Last night we had a historic election, and our country elected its first black president. Whether you agree with his policies or not, you must admit that he won in convincing fashion, and that he now faces one of the hardest things any politician must do. Living up to his campaign promises.
As America’s 44th president, Barack Obama will have one of the most challenging “to do” lists of any new Oval Office occupant in at least a generation. But before Obama can begin implementing the key aspects of his campaign’s domestic agenda — increasing healthcare insurance coverage, improving education, dealing with climate change — he must try to kick-start a struggling economy that’s sinking into a terrible recession.
Obama is inheriting an ecomony that is in recession, and now he, along with congress, must try and figure out what to do to turn things around.
photo credit: chad davis
Some sort of fiscal stimulus package might get passed when Congress returns from its autumn recess. But that will probably be merely an appetizer before the Democratic majorities in Congress send up a full-course meal of government aid to the new president soon after Obama takes the oath of office on Jan. 20, 2009.
The question is, what would be the most effective course of action to turn things around? Sounds like Obama may be banking on a set of stimulus packages and plans to start things off:
“Although our recommendation is a $300 to $500 billion package, our current expectation is only about $200 billion,” explains economist Jan Hatzius of Goldman Sachs in a recent analysis. Such a package would most likely include infrastructure spending, financial aid to state and local governments struggling with lower property tax revenue, and tax rebates to middle- and lower-income individuals. Would President Obama sign such a pricey bill, with Uncle Sam already facing a budget deficit of $1 trillion or more next year because of the $700 billion bank bailout? You bet. A rotting economy can be poison to any new administration, sapping it of public support.
Is another stimulus package the right thing to do? Who knows. I’m not sure throwing good money after bad will be the answer. And based on Obama’s promise to give tax cuts to 95% of the electorate, I’m not sure how he’s going to pay for it. (If anyone knows, please leave a comment)
Obama also has a litiny of other promises that he’ll now have to think about paying for. From the yahoo finance article, some of his priorities include:
- Helping homeowners: Daniel Clifton, an analyst with the Strategas Group, expects Obama to consider a range of options to bolster falling prices, such as an expanded home purchase tax credit, a moratorium on foreclosures, and “and potentially a large-scale refinancing housing proposal.” Among the various refinancing possibilities: using Fannie Mae and Freddie Mac to refinance the mortgages of all the “underwater” homeowners whose homes are now worth less than their mortgages. That could cost $50 billion or more. Others have suggested refinancing everyone into mortgages with a low, low rate. That could have a $300 billion tab
- Taxes – going up for some, down for others: who gets a tax cut — actually a refundable tax credit — is in dispute, with several different income ceilings being mentioned during the closing days of the campaign. One group that won’t get a cut is households making $250,000 or more. Obama has promised to roll back the 2001 and 2003 investment- and income-tax cuts for those folks. Keep in mind, though, that a weak economy could provide reason to leave upper income-tax rates where they are until the Bush tax cuts expire at the end of 2010
- Creating Jobs: With the unemployment rate currently at 6.1 percent and predicted to rise to 7 percent or higher, Obama will also move fast to implement his energy and infrastructure spending program, which is supposed create 5 million green jobs and ensure stronger economic growth into the future. He wants, for example, to invest $150 billion over 10 years to advance clean energy technology, as well as $10 billion per year for five years in a government-run, energy-themed venture capital fund. Then there is a $60 billion effort to shore up America’s crumbling roads, bridges, and electricity grid.
- Fixing healthcare: Obama has promised to overhaul the healthcare system. Just how he’ll do that at this point isn’t exactly clear. The article says the first step may include renewing a popular children’s health insurance program. Look for Congress to quickly give him the opportunity to sign a renewal of an expanded version of the popular children’s health insurance program. That would a first big step toward the full-scale revamp of the health insurance system that he has promised.
One thing is for certain, Obama has made a lot of promises and now will have to find ways to keep them. Based on the sheer numbers of dollars he would need it’s virtually certain he won’t be able to follow through on all of them (do any politicians keep all their promises?). Which ones will he find a way to get through?
Interesting days lie ahead, and I for one am interested to see where they take us. I hope you’ll all pray with me for our new president. He’s going to need our prayers in the coming weeks and years.
