This week, Obama is pushing for tougher regulations on the finanial sector. He believes that this will protect consumers while restoring "accountability, transparency and trust in our financial markets." He says that the financial crisis occured because of a lack of risk evaluation on Wall Street.



"Let me be clear: The choice we face is not between some oppressive government-run economy or a chaotic and unforgiving capitalism," Obama said. "Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors, and ultimately to keep those financial institutions strong."



Many Republican members of Congress (who also openly opposed the $700 billion stimulus package) are openly against further regulation of the financial sector. They mainly believe that tighter regulation will "stifle ingenuity."



I'm pretty much on the fence with this issue. On the one hand, I think that things need to change. Obviously something went wrong and it needs to be fixed. The government needs to take action. Just look at what resulted from President Taft's policy of strict laise faire during the Great Depression, the economy slipped further and further into a recession. On the other hand, everything I know about economics is telling me that the markets should be free to regulate themselves. The laws of supply and demand are unbreakable and almost certainly act in our benefit. However, this debate has been going on for ages. So far, the best thing is a combination of government regulation and free market capitalism.

Also this week, Obama is seeking to raise taxes on the weatlhy in order to provide healthcare for the uninsured.

"Obama's budget proposal would effectively raise income taxes and curb tax deductions on couples making more than $250,000 a year, beginning in 2011. By not extending former President George W. Bush's tax cuts for such wealthier filers, Obama would allow the marginal rate on household incomes above $250,000 to rise from 35 percent to 39.6 percent, said an administration official."

This robin hood plan would reduce the tax returns wealthy donors revieve by donating to private institutions. Many colleges are upset because they rely heavily on private donations. As a college student, this really affects me. I would not be a happy camper if my school was shut down. While i understand the need to reduce spending and the need to amp up Medicare, I don't agree with the means we're going through with it.

Coming from a upper middle class family, the increase in taxes would definitely affect me. And since i don't recieve benefits from Medicare and Medicaid, I'd have nothing to show from these increase in taxes.

Even with these measures, "the budget will still find itself in the red with deficits remaining above $500 billion over the second half of the decade."


Thirdly this week, legislation is being pushed through congress that would , "would let bankruptcy judges reduce the principal and interest rate on a home loan. That essentially would require mortgage companies to let debt-strapped homeowners reduce their monthly payments rather than lose their main residences" Many banks are against this legislation saying it impose unmanageably costs on companies which will translate to higher costs to buyers.

While many banks are against it, they realize that this bill will likely go through and are making "least-worst" attempt to cooperate. These banks are working to modify the bill to restrict the measure to certain kinds or sizes of home loans, certain borrowers, or situations where the mortgage holder — known as the loan servicer — agrees to the changes.

I think it's important to get this housing crisis under control. However, I didn't default on my payments so why should I support something that rewards those who did. I understand the need to help these people, but that doesn't mean I like it. For me this means a higher cost to recieve a loan, something that I will inevitably do after graduation.

Stimulus Package: "Take The Money And Run!"

So this week there's been some pretty historical developments. The Stimulus Package (a.k.a. The Flagship of Obama's platform) has been passed by both houses of Congress. This is a big deal! But before it was passed, many economists took the liberty of predicting the outcome of said package. They looked at all of the provisions outlined in the package and made prognostications on the outcomes they would have on the economy. Now that the Stimulus Package is passed, the states are facing the ironic challenge of spending their money.

Early this week on Feb. 13, an article was published containing economists' predictions on the out come of the Stimulus Package.

But at the end of the day, the economists concluded that
anything pumping money into the economy will help in the near term.
“Most
economists say that [the stimulus] is so big it will have to do some good. It
will generate some GDP growth,” said U.S. Chamber of Commerce chief economist
Martin Regalia

.

I agree, $787 billion is so much money that some good has to come from it. That much money has to go somewhere. As part of the Stimulus Package, $150 billion dollars is being allocated to infrastructure. That means that new roads are going to be built, current roads are going to be repaired, and alternate modes of transportation such as railroads are going to be expanded. This is great news! Many of the roads built nearly 50 years ago are in desperate need of repair in order to sustain the increasing volumes of traffic. Not only are we going to see where the money is going, but those roads aren't going to build themselves. This means hiring more workers, American workers, to build them. This bottom up approach is going to work. As more workers are hired, they'll be able to use the wages they didn't have before to not only buy food and clothes for their families, but to also buy new flat screen TVs, refrigerators and other goods that they may have been holding back on as a response to the downturn in the economy. These "long term" goods are a great indicator of how the economy is doing. When the economy is good, people buy these goods more often. But when it's bad, since these goods can be made to last, consumers tend to deal with older merchandise in order to allocate their money to "short term" goods such as clothes and gas for work.

However, these predictions really don't matter now that the stimulus bill has been passed. As of February 16 the bill is as good as through. However, there was very little bipartisan support. No Republicans in the House approved the bill and only three Republicans in the Senate voted in its favor. Many Republicans feel that this package is less about saving the economy and more about using the Democratic Majority to push Democratic policy. They feel that there is too much government spending and not enough tax cuts. However, this battle has been long before the Stimulus Package came into play. Nonetheless, this is a major victory for Obama. To have a something this big passed so quickly is astounding. However, Obama says this is just the first step towards fixing the economy and not an instant fix--Which is understandable. No one can expect the economy to make a sudden turn around. As I've said before, this Stimulus Package is not magic. In fact, I wouldn't expect to see any significant difference until the end of Obama's first term.

Now that the Stimulus Package is passed, many states are having trouble figuring out what to spend it on. The problem lies in deciding where to allocate the money left after carrying out the projects required by Congress. As I mentioned earlier, $150 billion dollars must be allocated to infrastructure. Also, Congress is requiring states to prioritize projects that it deems most necessary.

