This paper examines the economic conditions that shaped Barack Obama's 2008 election platform and the stimulus package he subsequently proposed to address rising U.S. unemployment. It outlines the plan's two major components — payroll tax cuts and direct government spending on infrastructure, renewable energy, and unemployment insurance extensions — and evaluates their effectiveness. The paper also presents competing perspectives on the best path to economic recovery, contrasting Keynesian public-works approaches with supply-side tax-cut arguments, and concludes that the stimulus fell short of its stated goals, prompting calls for new economic strategies.
The paper exemplifies evidence-based policy analysis: it states a policy goal (reducing unemployment below 7%), cites the projected outcome, then compares it against actual results using sourced data. This "goal vs. outcome" structure is a clean model for undergraduate policy evaluation essays.
The paper opens with unemployment statistics to establish urgency, then traces the political context of the 2008 election. It moves into a description of Obama's two-part stimulus plan (tax incentives, then spending), evaluates results against projections, introduces counterarguments from both the left and the right, and closes with a call for new approaches. The Works Cited follows MLA format with five sources.
The unemployment rate in the United States fluctuated between nine and ten percent for well over two years ("Labor Force Statistics"). That rate was more than double what it had been a mere ten years earlier, putting millions more Americans on the unemployment compensation rolls. More alarming than the numbers was the general feeling of pessimism that enveloped the country as the population wondered when the economy might turn around. To most of the unemployed, there appeared to be no end in sight. Many of the unemployed were not even receiving unemployment compensation from the government. At the end of March 2011, only 5.8 million of the estimated 13.2 million unemployed were collecting unemployment insurance (Hagenbaugh).
These statistics were key components of the 2008 election won by Barack Obama. All candidates recognized the importance of the economy and each drew up a plan to address it. Obama's idea that the government should provide the necessary economic stimulus was assailed as a "big government approach" to a problem that many felt should be allowed to play out naturally. However, the implosion of the housing market and the revelation of subprime lending issues forced many of these dissenters to admit that strong government intervention was indeed necessary.
Obama's economic plan consisted of several different components, all designed to spur economic activity and private-sector hiring. The first part of his plan was one he felt would be embraced by all sides of the debate: tax cuts. Obama's tax cuts were not focused on individual taxpayers, but on the payroll taxes that businesses pay. The Congressional Budget Office had concluded that payroll tax cuts were the most cost-effective way to increase hiring. Obama coupled this approach with tax credits for businesses that hired new employees, as well as reimbursing them for Social Security taxes up to $500,000 (Chan).
The stimulus plan Obama proposed included more than just tax incentives, as he aimed to get Americans back to work immediately. In order to infuse money directly into the economy quickly, Obama proposed giving cash to state and local governments that were being squeezed by the difficult economic times. This money was intended to be used for infrastructure spending in the form of school renovations and construction, road building, and bridge repair. Funds were also set aside for electricity grid modernization and renewable energy research and investment. For those who would continue searching for work, there was ample money to provide generous extensions to unemployment insurance.
The depth of the current recession has taken everyone by surprise and there may be no simple solution to get the most people back to work. It seems as though every conventional approach has been tried at some point, whether it is tax cuts, infrastructure spending, or other government-sponsored incentives. The numbers make clear that the current stimulus did not achieve its stated objective and was unable to make a significant dent in unemployment. Similarly, the tax cuts implemented during the Bush administration served only to eliminate the federal budget surplus and did little to prevent the economic downturn. It may be time to look for new ways to stimulate the economy — approaches that have never been tried before.
"Labor Force Statistics from the Current Population Survey." Bureau of Labor Statistics. U.S. Department of Labor, 10 Nov. 2011. Web.
Hagenbaugh, Barbara. "Many of the Jobless Get No Unemployment Benefits." USA Today. 9 April 2009. Web. 10 Nov. 2011.
Chan, Sewell. "Obama Outlines Plan to Increase Employment." The New York Times. 29 Jan. 2010. Web. 10 Nov. 2011.
Wolf, Richard. "Obama's $825B Stimulus Plan Includes Spending, Tax Cuts." USA Today. 16 Jan. 2009. Web. 10 Nov. 2011.
Blodget, Henry. "Here's The Chart That Will Get Obama Fired." Business Insider. 9 Oct. 2011. Web. 10 Nov. 2011.
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