We are in a recession. There isn’t any argument about that anymore. We’ve created it, now we have to fix it. The government has taken some positive steps, such as the Fed’s lowering of the interest rate, but other proposed plans could backfire and make the situation worse.
The first, and most glaring proposed solution is the gas tax holiday spearheaded by Senators Hillary Clinton and John McCain. Their plans would call for a suspension of the 18.4 cent-per-gallon federal gasoline tax over the summer. Sounds like a nice idea, right? Wrong. Does anyone really believe that the oil companies aren’t going to seize this opportunity? With prices down, Americans will by more gas. Big oil stands to make a killing, unhampered by the gas tax, by simply raising prices slightly. The average American stands to save a whopping $30. The second hole in this bucket is the $10 billion gap in federal funding for highway construction and maintenance. How does that help the economy?
No discussion of gas prices is complete without mentioning its profound effect on food prices. Unless you grow all of your own food and raise livestock in your backyard, you food has to be shipped to your local grocery store. This requires gasoline, so rising gas prices equal rising prices on everyday foods, like milk, bread, cheese, etc. The solution is not to let current agriculture policy continue. Every year, countless farmers receive a check in the mail from the federal government – a subsidy in exchange for not farming. The government’s reasoning is that too much competition makes the market price for corn and other produce unstable. The obvious solution, then, is to stop paying out these ridiculous subsidies. Make farmers farm, and competition will do what it’s supposed to do – drive prices down. We can’t do much about high gas prices, but this could go a long way toward lowering the price of food…and who knows, if there’s a big enough surplus, we could even help ease world hunger. Just a side benefit. 
We are in a recession, one that may stay with us for a while. If our politicians use some common sense and simple economics, then we can lessen the blow to America. If our politicians continue to indulge in illogical plans that look good on TV, then we can only expect the current crisis to get worse. Finally, we have to remember that recessions are a natural and unavoidable part of a mixed economy. It’s happened before and it will happen again. Relax, watch your money, spend your economic stimulus check on domestic products and services, and the economy will straighten itself out. Pure and simple.
Today is Saturday, May 10, 2008. Just 255 days until the next presidential inauguration.
May 22, 2008 at 10:03 am
What you’re saying is basically true but those problems are only a cosmetic facade on the surface to mask the real conspiracy behind a methodically twisted plan to purposely bring the US economy to it’s knees.
Think about it, doesn’t the Federal Reserve MANAGE our economy, raising and dropping interest rates and so forth? Well, usually when someone is put in charge to MANAGE something, anything, don’t they structure a plan to MANAGE and oversee things in the present and the future in order to keep a functional company afloat by not over spending while trying to balance a budget? You can bet your house that the Government can see well into the future of what the economy will be 10plus years ahead.
So how come all of this mayhem wasn’t prevented years before the burst of the Mortgage bubble, to the rising gas prices, Iraq war, Corporations falling, to food inflation not to name the least?
On top of that, the Government is doing absolutely nothing to try and better the rising gas prices, and yet BUSH proposed another $160 Billion for the Iraq/Afghan War? A $160 Billion that could go to a million other strifes right here in the US! Why is the US so dependant on Foreign oil? Is it because Bush has shares in a oil company and is just feeding his piggy bank just before the end of his term? And/or larger FORCES thinks the US Government needs restructering from the ground up by crushing the economy, forcing the Government to go in a totally different direction then what it is today? But of course, these are just some my many speculations of whats going on and where we’re headed.
If you think I’m a disillusioned paranoid nutcase, then read and educate yourself with the deep underlying truth about the reality of the US Goverment and WHO runs them!
Fasten your seat belt… TIGHT!
http://www.michaeljournal.org/fedreserve.htm
http://www.john-f-kennedy.net/thefederalreserve.htm
http://globalresearch.ca/articles/ENG407A.html
http://www.teamliberty.net/id272.html
May 25, 2008 at 12:09 pm
Sadly, the Federal Reserve can only do so much to regulate the economy. Our economy is mixed, meaning that the government regulates some aspects of it, but the vast majority is subject to the highs and lows of the capitalistic system.
Yes, the government was too slow to react to the subprime lending crisis and yes, the president’s connections to foreign oil have probably influenced his decision-making regarding our dependence on foreign oil, but I really don’t think that we can make the leap to accusing the government of trying to topple the economy.
90% of economics is psychology. Whether we like it or not, the fears of the American public, real or imagined, influence the economy more than the Fed ever could. Just the lingering fear of a recession caused Americans to change their spending habits in such a way as to create a recession. As for oil, fear of higher gas prices made us expect higher prices, and so the oil companies simply gave us what we expected to see.
I agree with you that these dark economic times are going to significantly change the economy and the way the government is run, but that is completely natural and can be a good thing, like the changes brought about by the Stock Market Crash of 1929 and the resulting Great Depression. Things are going to change, but let’s take it in stride and try to avoid conspiracy theories.