Friday, August 12, 2011
With more fear with the stock market some people in the U.S have been asking for another stimulus or spending package. Although putting money into the economy will create jobs the U.S can't afford it! Debt to GDP ratio is at 98%. The U.S doesn't have much wiggle room right now to lower taxes or to increase spending without paying for it. The U.S needs to reduce spending and raise taxes in order to lower the deficit. If the U.S doesn't reduce the deficit then it can face future downgrades, and will increase the interest of the debt. the Interest on the debt this year for the U.S is 200 billion and growing. With more downgrade and more stimulus that number will get bigger and force future cuts to be more sever and taxes to be raised more heavily in order to balance the budget. In 2020 under current projections the Interest on the debt will explode and be more expensive than the military, medicaid and medicare, and almost the exact same as social security. Another stimulus will make things harder in the future. The first stimulus wasn't all good either their was not enough spending on infrastructure and construction, and most of all it wasn't planned to be paid for. The Stimulus did create jobs and things would have been worse without it, but the U.S has no money or room to take any more cash for another stimulus. The U.S should invest in infrastructure and should extend the unemployment benefits , but this time they should pay for it. They need to have a plan that will eliminate the deficit all together within 7-8 years, and then if they want to spend any more they should have a new tax or cut to pay for the new spending. Stimulus season is over! The U.S made over 200,000 jobs last month in the recession they lost 700,000 a month in 2009 a stimulus made sense now not only is the U.S making jobs, but making another stimulus will make the deficit hard to handle .This May be an economic slowdown and the U.S might not employ to many people this month, but they are moving (slowly) in the right direction. the U.S may have to deal with sluggish employment for a while if they want to avoid being Greece!