More Pain to Come, Even if He's Perfect is an article that is written by Joseph Stiglitz that dwells on the economic issue that dogs the Obama administration. He is a professor at Colombia University as well as being the Nobel Prize winner in 2001 in the field of economics. He is also a co-author of The Three Trillion Dollar War, a book that he wrote alongside Linda J. Blimes. This excerpt provides a concise description of each of the topics below according to Stiglitz in the article.
More Pain to Come, Even if He's Perfect
The author indicates that 2008 saw some 1.2 million jobs being lost. The situation is dire as 750,000 Americans are also being faced with the exhaustion of benefits derived from unemployment-insurance which is limited. He anticipated that by October the same year, only a mere 32 percent of the Americans who will be unemployed will receive an unemployment check for support. Matters are complicated because health insurance is also lost when a person becomes unemployed in America (Stiglitz 2008).
Obama inherited a national debt of 10.5 trillion dollars which was also on the rise. Consequently, by 2008, it had doubled even before factors such as the total costs of the financial bailout, the Medicare prescription benefit and the price of returning hundreds of the veterans of the war in Iraq home (Stiglitz 2008).
The federal deficit is seen as a hindrance to any economic deliberations made by the new administration. Bold action however requires that this hindrance be overcome to ensure future growth. As such, settling the federal deficit now would be more beneficial than doing it later. This would include borrowing to finance investments that are high yielding and not just Wall Street bailouts (Stiglitz 2008).
Obama's argument that tax cuts for the upper-income population are not the way forwards, is right. He as such repealed the 2001-03 tax cuts for America's wealthiest (Pittman 2009). In addition Stiglitz (2008) argues that he should also consider taxing capital and dividend gains at a rate equal to ordinary income tax. This would reduce the national deficit, and although there would be adverse short term effects on the economy it would act to make the tax code fairer.
A step towards cutting the government spending includes winding down the Iraq war effort. A fraction of the 3 trillion dollars spent in the war on investments within the country would act to boost economic growth as well as reduce the deficit (Stiglitz 2008).
The education sector is still considered a global leader because of the countries universities. However issues in the sector include inequality in terms of Americans being denies a college education since they cannot afford it. Initial solutions in this sector would include adequate finding of the public primary and secondary schools (Stiglitz 2008).
The banks are being irresponsible by announcing intentions to pay dividends and bonuses as well as acquire more banks with the 700 billions dollars intended to bail them out which is tax payer money. The share prices for these bailed-out banks rose almost instantly showing that the investors were confident of a substantial increase on the bank's net profit. The biggest loser in this is the taxpayer. Instead of allocating capital and managing risk as they are supposed to, the financial markets were responsible for creating risk as well as wasting capital. The most immoral thing was the immense rewards bank chiefs awarded themselves with even as the banks stared bankruptcy in the face (Stiglitz 2008).
According to Lowenthal, Piccone & Whitehead (2009), America is presented as being among the stingiest of developed industrial countries in terms of efforts to eradicate global poverty and disease. Despite being the richest country globally, America only devoted 0.16 of the national GDP to foreign rate which is arguable one of the lowest rates donated by developed countries (Pittman 2009). A carbon tax or emissions permits auctioning would generate huge revenues that could be used to help citizens adjust to a new "green economy", reduce the deficit or lower workers taxes. If the environmental issues are not dealt with early enough Europe and other developed countries are likely to enforce a carbon tax on goods from America (Stiglitz 2008).
The long run growth of the country will depend on a new economic model which will act to curb irresponsible spending of the tax payers' money while creating more opportunities for citizens to be financially productive. This will require changes in the places and ways American works and lives creating losers, such as the oil industry that has been most profitable in recent years, but ultimately more winners (Stiglitz 2008).
The climate is considered to be in crisis. America and China are leading in terms of greenhouses emissions that contribute to global warming with America contributing more in on per capita basis. A reduction is its emissions is the only for America to benefit from a global agreement meant to save our planet (Stiglitz 2008).
The American government is also facing an infrastructure deficit in addition to the fiscal and trade deficit. Spending more money on the infrastructure such as technology (green) and transport is anticipated to provide short term stimulation of the economy country to be more competitive over the long run (Stiglitz 2008).