Thursday, October 25, 2012

Obama's Stimulus, Romney's Austerity

AT the last presidential debate, both President Barack Obama and Mitt Romney spent majority of their tussle around military spending, Iran, Israel, Pakistan etc—all the macho Captain America posturings and “national security” cautionary air. What about global economy? Aside from China, what is the trade policy on Russia, Brazil, India, Southeast Asia. What about the European Union? All this “threat to America” should be set aside—instead, focus on formulating a more sound economic/trade relations with the world...
     A glaring look at the debate also articulates Obama's edge in the race. Romney appeared tensed, scattered, unconvincing–and he agreed with Obama on most issues (Iraq, Afghanistan, Libya, Syria, Iran). The Massachusetts politician didn't present one smartly thought out foreign policy agenda. The president was more firm and convincing—although I don't necessarily agree with some or most of his arguments. Romney contradicted himself on not just one issue. It's as though he forgot what he kept on hammering out in his campaign speeches...
     I am particularly concerned that they didn't discuss or even asked by the moderator about how they'd deal with Russia being a member now of WTO (as China's main competitor in "stealing" American jobs and patents), China gaining control in South China Sea (a main trade gateway and defense fort), and what about the European Union? It bothers me that the debate centered on national security in re Iran and Pakistan... It sends a chilling message to Americans and the world that Muslims should be hated instead of looking at the global situation as a business negotiation and mutually beneficial compromises.
     But then, let's leave foreign policy for a bit and focus on economy.
     Mitt Romney’s best argument on the campaign trail is consistent but weak: Under President Obama, the American economy has remained gasping. That is not hard to argue. But if we scrutinize the Governor's proposed economic policies, well—Americans should worry more. He favors the same austerity measures that Germany and Britain have been implementing to rescue the economic downturn—as though he isn't looking outside his window what's going on in the West.
     Austerity refers to a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to try to reduce their deficit spending and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors.
     Textbook wisdom says that in an event of a downturn, governments should go into deficit to stimulate demand. That trick, after all, saved America from the Great Depression. But times are changing so fast. Recent European data and analysis by the International Monetary Fund underscore that austerity in the middle of a downturn not only doesn’t help but leads to even higher ratios of debt to economic output. The IMF projects that Europe's economy is expected to shrink even more this year, and that the US economy will only grow by 2 percent.
     Republicans who are almost unanimously in favor of austerity tried their shenanigan in New Jersey. NJ ranked 47th in economic growth last year. When Gov. Chris Christie took office in 2010 and began to impose austerity measures, New Jersey ranked 35th in its unemployment rate; now it ranks 48th.
     Bottomline, Obama's massive stimulus program and Germany/Britain's US Republican-endorsed austerity aren't working for the West.
     Needless to say, the president's $700 billion rescue of Wall Street in 2008 created only at least 1.4 million jobs, according to the nonpartisan Congressional Budget Office. That wasn’t enough. Moreover, the 93 percent income gains from the 2009-10 recovery went to only the top 1 percent of taxpayers, says economists Emmanuel Saez and Thomas Piketty.
     So what's going on? Americans should head East... Drop Europe and ponder countries that are doing exceptional work with their economies. I mean, even the “lowly” Philippines has recently donated money to a cash-strapped IMF.

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