would come from Canadian oil sands by 2030 if the pipeline were built. The marginal benefits of building the Keystone Pipeline would definitely outweigh the marginal costs of doing so, as the resulting jobs created and cheaper oil prices will have a very positive economic impact.
Unleashing America's Energy & Economic Potential on Federal Lands
http://www.breitbart.com/Big-Government/2013/11/21/Doc-Hastings-Unleashing-Americas-Energy-Economic-Potential-on-Federal-Lands
As I've mentioned before in this blog, the United States' oil production has been on the rise for the past several years, and the U.S. is expected to overtake Saudi Arabia in oil production by 2015. So it's safe to say that the U.S. is definitely headed in the right direction in the energy market. But the U.S. is still nowhere near its production capacity for oil, as thousands of acres of oil rich federal lands remain untapped, meaning that the current energy boom could be even greater if the Federal Government would allow more drilling and offer more leases on federal land. Currently, oil drilling has only been increasing on private and state lands, but the U.S. would be missing a huge opportunity by not drilling on federal lands.
The Article explains that H.R. 1965, the Federal Lands Jobs and Energy Security Act, a bill currently being considered in the House of Representatives, would authorize the opening up of more onshore federal lands for oil production, and protect land currently designated for oil production. According to the author, The Obama Administration "is actively and purposely keeping these resources off-limits." While that comment may seem biased for a news article, it appears to be fairly truthful considering the facts. For the past four years, the U.S. has seen the least amount of acreage of federal land leased for oil production since 1988. In addition to this, the average time taken to obtain a drilling permit for federal land by private companies under the Obama Administration is 307 days, which is practically an eternity compared to North Dakota's 10 days, or Colorado's 27 days (for state land). Under these conditions, it does in fact seem that the Obama Administration is purposefully suppressing energy production on federal lands.
Thankfully, some congress members have seen the economic benefit in increasing oil production on federal lands. H.R. 1965 would ensure that oil fields like the National Petroleum Reserve - Alaska are able to increase and expand production, and ensure that pipelines currently used for transportation of oil are maintained. I believe that it's absolutely crucial for H.R. 1965 to be passed, as the resulting increase in oil production will not only help erase our trade deficit, as discussed in my previous blog entries, but would also help create more jobs for the struggling American economy, as more and more workers are needed by firms expanding drilling operations on federal land. While the environmental impact of expanding oil production should certainly be considered, I believe that the positive economic impact of decreasing our trade deficit and creating more jobs far outweighs the negative environmental impact that could come as a result of increased drilling.
As I've mentioned before in this blog, the United States' oil production has been on the rise for the past several years, and the U.S. is expected to overtake Saudi Arabia in oil production by 2015. So it's safe to say that the U.S. is definitely headed in the right direction in the energy market. But the U.S. is still nowhere near its production capacity for oil, as thousands of acres of oil rich federal lands remain untapped, meaning that the current energy boom could be even greater if the Federal Government would allow more drilling and offer more leases on federal land. Currently, oil drilling has only been increasing on private and state lands, but the U.S. would be missing a huge opportunity by not drilling on federal lands.
The Article explains that H.R. 1965, the Federal Lands Jobs and Energy Security Act, a bill currently being considered in the House of Representatives, would authorize the opening up of more onshore federal lands for oil production, and protect land currently designated for oil production. According to the author, The Obama Administration "is actively and purposely keeping these resources off-limits." While that comment may seem biased for a news article, it appears to be fairly truthful considering the facts. For the past four years, the U.S. has seen the least amount of acreage of federal land leased for oil production since 1988. In addition to this, the average time taken to obtain a drilling permit for federal land by private companies under the Obama Administration is 307 days, which is practically an eternity compared to North Dakota's 10 days, or Colorado's 27 days (for state land). Under these conditions, it does in fact seem that the Obama Administration is purposefully suppressing energy production on federal lands.
