Revive the Economy the United

¶ … Revive the Economy

The United States today is facing a number of challenges, not least of which is the terrorist threat and political upheaval. One of the major internal problems the country is facing today is the economic downturn that started in 2008 and is still affecting the economy today. Economists have offered varied solutions, from tax cuts and rebates to a free market economy and the withdrawal of the government from spending regulation. Whichever solution is chosen, it is vital to recognize the importance of critical thinking in devising solutions to the economic problems and debt issues the country faces today.

Influences on Fiscal Policy

It is the opinion of several authors that the influence of Government and fiscal policy upon the economics within the country is somewhat disproportionate in terms of the natural economic rhythms of the population. In other words, government intervention in the economic realities in the country often leads to further deficits and further crises. The prolonged nature of the current economic situation, according to some, is a case in point.

Indeed, Reich (2011) believes that the current debate on the 2012 federal budget proposal takes the focus away from the issues that are of greatest importance in the economic crisis. The issues inherent in the debate include Republican questions regarding the President's spending cuts, whether these are sufficient to satisfy the Republican Party regarding the state of the American economy. Reich, however, argues that these are the incorrect issues to discuss at a time when these are not crucial for the healing of the current situation.

Indeed, Reich cites the 1995 budget debate involving Bill Clinton and Newt Gingrich, where the election was also a significant deciding factor in the direction of the debate. However, the author warns that the 1991 recession is not of the same nature or complexity as the one still experienced by many Americans. The current recession, for example, was caused by what Reich refers to as a "giant debt bubble," which will take more than a cut in interest rates to rectify. Indeed, interest rates, as Reich points out, have been close to zero for two years, making any effect by further cutting both unlikely and unviable.

The result of the crisis is a surplus of goods and cash as a result of the inability of average customers to buy goods and services. While the richest 10% of the population has experienced a revival of their personal economy, this is not enough to revive the entire economy.

Reich argues that insufficient federal spending is likely to deepening the crisis rather than remedy it. Indeed, the author reaches as far back as the Great Depression during the early 20th century in seeking analogies for the current crisis. Marks also focuses on this dark era in American history when searching for solutions. Both authors appear to agree on the fact that government intervention is the culprit in prolonging the crisis, especially with such intervention relating to spending cuts.

3. Interest Groups and the Media

The most important interest group in the American economy is Americans themselves. It appears, in its drive to find solutions to mitigate the crisis as fast as possible, it appears that the government has focused only on the possibilities of its own agenda and actions rather than those of the people of the country, where the economic power should lie. While government spending cuts are therefore a potential solution form the perspective of the country's rulers, it seems that alternative possibilities, such as a free market economy, have been ignored.

Furthermore, the media has a significant influence on the public perception of the economic crisis. The government can, for example, use the press to promote its solutions to the crisis, while this might not be the best solution available. On the other hand, the nature of the current media, especially in terms of blogs and citizen-generated opinion pieces, has brought about a greater sense of critical thinking in relation to the media. Hence, alternative suggestions have been more prevalent. The overwhelming influence of politics, however, tends to remain, and there is a general sense that the country's leaders will pay little mind to alternative solutions offered by the general population and even by economists.

4. Potential Solutions

Economists and authors offer several alternative solutions to the current solutions suggested by the government and political debate. The current solution proposed by government is spending cuts. As mentioned, this may not be the optimal solution to the country's economic woes, since it is likely that this is likely to simply drive the country into further crisis. Instead, a solution should involve creating greater spending power among the general population so that businesses can once again sell their products and services at healthier levels.

One solution that has been used in the past is tax cuts and rebates. Reich (2011), for example, suggests that the overall economy of the country will only repair itself when the average American citizen has more money in his or her pocket. Reich's solution is by means of tax cuts, where the first $20,000 of income is exempt from payroll taxes.

Another tax-related solution is by means of temporary rebate payments. According to Taylor (2009, p. 3), this has been done in the past to create a sense of greater economic security among citizens, which was meant to encourage more spending among average citizens and hence help the economy back to its feet.

The inherent danger in this is that government funding to maintain these probate payments may diminish and eventually dry up, creating a further crisis rather than stimulating the economy. All solutions that relate to tax cuts create a potential problem for government, since taxes are a primary source of funding. Furthermore, the health of social and health care systems is also dependent upon the ability of the government and the taxes paid by citizens to maintain them. Hence, tax cuts and rebate payments can serve as no more than temporary, short-term solutions that should be carefully regulated by the economic needs of the government. A more self-sustaining method of economic revival should be created instead.