Saturday, February 23, 2013

What Obama has Done for the Economy

When Obama came into office in 2009, the economy was in a downward spiral to disaster.  People were losing their jobs and the stock market was crashing.  Home prices lost over half their value, and the American auto industry was on the brink of closing it's doors forever.  This was a very tough time for the American people.  Obama came riding in on a white horse, promising change, and turning the economy around in his first term.  People believed he could do it.  People believed he could save our country from disaster, and make it better than ever.  So how did he really do?

Let's start with unemployment.  The unemployment rate stood at 7.8% in January of 2009 when he first took office.  It shot as high as 10% in October 2009.  Since then the unemployment rate has dropped back down to 7.9% for January 2013.  Sounds pretty good, right?  Well, yes and no.  The economy has been adding jobs consistently since November 2010, however not enough jobs for the economy to pick up steam and get rolling again like it once was.  This unemployment is lower, because people are going back to work, but also there are less people actually looking for work as well.  People who are unemployed and not actively searching, do not get counted in the unemployment rate.  So jobs are being created and people are making money again, but it's still not enough.  There are too many people living on unemployment and welfare, and they need to be given a very strong incentive to go back to work.  Maybe more job programs can be created to help train people in areas that need new workers. Perhaps, cutting funding for food stamps and unemployment checks to show people they can't live off the taxpayers forever would do the trick as well.

General Motors, Chrysler, and Ford Motors were deep in debt, people stopped buying new cars from them, and financing had dried up.  The Big Three had lost market share to international manufacturers such as Toyota and Volkswagen.  While Ford was able to pull itself up alone without government assistance,  GM and Chrysler weren't able to do that.  GM was given a $49.5 billion loan, while Chrysler received $12.5 billion.  Chrysler originally received $4 billion under the Bush Administration and $8.5 billion under the Obama Administration.  Chrysler paid back $10.6 billion.  So while Obama's loan has been repaid in full, taxpayers are still on the hook for $1.9 billion, which the Obama Administration had written off.  In 2010 when GM went public again, they paid back about $23.1 billion, leaving $26.4 billion left to be paid back.  The Treasury will sell it's stake of 200 million shares at $27.50 per share, which equals out to about $5.5 billion.  This means the taxpayers will have lost money on both of these loans.  The big question is, was it worth it?  Taxpayers are left footing the bill, but millions of people got to keep their jobs and helped keep the economy from sinking further than it already had.  What if GM and Chrysler had gone under?  Who would've taken their spots and filled the gap? What would have happened to all those employees?  These are questions that can only be answered in theory.  Some people think the bailout was a good idea, while others thought capitalism should've taken it's natural course.

The bottom line is, Obama has done a so-so job.  People are quick to say that he really has saved the economy and the country, even though work still needs to be done.  Others say he has made it worse than ever, and all his government spending is only going to hurt us further.  Yes more people are working, and the auto industry is doing well again, but it has been at the taxpayer's expense, which could lead to worse problems in the future.  We will have to wait and see.   

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