- How President Elect Obama’s Administration Will Affect Your Finances @ cashmoneylife.com
- President Elect Obama’s Approach to the Economy @ consumerismcommentary.com
- Get Over It: 10 Challenges President Elect Obama Faces Going Forward @ thewisdomjournal.com
Mr. ToughMoneyLove says
I’m still waiting for someone to define even one of these so-called “green jobs” that the government is going to create, let alone 5 million of them. If I am right, “green jobs” are really manual labor jobs, most of which will end up going to Mexicans carrying guest-worker permits under new open border policies.
Mr. ToughMoneyLoves last blog post..Want to be in a Working Family? (Hard Workers with Money Need Not Apply)
we’ve heard a lot of promises, and I’m dubious about how many he’ll be able to follow through on. Not sure if I want to see them come to fruition for some of them. Lots of high minded rhetoric, but now the rubber meets the road.
Maybe he meant, “green card” jobs?
saph@ walk with me says
Yes, our entire country needs our prayers!! I don’t really believe any of the promises any candidate makes. It’s all easier said than done. I voted based on what the candidate supports in regards to abortion, same sex marriage and those issues that are important to bible based values.
I did my part and now all I can do is pray God has mercy on this country.
saph@ walk with mes last blog post..My Recent Freebies
I agree that the ability to keep all campaign promises is dubious at best — for ANY politician. However, I was inspired last night by Obama’s obvious desire to unite us, and the fact that he made it clear that he expects a tough road, and that he hopes will all pull together. I think there is a lot to be said for the way he remained mostly positive in the campaign. I think he has good character and will do what he can to keep the promises that will have the most impact on the most people.
Do I sound like a hopeless idealist? Let the cynics begin the attack…
Mirandas last blog post..The Economy and a Barack Obama Presidency?
Not sure if you were watching the same campaign – Obama had a lot of negative advertising running where we live. Keeping it positive? Not so much in my estimation. Running a good campaign? Definitely – he took it to McCain and won fair and square.
I hope you’re right about his character, I’m not as confident in his abilities to unite and improve things in this country, but we shall see!
By and large, Obama ran a positive and less deceitful campaign (see factcheck.org and other sites for details) than McCain, though I don’t attribute negativity to McCain but some of the people around him. Like Miranda, I am cautiously optimistic that this will mean good things for all of us together.
All that being said, I have never understood why anyone expects a president to keep all his promises (and especially why people are bitter that he doesn’t). Do people not learn civics and government? We do have an entire legislative branch…!
As for paying for things – I believe letting Bush’s tax cuts expire for the folks over 250K is one way. Taxing oil profits is another way. And there’s talk of increasing capital gains tax. Can’t say any of these are fabulous ideas, though I would love to see the subsidies and credits to oil companies go.
deepalis last blog post..yes we did
Great point about how there are other issues to contend with. And, of course, if the Dems can’t get it done with the majority they have and the White House (I am always leery one one party has both the legislative and the executive), then we change the face of Congress in two years.
However, I think most of us won’t see any earth-shattering changes in our finances. And, as always, paying attention to wise decisions in our own financial lives is what will best help us through this time.
Mirandas last blog post..Ask the Piggy Bank: Reader Debt Question — College, Home Equity, or Car Loan?
Let me ask a question: Why is the issue about raising more money through taxes? Surely anyone who runs their household knows that there are really two answers to a budget – increase revenue and cut back expenses. Why are there not more promises to “trim the fat”, so to speak? Cut back on programs that are stale and out of date? To un-subsidize certain markets? And the list could go on…..
Truly, we have never had a truly balanced budget. Even under the Clinton administration the budget wasn’t balanced. Rather we had enough income to pay down what we owed. But we have never been at 0.
So in the end, can we ever really expect to see a “balanced budget” in the truest sense?
With God, all things are possible. With man… well, let’s just say we consistently fall short.
Joshuas last blog post..Stewardship: What does it mean?
Taxing oil profits is one sure way to raise your prices at the pump. Guaranteed.
Putting more money into the hands of the government has never caused spontaneous prosperity to come to a nation.
What gets rewarded is what gets done. What gets punished doesn’t get done again. The problem with those who believe in central planning is they have no concept of basic human psychology.