Recovery Economy Failure

The government established short range goals that included relief and immediate recovery, especially in the first two years. They then set up long-range goals which included permanent recovery and reform of current abuses particuarly those that produced the boom-or-bust catastrophe (World Book, Vol.14, p.748). The Congress authorized the National Recovery Administration (NRA) in a daring attempt to simulate a nationwide comeback. This scheme was to perform immediate relief with long range recovery and reform. It was designed to assist industry, labor, and the

On November 4, 2008, candidate Barack Obama was elected for the first term of his presidency. The following February, The American Recovery and Reinvestment Act of 2009—or the ARRA—was signed into effect by congress, and made into law by President Obama on February 17, 2009. This stimulus package was originally proposed to be 816 billion dollars, but was eventually raised to be 840 billion dollars in 2012. The purpose of this bill was to inspire confidence in the American people that the economy would be up and running again. The ARRA was intended to give money back to small businesses as well as the American families who ran and worked at these businesses. This varies from TARP, or the Troubled Asset Recovery Program, which was a bill that was aimed at bailing out banks in October 2008. TARP worked to allow banks in danger to participate in reverse auction, in order to sell their assets.

Leo: Before the end of his term, President Bush passed TARP. TARP was a program that increased government spending to buy all the garbage CDOs. This program involved $800 billion in government spending which was limited to $475 billion due to the Dodd-Frank Act (TARP Programs 1). President Obama continued using expansionary fiscal policy by passing the American Recovery and Reinvestment Act which increased government spending by $787 billion and lowered taxes (Amadeo 1).

The National Recovery Administration was created by Franklin D. Roosevelt as part of the New Deal policies. The National Recovery Administration increased the prices of manufactured goods. It hurt the farmers that needed to buy tools and equipment. As they did not have the money to buy the taxed equipment, they could not do their job. It was a detriment both the consumers and the companies. “New Deal spending was supposed to stimulate the economy, but New Deal taxing depressed the economy.”

The American Recovery and Reinvestment Act of 2009, otherwise known as the Stimulus Bill, was one of the first major pieces of legislation passed by the new Democratic Congress in 2009 and signed by newly inaugurated President Barack Obama. The legislation was an attempt to take the United States economy out of a major recession through federal spending. The motivation for this bill was the collapse of the housing market bubble and the mortgage crisis. A result of these problems was the decline of consumer and corporate credit, causing monetary liquidity in the economy. Obama argued that the economy needed a “jump-start” to get moving again; that being the stimulus of 2009. Drafts for the bill called for as little as $275 billion in spending,

Relief, part one of FDR’s New Deal programs, the short-term, “band-aid” solutions. These programs, such as FERA, the Federal Emergency Relief Administration, were established to put money directly into that hands of citizens who needed it most. By doing this FDR was able to jumpstart the economy with a different approach than what Herbert Hoover had attempted a year or so before. With money in the people’s hands it was able to circulate from the bottom to the top, and not visa versa like Hoover’s theory. FERA allowed people to afford their necessities, and at the same time began to get the economy back on track. Being a relief program means that it only last so long

These programs to aid the middle class require money that the government does not have. To create the necessary funds needed to operate the “Stimulus Package,” the government levied high taxation on corporations. However, this had the opposite result. The high taxation placed on large corporations took away jobs from the American middle class(Kent McDill). Middle class jobs are slowly bleeding out of America. The high taxation, along with strict corporate regulations are taking middle class jobs out of America and forcing corporations to take a different route for employees.

The next step in FDRs New Deal is recovery. The objective of the National Recovery Administration was to create codes for businesses to follow. These codes would then help to provide minimum wages for employees, restrict the number of hours worked to prevent over time and set prices and production levels. The goal was to fix the American economy by limiting competition, rising power purchased by the consumer and hiring unemployed workers back to work for them once more. By mid-1933, the new agency achieved the voluntary acceptance by nearly 600 industries of new codes. The new codes covered nearly 30 million workers. One problem was that the chief administrator was chosen because of his well-known service in the WIB during World War I. Sadly,

They write, “In response to the massive unemployment of the 1930’s, Roosevelt’s New Deal in 1933 introduced the first federal relief programs targeted at the poor and unemployed… he anticipated that the work relief jobs would boost consumer spending and thus increase demand for labor, which would then raise private employment and earnings.” (Neuman, Fishback, Kanton, pg 4) This quotes illustrates that programs such as these relief jobs, would not only be able to get the people back to work, but also get the economy up and running again.

The U.S has gone through a major economic struggle and is still fighting for stability. It is, also, undergoing a recession which occurs whenever gross domestic product and the total output of goods and services fall for two consecutive quarters. The 789 billion dollars stimulus package has not created many private sector jobs and the hundreds of billions in TARP money squandered by Treasury Secretary Geithner to bail out General Motors, Chrysler, Bank of America, AIG and Citigroup has not reached most business and working Americans (Peter Morici). Though the unemployment rate has decreased, it is because many Americans have stopped looking for jobs and are no longer in the unemployment rates. This, of course, does not show any improvement in the U.S economy. Most of the taxpayers’ money is being used to support illegal families with American-born babies; while, many illegal Mexicans are taking jobs from citizens who are desperately searching for jobs. With this unattended problem the country’s economical repair will be prolonged.

Blumberg, Alex, dir. “The Giant Pool of Money – Episode 355.” Dir. Davidson Adam, This American Life. NPR News: WBEZ,

Fiscal policy: Given the breadth and depth of this recession, it was clear that the Treasury and the entire Obama administration had to take bold actions. In fact, right at the beginning, they were committed to a fiscal stimulus policy package which would be “substantial” enough to pull the economy out of the recession. The final stimulus package signed into law in 2009, the American Recovery and Reinvestment Act, was totaled $787 billion including about one-third tax cuts and one-third aid for states and the unemployed. Of the rest, labor health and education investment got 8%, and infrastructure investment got about 7%. It also included a large amount of government money to

Observers of failed economic stimulus packages have developed a fear that these large sums of funding will be mismanaged and therefore will not be able to stimulate the economy (“History of Government Spending,” n.d.).

In these current economic times, people have lost jobs. People have lost faith in the economy since the worth of their money keeps falling. Businesses are failing left and right because of the lack of confidence in the system. Banks have folded because of the amount of people who are unable to pay their loans, leaving the banks without funds. The auto industry is failing as people cannot afford the new cars being produced by Detroit. Confidence in the economic system of the United States is very low. How can the country recover from this economic recession? Some economists would say that the government should step in to save the day by pumping funds into the system. President Obama signed a massive stimulus bill in an attempt to turn the

The policy response from the G.W. Bush is that there are three main parts to the fiscal policy stimulus. An individual tax that the Internal Revenue service sent out started in mid-2008. There were two business provisions that encourage investment during 2008 by increasing limits on expensing investment costs and accelerate depreciation of qualifying investments. The specific steps taken in early 2008 were the home owner purchases rebate and tax cuts.