The Need for Appropriate Government Response to the Global Financial Crisis

People generally enjoy working and being productive members of society. The positive effects of the Welfare Reform Act is moving to eventually end poverty in America and promote economic growth. According to the 2005 report measuring welfare dependents “Poverty in 2003 remains much lower than in 1996, the year of passage of the Personal Responsibility and Work Opportunity Reconciliation Act. The official poverty rate for 2003 was 12.5 percent, compared to 13.7 percent in 1996.” ( Gil Crouse, Susan Hauan, Julia Isaacs, Kendall Swenson and Lisa Trivits, 2005 ) States that design welfare-to-work policies that emphasized getting recipients into jobs by shifting to “work-first” welfare systems can modify program rules to allow more earned income,

A nation’s economy plays a vital role in how a nation operates. The United States economy faces a large variety of problems in this paper; we will focus on 4 major economic problems, unemployment, inequality, federal debt, and the financial/credit market. All four issues are interconnected in some way with deep social and economic implications. These issues were emphasized during the Great Recession that hit the U.S. economy in 2007.In the following paper, we will look at each of the four topics individually as well as look at how each plays a significant role in one another’s overall impact on the U.S. economy as well as individuals in the United States. The United States plays a crucial role in the world economy, meaning that every issue and difficulty faced the United States economy has implications far outside the U.S., understanding how these issues relate to one another sheds insight into just how connected every area of the economy actually is.

Our economy is a machine that is ran by humans. A machine can only be as good as the person who makes it. This makes our economy susceptible to human error. A couple years ago the United States faced one of the greatest financial crisis since the Great Depression, which was the Great Recession. The Great Recession was a severe economic downturn that occurred in 2008 following the burst of the housing market. The government tried passing bills to see if anything would help it from becoming another Great Depression. Trying to aid the government was the Federal Reserve. The Federal Reserve went through a couple strategies in order to help the economy recover. The Federal Reserve provided three major strategies to start moving the economy in a better direction. The first strategy was primarily focused on the central bank’s role of the lender of last resort. The second strategy was meant to provide provision of liquidity directly to borrowers and investors in key credit markets. The last strategy was for the Federal Reserve to expand its open market operations to support the credit markets still working, as well as trying to push long term interest rates down. Since time has passed on since the Great Recession it has been a long road. In this essay we will take a time to reflect on these strategies to see how they helped.

An estimate in 2011 concluded that 1.9 million families were the target population of the TANF program. The need that is targeted includes assisting families with cash benefits to provide for children in their home. Families below the federal poverty line are provided minimal cash assistance, child care, education, and training. For the TANF policy and program to be successful there needs to be changes that focus the increasing support for working families through TANF, eliminate education barriers, address employment barriers, provide child poverty reduction bonus, restore immigrant eligibility, enhance the capacity of the welfare system infrastructure, and expand other programs supporting low-income families (National Association of Social Workers, 2014). These changes are need to remove the focus from the deficit of individuals and families living in poverty while creating a policy that will address the needs of the

In contrast, expenditures on the Earned Income Tax Credit (EITC) have grown sharply from $5 billion in 1975 to $45 billion in 2005. No other federal antipoverty program has grown so rapidly. The EITC is now U.S.’s most immensely colossal cash antipoverty program. The incentives embedded in the EITC differ from those in AFDC/TANF. AFDC recipients with no earnings received the most astronomically immense welfare payments. In contrast, the EITC inspirits less-adept workers to enter the labor market, since nonearners do not receive the credit and the EITC amount elevates with earnings up to about the impecuniosity

Living in America, citizens should be well aware of the poverty issues that strike the country everyday. With the poverty rates increasing, Americans are pleading the government for aid in providing food and shelter for their families. In “Poverty in America: Why Can’t We End It,” author Peter Edelman, asserts that poverty can be fixed if the people have interest to do so. He includes statistics and reasons that explain the rise of poverty in America and possible solutions to the problem of poverty. Edelman stated that although the numbers of poverty have declined, there are still 15 million more people who are poor today. The government has also taken action to decrease the numbers of citizens in need of aid and keep 40 million people out of poverty by giving: Social Security, food stamps, cash assistance and programs. The author explains that even though there are still individuals who need aid, the numbers would have been double without government assistance. Edelman

Lack of work generated income while receiving welfare clearly leads to dependency if the surrounding structural conditions promote this option for the public. High Effective Marginal Tax Rates are one of the structual explanations for why people perceive welfare as maximising their options in regard to income and work. Lowering tax is one efficient solution to counter act poverty in welfare dependency. In 2003, 8% of the working population endured EMTR's of 60% or more (Saunders, 2004: 139). Because income support is based off combined family income while taxation is based individually, many part time second income earners see that working is not worth their while (Saunders, 2004: 139). Incentive based welfare reform should mean not punishing those who choose to work (if able) instead of receive benefits on weak claims. Saunders tax reforms suggest that in order for labour to be encouraged the tax system must sit equal with the welfare system in measuring a families income, acknowledging how many people have to be supported by combined income (Saunders, 2004: 143). Other solutions to the effects of high EMTR's are to raise the tax free threshold, replace means tested child payments with flat rate payments (Saunders, 2004: 142).

