Issue Paper: Solving the Deficit/Economy

Samantha Sidoti

AP Government

Ms. Duquette

November 11th, 2010

Issue Paper

Democrats and Republicans are constantly at war over whose ideas are the best for the nation. They stand divided on almost every social and economic issue, such as gay marriage, alternative energy, the creation of jobs and the war in Afghanistan. This division is also true for the nation’s most pressing issue, the economy. Fiscally, Democrats have always sought to alleviate the middle class in hopes of them stimulating the economy. Republicans, however, have always aimed at tax breaks for the upper class in hopes that they will stimulate the economy, thereby improving the lives of the middle class. These patterns have always existed throughout history and still hold true today. Because the nation has been in the worst economic recession it has seen since the Great Depression, the democratic candidate in the 2008 election, Barack Obama, was elected under pretenses that he would get the nation back on its feet, starting by relieving the middle class. 2 years later, Republicans and Democrats are more divided than ever on how to solve the deficit. Most Republicans believe in continuing the Bush-era tax cuts while Democrats are focused on more social welfare programs and tax breaks for the middle class.

The Republican party has recently proposed a bipartisan, “Two Point” plan that they believe will create jobs and therefore bring the economy back to life. The plan, as simply stated, has two main objectives: cut non-security related government spending back to the level it was at in 2008, and put a 2-year freeze on all current tax rates. This freeze on taxes would extend the Bush-era tax cuts which give tax breaks to the upper class receiving an income of $250,000 a year or higher, and tax breaks to the middle class (gopleader.gov).Though President Obama agrees that the extension should apply to the middle class, he believes, along with the Democratic party, that taxes for families with incomes of $250,000 a year or higher should be able to increase (Kornblut). This Republican idea of tax breaks for the wealthy and reduction of government spending are the same principles of Regan’s “trickle down” system employed in the 1980’s, continuing the republican belief that if the wealthy are given tax breaks, they will create more job opportunities for the middle class, thus regulating the economy. The “Two Point” Plan is backed by Republicans and some economists who say it “is needed to promote private- sector job creation and prevent a lame-duck Congress from writing another bloated omnibus spending bill after the November elections,” (gopleader.gov).

On the other side of the equation, the Democratic party believes that in fixing the economy the middle class needs to be helped first. This is believed under the pretenses that if the middle class is economically stable, they will put money back into the market and therefore stimulate the economy on their own. When President Obama was elected, he immediately signed the Recovery Act of 2009 which intended to jumpstart the economy by providing tax cuts to the middle class and increasing stimulus spending (recovery.gov), much to the dismay of Republicans who oppose any non-security related spending at this time. While the party itself believes in stimulus spending on socialwelfare programs and tax cuts for the middle class, they are now beginning to struggle to come to a consensus on ‘how much’ should go where. For example, not all democrats agree with Obama in that only the middle class should continue to have tax cuts. With employment still being at 10%, most democrats agree that more should be spent on stimulus to create jobs before solving the deficit. One of the newest courses of actions that President Obama has taken towards solving economic issues in unity with the Republicans is his creation of the bipartisan debt-reduction committee. The committee is meant to determine whether there is a consensus between the parties on determining solutions for issues such as Medicare, Social Security and inadequate tax revenues (Calmes).

No matter who is in power, both parties can agree that the economy needs to be restored to what it was or the nation will be headed into depression. Though both have very different methods of resolution, they both share the common goal of creating jobs and decreasing the deficit. One can only hope that the new bipartisan debt-reduction committee can come to a consensus and create a starting point for both parties to come together and act against this recession.



Bibliography:
Democratic party on budget & economy. (2010). OnTheIssues, Retrieved from http://www.ontheissues.org/celeb/Democratic_Party_Budget

Calmes, Jackie. (2010). Deficit division likely to grow after election. The New York Times, Retrieved from http://www.nytimes.com/2010/10/26/us/politics/26fiscal.

Kornblut, Anne E. (2010). Obama details opposition to extending tax cuts for wealthy. The Washington Post, Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2010/09/08/AR2010090806033.html

House republican leader John Boehner. (n.d.). Retrieved from http://gopleader.gov/news/DocumentSingle.aspx?DocumentID=205275

Track the money. (n.d.). Retrieved from

http://www.recovery.gov/About/Pages/The_Act.aspx

(ps) Sorry if this looks really weird. It keeps showing me different ways it's going to look once I publish it and idk how to get it right. I double spaced it and did everything normal on turnitin.com and on my hard copy though :)