Thankfully, some congress members have seen the economic benefit in increasing oil production on federal lands. H.R. 1965 would ensure that oil fields like the National Petroleum Reserve - Alaska are able to increase and expand production, and ensure that pipelines currently used for transportation of oil are maintained. I believe that it's absolutely crucial for H.R. 1965 to be passed, as the resulting increase in oil production will not only help erase our trade deficit, as discussed in my previous blog entries, but would also help create more jobs for the struggling American economy, as more and more workers are needed by firms expanding drilling operations on federal land. While the environmental impact of expanding oil production should certainly be considered, I believe that the positive economic impact of decreasing our trade deficit and creating more jobs far outweighs the negative environmental impact that could come as a result of increased drilling.
Friday, November 1, 2013
US energy revolution will end old Opec regime
http://www.ft.com/intl/cms/s/0/b707d4d4-31b8-11e3-a16d-00144feab7de.html#axzz2jSGduSkw
For many decades, the United States has been dependent upon foreign oil from regions like the middle east to meet its energy needs. But in recent years, the United States' energy production output has been steadily increasing as a result of new developments in natural gas drilling techniques and technology, and more oil production within our borders. This increase in energy production is likely to have a large impact on America, and worldwide energy markets, as the balance of power in these markets is slowly changing. In another ten years, the United States is set to dethrone OPEC as its influence over energy markets continues to grow.
In 1973, OPEC placed an oil embargo on America for supporting Israel in the Yom Kippur War, and the United States suffered from high oil prices as a result of this decision. OPEC has been known to use oil as a "policy instrument," often keeping oil supplies underground in order to drive prices up, while countries like the U.S. had no way to counter their actions. According to the author of this article, if the U.S. should overtake OPEC nations like Saudi Arabia and Qatar in oil production within the next decade, then the U.S. would no longer be subject to the price gouging methods of OPEC, and would become energy independent. The U.S. economy would benefit greatly from this change in regime, as American citizens would not have to endure the endless "pain at the pump" caused by OPEC nations' demands, and the economy would be much more stable if investors could have more certainty about the nation's energy supply.
Another great benefit from the United States' "energy revolution" will be a decrease in the U.S. trade deficit. As domestic oil production rises, the U.S. will export more and more oil to foreign countries, ultimately helping to cut back the trade deficit. This may help add value to the dollar, and aid the U.S. become more competitive in global markets, as more and more oil exports flow out of the country, and more wealth flows into the U.S. as a result.
For many decades, the United States has been dependent upon foreign oil from regions like the middle east to meet its energy needs. But in recent years, the United States' energy production output has been steadily increasing as a result of new developments in natural gas drilling techniques and technology, and more oil production within our borders. This increase in energy production is likely to have a large impact on America, and worldwide energy markets, as the balance of power in these markets is slowly changing. In another ten years, the United States is set to dethrone OPEC as its influence over energy markets continues to grow.
In 1973, OPEC placed an oil embargo on America for supporting Israel in the Yom Kippur War, and the United States suffered from high oil prices as a result of this decision. OPEC has been known to use oil as a "policy instrument," often keeping oil supplies underground in order to drive prices up, while countries like the U.S. had no way to counter their actions. According to the author of this article, if the U.S. should overtake OPEC nations like Saudi Arabia and Qatar in oil production within the next decade, then the U.S. would no longer be subject to the price gouging methods of OPEC, and would become energy independent. The U.S. economy would benefit greatly from this change in regime, as American citizens would not have to endure the endless "pain at the pump" caused by OPEC nations' demands, and the economy would be much more stable if investors could have more certainty about the nation's energy supply.
Another great benefit from the United States' "energy revolution" will be a decrease in the U.S. trade deficit. As domestic oil production rises, the U.S. will export more and more oil to foreign countries, ultimately helping to cut back the trade deficit. This may help add value to the dollar, and aid the U.S. become more competitive in global markets, as more and more oil exports flow out of the country, and more wealth flows into the U.S. as a result.
