Obama's Economic Problems!?
1) The current state of the economy is in a recession. Negative GDP growth has been reported for the last two quarters of 2008. The Obama administration is planning to reduce the unemployment rate in 2009. How will they achieve this (AG/AD Graphical model) by cutting taxes and increasing infrastructure spending?
2) If the Obama administration only planned to increase infrastructure projects in order increase output and get the economy out of the recession, what can make the policy ineffective?
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1) Remember Obama tax cuts are only for those making less then $200,000 and for those making 250,000 will see a tax increase. also Obama says that they will close a number of tax loop holes that gave people unfair tax breaks. But even if all that equals out to us bring in around the same amount in tax revenue the odds are we are going have to go deeper in national debt. at least at first, if spending on infrastructure creates enough jobs we will have a wider tax base (ie more people working) then we did before and there for the nation will actually be making more money.
2)
A. If these projects are handled poorly we may not see the wanted results.
B. giving the state the economy is heading right now. even if everything is ran correctly it may not be enough to off set the job looses we have already seen (and those that we may see by the time Obama takes office)
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