Republican or Democrat, People are Upset of the Economy

The outcome of the upcoming November U.S. midterm elections will certainly be determined by key issues in the country. With unemployment levels among American cities going higher and with job scarcity presenting a dangerous threat, American voters will certainly consider the economy as a driving force for their votes. It is remembered that the Obama administration passed the $800 billion economic stimulus package to augment the fiscal crisis and create jobs for the people. Over a year has passed and many Americans are still without jobs. Job creation will be the main focal point this election. Obviously, people are upset with the economy.

With a budget deficit estimated at $1.171 trillion and a national debt of $14.078 trillion, America is certainly struggling and will drown in debt in the coming years if nothing is done to stop it. The stimulus plan of Obama calls for rapid spending though it hasn’t achieved any significant success yet. More people now believe that the stimulus was just a waste of taxpayer’s money and will just contribute to more debts in the future. In a bid to take control of the U.S. Congress this coming November, arch-rivals Democrats and Republicans are trying to persuade the people about their platforms for economic growth.

In a recent survey released early Tuesday by ABC News/Yahoo! News polls, respondents, majority of them independents, expressed their lack of confidence on either party’s ability to save and improve the situation of the economy. We all remember how Obama-led Democrats presented measures for the economy during the past few weeks such as more stimulus projects which will hopes to generate more jobs. On the other hand, Republicans and its leaders are continuing to spread the message about the 2 years of Democratic leadership where it has ultimately failed to save the economy.

During the previous presidential race where Obama handily won, Independents played a vital role as they voted 52% for Obama as opposed to 44% for his rival. And today, Independents aren’t satisfied at all with the way Obama and his administration are taking care of things. In fact, the survey indicated that only 11% of Independents believe that the economy will have a better chance of improving if Democrats win Majority of the seats this November. Despite of their displeasure with Democrats, only 21% of Independents also believe that the economy will be better if Republicans take control of Congress.

Despite of an early lead by Republicans, there are plenty more of issues to be tackled before we can see who clearly has an advantage. One such issue that is being closely watched by Independents is the expiring Bush-era tax cuts. The voting turnout this November is expected to be lower compared to the previous years. It is expected to be 20 percentage points lower than it was during the previous election. A majority of those who will skip voting are those “Democratically inclined” independents. It is expected that those Independents who voted for Obama 2 years ago are exhausted enough that they would rather stay home come election time. Others might even try out with the Tea Party movement as they are more open for change in governance.

The Moral Hazard Argument and its Implications to Unemployment

The first thing that comes to our mind when we hear about an economic recession is the collapse of numerous business and financial institutions. But perhaps the most significant and most destructive consequences are the massive layoffs and the rise of unemployment levels. With an underperforming economy, business institutions are forced to trim their workforce in order to reduce expenses and increase profit. Unknowing of the greater risks, these layoffs will in fact cause numerous unlikable and devastating consequences in the future.

It is such an eerie and uncomfortable feeling whenever you lost your job which was your only source of income. Most people utterly despise having come to a state of poverty or at least being unable to purchase what one needs or what one wants. Americans will definitely agree with me in mentioning that finding jobs today isn’t as easy as during pre-recession period. More people are losing their jobs or their source of income compared to people who gets accepted for work.

The U.S. Department of Labor stated that the U.S. unemployment rate is now at 9.5% and will continue increase if the government doesn’t find immediate solutions to create newer jobs. What worries most economists and individuals are the 479,000 people who recently lost their jobs and now are applying for unemployment benefits. In July, Republican senators tried to prevent the extension of jobless benefits for 2.5 million Americans. Republicans argue that $34 billion price tag for the bill isn’t reasonable enough as it will only increase the budget deficit.

Arizona Senator Jon Kyl voiced out a more philosophical approach indicating that unemployment insurance doesn’t create newer jobs and will only hinder people from seeking a new work. He emphasized that it is a moral hazard when unemployed people behave irresponsibly and become lazy when given jobless compensation. Several economists and advisers are worried that the U.S. might well become like Europe where unemployment benefits are permanently available and with the unemployment rate considerably higher at normal or recession-free times.

The moral hazard argument was basically tagged as inapplicable at recent times because of the many problems that the nation is facing. Today’s situation is certainly not normal and bad things really do happen. Raj Chetty, a Harvard economist, emphasized that in a recession, cutting jobless benefits to encourage them to look for jobs that do not basically do not exist is very unreasonable. Democrats will pursue the extension of jobless benefits in order to stop the bleeding and prevent jobless people from drowning more into poverty.