Thursday, October 31, 2013
Fracking the U.S. trade deficit
http://www.csmonitor.com/Environment/Energy-Voices/2013/1008/Fracking-the-US-trade-deficit-video
Over the past decade, the natural gas production of the United States has increased greatly, and according to the author of this article, this new energy boom is starting to trim back the United States' trade deficit. Trade deficit is a measure of the difference between the value of a country's total imports and exports. A nation accumulates a trade deficit when the value of its total imports outweighs the value of its total exports, and America just happens to have the highest trade deficit in the world. But over the past few years, a new trend has been emerging as the U.S. has been slowly chipping away its trade deficit as energy costs have decreased, and dependence on foreign oil has dropped.
According to this article, this year the United States is expected to surpass Russia and Saudi Arabia as "the world's largest producer of oil and gas," and by 2020, the United States is expected to become the world's largest oil producer. Energy is turning out to be a big export for the United States, as more and more liquified natural gas is being shipped to other countries, which is a good first step in erasing our trade deficit. The article states that from 2011 to 2012, the U.S. trade deficit decreased by 13.5% from $559.9 billion to $540.4 billion, largely as a result of energy exports. Over the past few years, politicians have been speaking out frequently to address their concern over American companies outsourcing jobs to China, and thus stripping away America's once great industrial power. But if the United States can become the world leader in energy markets, perhaps that will be enough to offset the consequences of America's loss of manufacturing dominance.
The expansion of U.S. energy production will most certainly lead to more jobs, as energy companies hire new workers to meet increasing energy demands. But the biggest impact of increasing energy production will be the return of manufacturing plants and jobs to America, as companies become increasingly attracted to our lower energy costs. This long awaited return of manufacturing companies will greatly help offset our trade deficit when these firms begin shipping their products around the globe, adding to the United States' exports. Energy production is the future of American prosperity and, if current trends continue, will help shrink our trade deficit as well.
Over the past decade, the natural gas production of the United States has increased greatly, and according to the author of this article, this new energy boom is starting to trim back the United States' trade deficit. Trade deficit is a measure of the difference between the value of a country's total imports and exports. A nation accumulates a trade deficit when the value of its total imports outweighs the value of its total exports, and America just happens to have the highest trade deficit in the world. But over the past few years, a new trend has been emerging as the U.S. has been slowly chipping away its trade deficit as energy costs have decreased, and dependence on foreign oil has dropped.
According to this article, this year the United States is expected to surpass Russia and Saudi Arabia as "the world's largest producer of oil and gas," and by 2020, the United States is expected to become the world's largest oil producer. Energy is turning out to be a big export for the United States, as more and more liquified natural gas is being shipped to other countries, which is a good first step in erasing our trade deficit. The article states that from 2011 to 2012, the U.S. trade deficit decreased by 13.5% from $559.9 billion to $540.4 billion, largely as a result of energy exports. Over the past few years, politicians have been speaking out frequently to address their concern over American companies outsourcing jobs to China, and thus stripping away America's once great industrial power. But if the United States can become the world leader in energy markets, perhaps that will be enough to offset the consequences of America's loss of manufacturing dominance.
The expansion of U.S. energy production will most certainly lead to more jobs, as energy companies hire new workers to meet increasing energy demands. But the biggest impact of increasing energy production will be the return of manufacturing plants and jobs to America, as companies become increasingly attracted to our lower energy costs. This long awaited return of manufacturing companies will greatly help offset our trade deficit when these firms begin shipping their products around the globe, adding to the United States' exports. Energy production is the future of American prosperity and, if current trends continue, will help shrink our trade deficit as well.
Tuesday, October 8, 2013
Obama Renews Calls on Congress to End Shutdown, Raise Debt Limit - The Washington Post
http://www.washingtonpost.com/politics/john-boehner-presses-demands-for-talks-with-obama-on-shutdown-debt-ceiling/2013/10/08/fbbe50da-3028-11e3-9ccc-2252bdb14df5_story.html
President Obama held a press conference today in which he urged the Republican-controlled House of Representatives to end the government shutdown and, more importantly, vote to raise the debt ceiling. Furthermore, Obama is demanding that there be no debate on the issue of raising the debt ceiling, and is refusing to negotiate with the Republicans over this. If the government debt hits the current debt ceiling of $16.999 trillion, a limit its expected to reach by October 17, then we will default on our debt, lowering our nation's good credit.
