Saturday, September 18, 2010
Are we there yet? America’s recovery will be much slower than that from most recessions; but the government can help a bit
This article talks about the somewhat unusual slow recovery rate of the American economy post-recession. Some of the possible reasons for this include a complete breakdown in the finance sector, which delays growth, and poorly structured morgages that are worth more than the actual house. The author suggests a number of solutions. The one I found most interesting suggests keeping Bush's tax cuts and running a loose fiscal policy. This will no doubt increase the deficit. So, is it more important to cut the deficit or encourage growth?
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3 comments:
i would say try to increase growth for the long term, then start to think about the deficit. Once the economy gets back on its feet then you can make the effort to reduce the deficit. It just doesn't seem smart when everyone is struggling to start asking for a bigger percentage of peoples money..
I think that increasing the fiscal deficit further by bringing in tax cuts may not be such a good idea. The government has pumped in so much money into the economy over the past two years and holding out for those policies to take effect might be a good idea. Continued spending and running the deficit higher, without waiting to see the impact of the policy changes will not help.
I would suggest increases the growth. Once the growth in attained the deficit can be dealt with. Though growth should be paid attention to, it would be economically irresponsible not to think about the deficit at all while doing so. I think growth should be concentrated on with the deficit in mind and on the back burner.
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