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What is the President doing to combat the current economic crisis?

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yaga49 | (Level 1) Valedictorian

Posted January 30, 2013 at 12:34 PM via web

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What is the President doing to combat the current economic crisis?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted January 30, 2013 at 2:23 PM (Answer #1)

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There are many things that President Obama has done or is proposing to do that can be seen as efforts to improve the economy.  

Much of what President Obama did early in his first term was meant to help the US recover from what was then a true crisis.  The two most prominent things that he did were to bail out the American auto industry and to implement a large “stimulus package” of government spending and tax cuts.  This is orthodox fiscal policy.  In a recession, government is supposed to reduce taxes and increase spending so as to put more money in people’s hands.  The people spend that money, creating aggregate demand and boosting the economy.

Once these immediate efforts were done, Obama shifted to trying things that he hoped would improve the economy in the long run.  His “Obamacare” proposals were meant in part to help reduce healthcare costs which are a drag on the economy.  His current proposals for increasing taxes on the wealthy are in part a way to get the deficit down to more manageable levels.

Today, there is something less of a crisis in the US economy.  There are still issues with unemployment and slow growth.  Obama’s main proposal in this area is to increase taxes on the rich to fund programs that would improve American infrastructure.

Thus, Obama’s main way of attacking the economic problems of the US has been a fairly orthodox Keynesian mix of tax cuts and spending increases.

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