President Obama held a press conference today in which he urged the Republican-controlled House of Representatives to end the government shutdown and, more importantly, vote to raise the debt ceiling. Furthermore, Obama is demanding that there be no debate on the issue of raising the debt ceiling, and is refusing to negotiate with the Republicans over this. If the government debt hits the current debt ceiling of $16.999 trillion, a limit its expected to reach by October 17, then we will default on our debt, lowering our nation's good credit.
In this case, I find myself agreeing with President Obama. Republicans have lost the right to negotiate and make demands regarding the debt ceiling after their behavior essentially caused the government shutdown last Tuesday. Why should Democrats now listen to the Republicans' demands after their hopeless mission to defund Obamacare left 800,000 Americans out of work? House Speaker John Boehner has warned that the government must learn to live within its means and stop borrowing so much money before Republicans will vote to raise the debt ceiling again. But Obama also reminded Republicans that if we hit the debt ceiling and default on our debt, then the Federal Government will have to pay more interest on the national debt, which is just as bad increasing spending.
While I agree that the government absolutely does need to cut spending to lower the deficit, with the government shut down and the economy in the balance, now is not the time to negotiate over budget cuts or Obamacare. I was not impressed with the way Republicans handled the shutdown and I will not approve of those tactics being used over the debt ceiling. There is simply too much at stake. The economy would be deeply hurt by a default on our debt, and having that happen on the heels of a government shutdown would be even worse. Republicans should choose their battles carefully, and find different ways to cut the deficit in the future.
Government Shutdown Unlikely to Damage Economy, But Debt Limit Could be Catastrophe - The Washington Post
http://www.washingtonpost.com/business/economy/government-shutdown-wont-kill-economy-but-debt-ceiling-could-be-catastrophe/2013/10/07/06196142-2f6f-11e3-bbed-a8a60c601153_story.html
Ok, so my predictions about the government shutdown not happening were a little bit too optimistic. As you now probably know, the Federal Government did indeed shut last tuesday after Republicans refused to back down on defunding Obamacare, and Democrats refused to accept their demands. In the course of a week, 800,000 government workers were furloughed by the Federal Government as a direct result of the government shutdown, but essential services of the government will still be carried out. Now, with hundreds of thousands of government employees out of work (at least for the time being), and renewed uncertainty in the Federal Government, the economy is sure to take a hit in the coming weeks.
The government shutdown has already had a broad impact. National parks and museums still remain closed, which is hurting tourism, and will ultimately lead to a loss of revenue from potential foreign visitors to those sites. But more importantly, as I mentioned in my previous blog, investors are now losing confidence in the economy as a whole, and are beginning to sell stocks. This could have a global effect if world markets lose confidence in the United States' economy as well.
While the effects of the government shutdown have been very negative, if congress cannot agree to raise the debt ceiling by the upcoming deadline, the resulting impact on the economy will be far worse in comparison, as the Federal Government will not be allowed to borrow any more money to pay its bills. According to the article, the investment bank Goldman Sachs reports that if congress does not vote to raise the debt ceiling, our nation's GDP will be lowered by 4.2% over the course of a year. This is simply unacceptable. If Republicans and Democrats refuse to come to a compromise on raising the debt ceiling, then the economy could be damaged greatly because of their failure to do their jobs. While Republicans may argue that the national debt is too high and implementation of Obamacare will increase the deficit too much to allow the debt ceiling to be raised, failure to raise the debt ceiling will probably have far worse effects on the economy than a $16.7 trillion dollar deficit.
Ok, so my predictions about the government shutdown not happening were a little bit too optimistic. As you now probably know, the Federal Government did indeed shut last tuesday after Republicans refused to back down on defunding Obamacare, and Democrats refused to accept their demands. In the course of a week, 800,000 government workers were furloughed by the Federal Government as a direct result of the government shutdown, but essential services of the government will still be carried out. Now, with hundreds of thousands of government employees out of work (at least for the time being), and renewed uncertainty in the Federal Government, the economy is sure to take a hit in the coming weeks.
