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?
First of all, I agree with the group’s commentary that Obama did the right decision in this harsh economic period. Obama has done what he promised before—the changes of US. Now, we can see that Obama really want to rearrange the US Government and re-fix the direction of the policy. In the Fiscal plan, Obama wants to raise the tax rate. Furthermore, the increased tax income can use in the health-care system. Then, the beneficiaries also are the citizens. That is a good suggestion.
回覆刪除Somehow, Obama such decisions also influence the existed beneficiaries who the businessmen are. Obama has announced that he will cut the tax-free from several kinds of businesses. This movement really decreases lots of profits to those kinds of companies. In fact, in order to prevent loss, such businessmen will use their influential power in the Government to opposite to Obama’s Fiscal plan.
In the conclusion, I understand Obama really want US has changes and realizes what he has promised. However, in order to achieve Obama’s goal, I think he has to overcome many challenges and get more supports.
Kelvin / Man Hon Wai (50944720)
I think the huge fiscal deficit in US could not be easily solved. It is because the financial problems were accumulated from years before the outbreak, various problems have risen, it would take years to overcome all of them. Moreover, most of the scholars predicted that the US is only facing the first wave of the impact brought by the financial crisis, the situation will be worsened. Therefore, I don’t believe that the financial plan of the Obama’s government can solve the fiscal deficit immediately. As Obama has also mentioned in his president inauguration that the US people should not expect the economy improving soon after However, the financial plan of the Obama’s government shows its effort on trying to improve the economy and reduce the panic of the US people. In Obama’s fiscal plan, increasing tax, improving education and medical welfare are some of the good policy that will help the US people to survive in the harsh economy easier. Obama really understand the need of the US people, especially the announcement on the improvement of the healthcare system. In this financial plan, most of the beneficiaries are the citizens, their livelihood would be improved, I think most of the US people would be happy about that.
回覆刪除Refer to the Group’s comment about the change of spending habit of the US, I think it is too optimist to think that Obama can change their over-spending consuming habits. For years, US people has built up a habit to buy luxury goods which they could not afford, and they keep on borrowing money from the bank. They have already get used to this kind of life style. Although Obama want to change it, it could not be simply fixed within a few years. The situation is not optimist, yet from the financial plan, we could see the attitude of the Obama’s government. They are positive and willing to face the challenge. Furthermore, the new government has given people faith. The faith of believe in changes. Under the effort of the Obama’s government, I believe that the US’s economy will go right on track again.
sammy/ Sin Hon Kuen (51130875)
此留言已被作者移除。
回覆刪除Group A has clearly to summarise the fact of the news, and it seems to mention the background information of the news. However, in my opinion, the content of background information seems not detaily to talk about what happen in US economy before the US face the massive deficit.
回覆刪除I agree with the group's analysis and opinion, acutally the US over spending consuming habits is one of the reasons causing the global financial crisis. One of the examples is that the US people purchase properties as their investments.
1.the fiscal plan can improve the economy of US, because spending cuts and tax increase are the basic for the economic growth of one country.
2.it is not a easy question. I think the US government and the president Barack Obama need deeply discussion and do some public investigation before planning the policy to balance the incomes and the expenditure.
3.small enterprises may not be supported by the government play, becuase the big enterprises and banks influence thhe country's economy most, the government will implement the aid plan to these big enterpries and banks first since they play an important role for the country's economy.
comment by Jim Lai Chi Shing (50943194)
First of all, I appreciate Group A can share such invaluable opinion for us to think more the Obama’s economic-aided package.
回覆刪除Under a situation of financial crisis, economic-aided package has become a key measure of the financial plan each country. Obama’s plan is one of the role models for other countries to introduce their own packages. It indicates that his measurement influence the development of the whole countries. I am standing on the same position with Group A that Obama should first help the most fragile industry – finance industry. Since the underlying cause of this crisis is from finance industry, assisting the recovery of the finance industry is exactly what Obama should do, and he should first focus on. Government intervention on the economy is a must for the recovery. The things which the government can do are maintaining the financial structure to be stable, and the operation of financial institution is in a normal pace.
Refer to the question of group A, I believe that the fiscal plan can improve the economy in US. At least, it can give confidence US citizens that Obama has assisted the whole US to leave this harsh period. Although the period may not come so fast, I believe the efficiency of the plan will be shown soon. But, more I concern in US is about the over-issuing of Bond by the US government. Most of the fiscal plans are supported by issuing of Bond. Obama need to handle this problem carefully. Once the promise of US Government is broken, the situation will be worsened. All in all, reviving confidence of US citizen is the most important thing Obama should do at this moment.