Original context:
President Barack Obama forecast the biggest US deficit since World War II in a budget yesterday that urges a costly overhaul of the health-care system and spending billions to arrest the economy's .
An eye-popping US$1.75 trillion (HK$13.65 trillion) deficit for the 2009 fiscal year is projected in Obama's first budget. That is equal to 12.3 percent of US gross domestic product - the largest share since 1945. In 2010, the deficit would dip to a still-huge, but Obama promised to get the red ink under control within a few years through tax increases and spending cuts.
"While we must add to our deficits in the short term to provide immediate relief to families ... we can produce sustained growth and shared prosperity," Obama said at the White House.
The proposed US$3.55 trillion spending plan for the 2010 fiscal year that begins on October 1 provides the broad outlines of a more detailed one to be released in April.
The soaring deficit figure sent US Treasury bond prices lower and yields up to three-week highs.
Gold prices slid to their lowest level in more than a week while stock prices rose. The budget requires passage by Congress to take effect. While Obama, a Democrat, has broad support with both chambers in Congress controlled by his party, he could face a fight as the shock of huge deficits leads to wariness about more spending.
A senior administration official meanwhile, told the Associated Press that the budget includes a provision of US$250 billion - if needed - to prop up troubled banks and other businesses.
That would be on top of the US$700 billion Congress has already approved for dealing with the nation's worst financial crisis in seven decades. AGENCIES
Group commentary:
Background and facts:
President Barack Obama predicts US faces enormous deficit US$1.75 trillion .(HK$13.65 trillion) due to costly implementing health-care system and the economic policy, which will dip to US$1.17 trillion in 2010 in his prediction. He will solve this by spending cuts and tax increases. In April, the spending plan for 2010 fiscal year will be released, which will begin on October, 2009. The budget plan needs to be passed by Congress to take effect. One of the budget (about US$250 billion) may be used to save banks and businesses in economic crisis.
Issues:
1.The huge fiscal deficit in US
2.The main focus of 2009 fiscal plan, like health-care system and economic policy. (The beneficiary in this plan)
3.Whether the plan is passed in Congress in April
4.Whether the plan can fix the economic crisis in US
Analysis and Opinion:
In our group’s opinion, Obama is doing the right thing which stabilizes the country by spending cuts and tax increases. It not only can reduce the country’s deficit in followings year, but also it makes the citizens in US change their over-spending consuming habits (that is one of the reasons casing the financial crisis). In the past, due to this habit, US people buy luxurious things and house by borrowing money from bank. So, The fact that Obama encourage people to cut their spending is right.
Also, from the prediction of Obama, the huge deficit cannot avoid in following years. He knows that the budget plan should help the most fragile industry, like bank and businesses, which make the economy stabilize as a result. He knows that bank’s industry is the most important to the country’s economy because many businesses need the loan from the bank to maintain their operate, especially in financial crisis.
Finally, He also make some plans to benefit the people’s livelihood, like improving the medical system. By doing that, he can get support from the US’s citizens and increase the bond for the US’s government and Obama, thus leading to the effective corporation among the citizens to fix the crisis.
Question for readers:
1.Do you think that the fiscal plan can improve the economy in US? If not, what suggestions can make to improve the plan?
2.How the government plan the policy to balance the income and expense? (e.g. Increasing tax for income ; improving education and medical policy that belong to non-economic policy with expense)
3.Do you think the beneficiary can get the huge support by the government? Are any others fragile people ignored by the government in this plan?