The government shutdown has already had a broad impact. National parks and museums still remain closed, which is hurting tourism, and will ultimately lead to a loss of revenue from potential foreign visitors to those sites. But more importantly, as I mentioned in my previous blog, investors are now losing confidence in the economy as a whole, and are beginning to sell stocks. This could have a global effect if world markets lose confidence in the United States' economy as well.
While the effects of the government shutdown have been very negative, if congress cannot agree to raise the debt ceiling by the upcoming deadline, the resulting impact on the economy will be far worse in comparison, as the Federal Government will not be allowed to borrow any more money to pay its bills. According to the article, the investment bank Goldman Sachs reports that if congress does not vote to raise the debt ceiling, our nation's GDP will be lowered by 4.2% over the course of a year. This is simply unacceptable. If Republicans and Democrats refuse to come to a compromise on raising the debt ceiling, then the economy could be damaged greatly because of their failure to do their jobs. While Republicans may argue that the national debt is too high and implementation of Obamacare will increase the deficit too much to allow the debt ceiling to be raised, failure to raise the debt ceiling will probably have far worse effects on the economy than a $16.7 trillion dollar deficit.
Thursday, September 19, 2013
Government Shutdown Moves Closer to Reality - The Washington Post
http://www.washingtonpost.com/business/economy/year-end-tax-cuts-have-nearly-doubled-projected-size-of-national-debt-cbo-says/2013/09/17/cda802d2-1f9c-11e3-94a2-6c66b668ea55_story_1.html
Once again, business in the House of Representatives is grinding to a halt as we approach the imminent government funding debate. Just in case it slipped your mind, lets have a recap of the 2011 debt ceiling crisis in which congress dragged out a vote on whether or not to raise the debt ceiling. Republicans in the House of Representatives threatened to let the government shut down if Democrats did not agree to include a "balanced budget amendment" to the constitution, thus holding the nation hostage as a polarized congress underwent endless debates and theatrics until a compromise was finally reached. But this time is slightly different, as House Republicans are demanding that Democrats vote to defund Obamacare before they will vote to continue funding the government.
While I do not oppose Republicans' efforts to end Obamacare, I do not believe that threatening to shut down the government is a rational way for the GOP to accomplish this goal. Not only is this tactic unorthodox and ineffectual, but it is also a surefire way to damage the economy by inciting fear on Wall Street. When investors see that there is a chance of a government shutdown, they are likely to respond by selling stocks, lowering their values and ultimately hurting the economy. For this reason, Republicans should be wary about sticking to their guns without compromise in this situation. While the effects of a government economy would probably not be described as catastrophic, it would most certainly be an undesirable situation for everyone, with all but "essential services" of the federal government being delayed until further notice.
Will Republicans and Democrats come to a compromise on this issue and vote to continue funding the government? I hope so. And if history is any indication of what will happen, we can probably assume that they will, even if it comes down to an eleventh hour agreement. While I do not like to see Obamacare going into effect just as much as the Republicans don't, the best way to cut the deficit at this point is not by letting the government default. Republicans should focus on more realistic methods of stopping Obamacare, instead of settling for an all-or-nothing, high stakes showdown with Democrats in congress by using a potential government shutdown as leverage by which to ram through their economic policies.
Once again, business in the House of Representatives is grinding to a halt as we approach the imminent government funding debate. Just in case it slipped your mind, lets have a recap of the 2011 debt ceiling crisis in which congress dragged out a vote on whether or not to raise the debt ceiling. Republicans in the House of Representatives threatened to let the government shut down if Democrats did not agree to include a "balanced budget amendment" to the constitution, thus holding the nation hostage as a polarized congress underwent endless debates and theatrics until a compromise was finally reached. But this time is slightly different, as House Republicans are demanding that Democrats vote to defund Obamacare before they will vote to continue funding the government.
