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.
In terms of local business, authors such as Marks (2008) suggest a focus on free market principles, where the government's power is limited and the market regulates itself. This would create more opportunities for new entrants into markets, also creating more job opportunities and a...
The authors found that a significant number of immigrants during the 1990s as well as the start of the new century have started businesses themselves, or are involved in helping other businesses towards success. This, along with the general principles of a free market economy, could mean the answer to the current economic situation in the United States.
5. Recommendations.
The first recommendation I would make in this regard is to recruit the advice of economic experts. Such advice should then be critically considered before a decision is made about a way forward. More specifically, from the suggestions offered above, it might be advisable to use an immediate remedy such as tax solutions as a short-term response, while longer-term solutions could lie in encouraging a free market regulated by entrants such as immigrants and local entrepreneurs. This could then result in a truly self-sustaining growth factor for the economy, which would also mean more taxes and economic solutions for the government.
References
Herman, R.T. And Smith, R.L. 2010. Immigrant, Inc.: why immigrant entrepreneurs are driving the new economy. John Wiley & Sons.
Marks, A. 2008. The Next Policy: Reviving the Economy Through Free Market Principles. Web: http://thenextright.com/aaron-marks/the-next-right-policy-reviving-the-economy-through-free-market-principles
Moore, S. 2003. Tx Plan Revival? The Washington Times. Apr. 6. Web: http://www.cato.org/pub_display.php?pub_id=3062
Reich, R. 2011. The Obama budget -- and why the coming spending-cuts debate has nothing to do with reviving the economy. Web: http://blogs.berkeley.edu/2011/02/15/the-obama-budget-%E2%80%94-and-why-the-coming-spending-cuts-debate-has-nothing-to-do-with-reviving-the-economy/
Taylor, J.B. 2009. The Lack of an Empirical Rationale for a Revival of Discretionary Fiscal Policy. American Economic Association Annual Meeting, Jan 4. Web: http://www.stanford.edu/~johntayl/AEA%20Paper%20on%20Fiscal%20Policy%202009%20JBT.pdf