"The law also requires that half the money be spent on projects
that have been vetted by the federal government and deemed "ready to go" in 120
days, as a way to jolt the economy and create jobs. That means state officials
are under pressure to make decisions quickly on which projects to fund and which
to bypass.
While many states have made their lists of "ready-to-go"
infrastructure projects available online for public review, others have
resisted, in part because the limited stimulus funding means only a fraction of
the projects will receive money. Watchdog groups say it's likely that state
officials fear angering constituents if a project appears on a wish list and
then is struck from the final allocation."

I don't know about you, but I'm glad that Congress is using some oversight in the spending of this money. $787 billion is an insane amount of money that, by borrowing, puts us in a debt that my children will still be paying! I want every single penny of that to go to projects that will help the economy instead of pet projects of politicians or in the pockets of greedy executives. It shows major responsibility on Congress's part to at least partially oversee the spending of this money. That being said, many states are being very careful in allocating the money. Because very few states have outlined specific projects that have previously prioritized, many states are appointing third party officials to take care of the issues while others are having fierce legislative battles to determine where every cent is going. So the states get kudos as well. It would be a very bad thing if those states without prior plans where overpowered by one party.

The next few years are going to be very exciting times where very important decisions are going to be made. The Stimulus Package was the first and the States' allocation of this money is the second.

Economic Stimulus Package on track for final votes

This week, Obama's stimulus package will be going through the final votes in the House and Senate. This article from the associated press sums up the changes to the original bill pretty nicely.

WASHINGTON – Economic stimulus legislation at the heart of President Barack Obama's recovery plan is on track for final votes Friday in the House and Senate after a dizzying final round of bargaining that yielded agreement on tax cuts and spending totaling $789 billion.
Obama, who has campaigned energetically for the legislation, welcomed the agreement, saying it would "save or create more than 3.5 million jobs and get our economy back on track."
The $500-per-worker credit for lower- and middle-income taxpayers that Obama outlined during his presidential campaign was scaled back to $400 during bargaining by the Democratic-controlled Congress and White House. Couples would receive $800 instead of $1,000. Over two years, that move would pump about $25 billion less into the economy than had been previously planned.
Officials estimated it would mean about $13 a week more in people's paychecks this year when withholding tables are adjusted in late spring. Next year, the measure could yield workers about $8 a week. Critics say that's unlikely to do much to boost consumption.
"The most highly touted tax cut in the original proposal now translates into $7.70 a week for middle-class workers," said Senate GOP Leader Mitch McConnell of Kentucky.
Millions of people receiving Social Security benefits would get a one-time payment of $250 under the agreement, along with veterans receiving pensions, and poor people receiving Supplemental Security Income payments.
An additional $46 billion would go to transportation projects such as highway, bridge and mass transit construction; many lawmakers wanted more.
Brendan Daly, spokesman for Speaker Nancy Pelosi, D-Calif., and Don Stewart, an aide to McConnell, said final votes are likely in the House and Senate on Friday.
The Obama plan offers a 60 percent subsidy to help unemployed people pay health insurance premiums under the COBRA program and divvies up $87 billion among the states to help them with their Medicaid costs for the next two years. It provides $19 billion to modernize health information technology systems, even though such funding will create few jobs right away.
To tamp down costs, several tax provisions were dropped or sharply cut back. A provision popular with Republicans and the big business lobby that would have awarded about $54 billion to money-losing businesses over the next two years was instead limited to small businesses, greatly reducing its cost.
A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August. Car buyers could deduct the sales tax they paid on a new car but not the interest on their car loans.
But nothing could shake negotiators from insisting on including $70 billion to shelter middle- to upper-income taxpayers from the alternative minimum tax, originally passed a generation ago to make sure the super-rich didn't avoid taxes.
The move is aimed at easing headaches that would follow if Congress passed it later in the year — rather than creating jobs. The Congressional Budget Office estimates that provision will have relatively little impact on the economy.
In late-stage talks, Obama and Senate Majority Leader Harry Reid, D-Nev., pressed for $8 billion to construct high-speed rail lines, quadrupling the amount in the bill that passed the Senate on Tuesday.
Reid's office issued a statement noting that a proposed Los Angeles-to-Las Vegas rail might get a big chunk of the money.
Scaling back the bill to levels lower than either the $838 billion Senate measure or the original $820 billion House-passed measure caused grumbling among liberal Democrats, who described the cutbacks as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are feeling heat from constituents for supporting the bill.
Specter played an active role, however, in making sure $10 billion for the National Institutes of Health, a pet priority, wasn't cut back.
After final agreements were sealed Wednesday afternoon, staff aides worked into the night drafting and double-checking in hopes of officially unveiling the measure Thursday.

All I can say is finaly! In my opinion, it really doesn't matter what
the stimulus package contains. Much like FDR's immediate action after his
inaugeration, Obama today just has to do something. The American people need to
see action. That's what's going to get us out of this recession--a leader to give us the hope we need to increase productivity. It seems that it wasn't until the media began warning of a recession that people scared themselves into one. Once there was a threat of a recession, consumers began spending less and actually increasing the rate of economic decline. So, this stimulus package is exactly what we need to get our economy back on track. Not because it is full of magic legislation that suddenly lift us out of recession, but because it will show Americans that the Government is doing something for our benefit. Consumers need that confidence in order to start spending again, which will increase demand (causing producers to increase their output to meet that demand). This increase in output will require manufacturers to hire more people to either make the product or service the machines that make the products. Either way, jobs will be created.