While I do not oppose Republicans' efforts to end Obamacare, I do not believe that threatening to shut down the government is a rational way for the GOP to accomplish this goal. Not only is this tactic unorthodox and ineffectual, but it is also a surefire way to damage the economy by inciting fear on Wall Street. When investors see that there is a chance of a government shutdown, they are likely to respond by selling stocks, lowering their values and ultimately hurting the economy. For this reason, Republicans should be wary about sticking to their guns without compromise in this situation. While the effects of a government economy would probably not be described as catastrophic, it would most certainly be an undesirable situation for everyone, with all but "essential services" of the federal government being delayed until further notice.
Will Republicans and Democrats come to a compromise on this issue and vote to continue funding the government? I hope so. And if history is any indication of what will happen, we can probably assume that they will, even if it comes down to an eleventh hour agreement. While I do not like to see Obamacare going into effect just as much as the Republicans don't, the best way to cut the deficit at this point is not by letting the government default. Republicans should focus on more realistic methods of stopping Obamacare, instead of settling for an all-or-nothing, high stakes showdown with Democrats in congress by using a potential government shutdown as leverage by which to ram through their economic policies.
Oh Look, There Goes the Deficit - TheDailyBeast.com
http://www.thedailybeast.com/articles/2013/09/14/oh-look-there-goes-the-deficit.html
In what may seem like a startling turn of events in light of the rampant growth of the Federal Government's annual budget deficit this past decade, deficit spending is actually starting to shrink. While I had expected the sequester to help rein in deficit spending when it was implemented last March, I did not expect it to make quite the impact it appears to have made on the National Debt. The author of the article attributes the 35%, $409 billion reduction in deficit spending since last year to a 15% increase in tax revenue, and a 3.6% reduction in government spending. I agree that these two statistics represent monumental turnarounds for the financial state of the federal government, but I also believe that even greater spending cuts will be necessary for the U.S. Government to get its fiscal house in order.
The implications for the economy as a whole on this issue are huge. While the unemployment rate has been declining, most companies have been reluctant to hire more new employees for the past few years as a result of uncertainty in the the nation's economic stability in the near future. Without the burden of a rampantly growing national debt, employers may have a new incentive to begin creating more jobs, which may finally mark a complete recovery from the Great Recession. While the stock market has recovered all of its losses from the housing market crisis of 2008 and the Dow Jones Industrial Average has reached all time highs, the high national unemployment rate has remained a major obstacle to a full economic recovery.
While the author of the article mentioned some good reasons for the deficit to be decreasing, I did wonder why he didn't write about the rebound of the stock market. Last summer the stock market made significant gains which means that capital gains taxes must have brought in a greater amount of revenue, which could certainly have affected the deficit. Overall, I found this article to be interesting and insightful, and I am happy to see that deficit spending is finally shrinking.
In what may seem like a startling turn of events in light of the rampant growth of the Federal Government's annual budget deficit this past decade, deficit spending is actually starting to shrink. While I had expected the sequester to help rein in deficit spending when it was implemented last March, I did not expect it to make quite the impact it appears to have made on the National Debt. The author of the article attributes the 35%, $409 billion reduction in deficit spending since last year to a 15% increase in tax revenue, and a 3.6% reduction in government spending. I agree that these two statistics represent monumental turnarounds for the financial state of the federal government, but I also believe that even greater spending cuts will be necessary for the U.S. Government to get its fiscal house in order.
The implications for the economy as a whole on this issue are huge. While the unemployment rate has been declining, most companies have been reluctant to hire more new employees for the past few years as a result of uncertainty in the the nation's economic stability in the near future. Without the burden of a rampantly growing national debt, employers may have a new incentive to begin creating more jobs, which may finally mark a complete recovery from the Great Recession. While the stock market has recovered all of its losses from the housing market crisis of 2008 and the Dow Jones Industrial Average has reached all time highs, the high national unemployment rate has remained a major obstacle to a full economic recovery.
While the author of the article mentioned some good reasons for the deficit to be decreasing, I did wonder why he didn't write about the rebound of the stock market. Last summer the stock market made significant gains which means that capital gains taxes must have brought in a greater amount of revenue, which could certainly have affected the deficit. Overall, I found this article to be interesting and insightful, and I am happy to see that deficit spending is finally shrinking.
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