Tuesday, April 3, 2012

Pro Ryan's Budget Plan

President Obama used the term “social Darwinism” to define Paul Ryan’s budget plan, arguing that the plan is bad for solidarity in the country by creating tension between the wealthy and the poor and enlarging party differences. The President stresses the importance of middle class, as it has been the engine of progress throughout the American history. Although President Obama is correct about strengthening middle class, I think there should be some decisive governmental action taken to cut deficit because the even-increasing deficit signals unhealthy economy(Washington Post).

President Obama has introduced several stimulus projects into the market, but they did not achieve desired goals. Evidence of past stimulus plans show that we cannot rely on stimulus any more and that it is a misuse of resources. Stimulus will not ease the market in the long run if people do not feel confident spending money and do not feel secure about their basic needs. That is way the purchasing power still remains weak. Without borrowing money and deepening the deficit, the government should generate economic development with its given resources. It is highly necessary to control spending and cut deficit, which will strengthen the U.S. dollar. If the U.S. keeps borrowing money and allowing stimulus plans, the U.S. dollar will remain weak, and investors do not feel confident investing, including big investors and individual investors who purchase currency according to exchange rates. I remember that when I was planning to participate in an exchange program in the U.S. in 2003, the exchange rate was 8.3 CNY per USD, while it is now 6.2 CNY per USD. The decline of 2 dollars may sound subtle to many people, but it means a big decline in investors’ confidence in the U.S. dollar. If investors gain confidence because of a stronger dollar, there will be more money flowing in the market, which will revive the economy, a purpose of stimulus plan, but it is different from stimulus plans in the way that it is not artificially introducing money into the market. If President Obama really wants to promote bipartisanship, it is time to consider spending cut and government program cut. There will surely be people who get hurt, but it is a choice between a deteriorating economy for all and temporary sacrifices for some.

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1 comment:

Eric Boole said...

Beryl--While I agree that deficits are indeed unsustainable in the long term, I believe using stimulus in the short run to stimulate growth is a wise choice. There is some optimism regarding the consequences of stimulus measures: according to the Commerce Department on Friday, consumer spending rose .8% in February, the highest it has risen in months. While the premise of a self-sustaining recovery is clear goal of all policy makers, liberal and conservative, deficit spending now in order to stimulate growth maybe be the wisest plan of action--I do not foresee tax cuts or rises prior to the end of 2012, and now is a critical time to continue the sustenance of our economic recovery.