The U.S. economy is chugging along in a slow growth mode, which has lowered the unemployment rate, albeit at snail's pace, but it has not really excited the consumer base nor made the corporate world feel confident enough to aggressively pursue capital expansion plans.
President Barack Obama has been and continues to be very focused on how to help the poor via welfare programs. It has been estimated that under Obama, the welfare cost has zoomed up to almost a trillion dollars a year that include food aid, disability benefits, social services, educational assistance, housing assistance, vocational training, medical assistance, energy and utility assistance, child care and development, etc. Many of these welfare programs are fraught with waste, fraud, and abuse and they are growing at an alarming rate which could worsen the budget deficit problem. While Obama’s focus on helping the poor is noble, the welfare state is just a band aid approach to dealing with the broader issues of unemployment or underemployment and poverty. The welfare programs, without an expanding economy, make the poor people permanently dependent on the government which is hardly an ideal outcome. This approach actually locks the poor people in perpetual poverty without any realistic hope to get out of the sink hole. What we need right now is to find a way to grow economy at a faster clip and create high-paying jobs, and at the same time train the chronically unemployed people to fill those jobs. If Obama doesn't shift his strategy, his presidency would be remembered for resurrecting the welfare state which President Bill Clinton worked so hard to dismantle, making it difficult for Democrats to keep the control of the U.S. Senate in 2014 and win the presidency in 2016. The prosperity during the Clinton presidency showed that good economic policies and not the welfare programs are the answer to lifting the poor out of poverty.
Obamacare, aside from the disastrous launch of the government health care exchanges, has been a net negative for Obama and the Congressional Democrats. Obamacare has brought about unintended consequences that have forced the government to put many aspects of Obamacare on hold, creating uncertainty and instilling fear among the middle class. While Obamacare has helped millions of the poor and uninsured to get subsidized health care insurance, it is actually hurting the middle class. Many big companies are unexpectedly discontinuing their traditional health care plans and switching to alternative plans in which they give a fixed amount to employees which they can use to buy their own insurance on the government or private exchanges. What that means is that the employees would bear a bigger burden of escalating health care costs in the future. The big businesses are using Obamacare as an excuse to protect themselves from the future higher health care costs. This unanticipated move by big employers would hurt the middle class, whose prosperity is essential to grow the economy faster.
In recent months, Republicans have been wise to lower their Tea Party inspired rhetoric and to be more willing to compromise on the key issues of budget and debt. Yesterday, the Republican-controlled House passed a clean bill to increase the debt ceiling, which will go a long way to repair their battered image after the last year’s government shutdown that outraged the public. Republicans need to do more to be viewed as a viable alternative to Democrats in the upcoming elections. They need to go one step further and proactively propose their own plans on how to grow economy and create high-paying jobs. Repealing Obamacare or delaying immigration reforms are not going to be received well by the electorate. As the FED's monetary stimulus winds down, it's incumbent upon the Congress to come up with a solid bi-partisan plan to stimulate the economy and put us on a path of sustained 4% GDP growth and achieve meaningful growth in personal income and consumer spending. The people desperately want the Congressional Republicans to move away from their right-wing ideologies and work with Obama and the Congressional Democrats to move swiftly on economy and not make the delusional political calculation that if economy worsens, they will be better positioned to win the Senate and the White House.
New initiatives on the economy could include the following:
- As the FED winds down monetary stimulus by tapering the QE 3 program, the
Congress needs to undertake fiscal stimulus; for example, the Congress could authorize increased funding for repairing the crumbling
infrastructure such as roads, highways, bridges, and tunnels.
This investment could be financed by a special temporary tax on gasoline.
- It's time the Congress and Obama work out a
compromise on long-term tax reforms and spending cuts that cover
entitlement programs.
- As the new technologies change how the goods are
produced and services delivered, many chronically unemployed workers need
the government help in getting retrained for the jobs of the future. The
government could give tax credits to corporations that train and hire
unemployed or underemployed workers.
- Rather than trying to repeal Obamacare, the
Congress should let the full implementation go forward, re-assess where we
are, and then modify Obamacare to make it better and more effective. Given
that the old system has been disrupted beyond recognition, it's a
wishful thinking that the genie could be put back into the bottle. It
would be sheer waste of time, if Republicans persisted in figuring out how
to get rid of Obamacare.
- The Congress should put the work on bills related
to pending Trade Agreements on a fast track that will create new jobs.
- It’s time the House takes up the Immigration bill
already passed by the Senate.