A study conducted by the Economy League of Greater Philadelphia found that hiring just 100 formerly incarcerated individuals can increase tax contributions by $1.9 million, boost sales tax revenue by $770,000, and save $2 million annually by reducing criminal justice costs associated with recidivism. Increased employment for people with criminal histories decreases the chances that someone is likely to commit more crimes after reentering society ("Economic Benefits of Employing Formerly Incarcerated Individuals in Philadelphia," 2011). Another study, conducted over three years, found that formerly incarcerated people who were consistently employed throughout the year had a 16% recidivism rate compared to a 52.3% recidivism rate for all Department of Correction releases, thus making our communities safer ("Safer Foundation Three-Year Recidivism Study 2008", 2008). Additionally, this would save tax dollars through reduced public assistance expenditures, as many of these individuals will no longer need benefits such as food

Welfare programs have evolved over the past few decades; however, some of the programs were not always for the greater of the nation. The United States welfare programs began when Roosevelt signed the Social Security Act IN 1935 (Moffitt 2015). The act consisted of three programs within in it: “Social Security, the Unemployment Insurance (UI) … [and] the Aid to Dependent Children (ADC)” (Moffitt 2015). The programs have certain requirements that have to be met for citizens to qualify for them. Social Security requires work in the last 10 years and earnings of, at minimum, $1,200 per quarter. UI backing is established by either unemployment or employment as well as earnings from the last year. Ironically, the poorer individuals tend to have erratic employment histories and little salaries, and they are seldom able to be qualified for these programs (Moffitt 2015). The applicants eligible for the program have usually kept a job consistently, but the income is what is putting them in the

A, I have chosen for review Sykes, J., Križ, K., Edin, K., & Halpern-Meekin, S. (2015). “Dignity and Dreams What the Earned Income Tax Credit (EITC) Means to Low-Income Families.” I will be comparing to Eissa, Nada and Jeffrey B. Liebman. 1996’s article “Labor Supply Response to the Earned Income Tax Credit.” In the article Sykes, J., Križ, K., Edin, K., & Halpern-Meekin, S. (2015). “Dignity and Dreams What the Earned Income Tax Credit (EITC) Means to Low-Income Families.” explore what meanings these low-income workers ascribed to this money and how these meanings may have shaped their allocations and also focus to study psychological effect and expectation of Earned Income Tax credit (EITC). In the article “Labor Supply Response to the Earned Income Tax Credit,” Eissa, Nada and Jeffrey B. Liebman (1996). It compares the impact of TRA86 the change in labor supply of single women with children to the change for single women without children.

Though evaluating the anti-poverty approach listed above, what I have come to notice is that the government had made very few progresses to remedy our poverty crisis. At the moment, one in five American children is subjected to “food stamp”. A lot of political and social changes have took place in American since the Social Security Bill was first introduced, yet a majority the policies that we use to address our poverty concerns remain the same. Our public assistance programs hesitated to adapt to the industrial transformations and hence, did not adjust the amount of aid toward the already vulnerable working-poor. Coupled with the lack of aid, our welfare system has become completely “rule based”. Our welfare system today focused more on formality, and has done little to counter the impacts of our ongoing recessions and globalization.

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.

This report examines the provisions, purpose, and impact of the Earned Income Tax Credit (EITC). It will consider both positive and negative arguments for the program, and review suggested alternatives. Finally, it will give supporting evidence as to why the EITC is a flawed, yet overall beneficial program for the nation’s war against poverty. As one of the most heavily debated tax issues since the 90s, the EITC is an important anti-poverty program that requires attention and understanding by all American citizens.

UK government was very swift in its response the financial crisis. Various measures were taken to address the economic anomaly that came with the crisis. These range from various monetary policies to fiscal policies. Some of these policies are discussed below:

The Global Financial Crisis, also known as The Great Recession, broke out in the United States of America in the middle of 2007 and continued on until 2008. There were many factors that contributed to the cause of The Global Financial Crisis and many effects that emerged, because the impact it had on the financial system. The Global Financial Crisis started because of house market crash in 2007. There were many factors that contributed to the housing market crash in 2007. These factors included: subprime mortgages, the housing bubble, and government policies and regulations. The factors were a result of poor financial investments and high risk gambling, which slumped down interest rates and price of many assets. Government policies and regulations were made in order to attempt to solve the crises that emerged; instead the government policies made backfired and escalated the problem even further.