The idea to tax bonuses given to employees and coming from companies came up a while ago. Today the democratic leaders of the United States are willing to legalize this measure. This would mean 5 billion dollars more tax income each year. More money for the government could lead to an improvement of the American economy.
The measure would not only affect employees but also former employees. Bonuses for people with an income of more than 250 thousand dollars will be taxed at a 90% rate. The tax will affect every bonus that has been given after January the first of this year.
One of the democratic leaders said about the AIG executives who received bonuses that they’re not the type of people who can define equity and justice nor they know the difference. These people just don’t realize how rich they are and how many other Americans are undergoing financial problems. They don’t know how many pain they’ve caused for millions of Americans by receiving their huge bonuses.
A lot of tax money goes out to American companies. One of the objectives of this measure is to make sure that the money won’t be used again for paying employees by giving bonuses and until now people didn’t have to pay taxes on these bonuses. It was a sort of payment given to employees but the government couldn’t tax it. This measures solves this problem.
My personal opinion about this measure is pretty positive; I think it’s justified because most of the time it are rich Americans who have a nice job and get big bonuses and the normal Americans usually don’t get things like that. So the rich people become more rich and the poor ones become more poor. That’s just not fair so the measure certainly is a great idea to try to solve the gap between rich and poor in a capitalistic country like the United States.
Source: http://money.cnn.com
donderdag 19 maart 2009
Podcast 1
The link to our podcast can be found trough the following link:
http://rapidshare.com/files/211004946/PODCAST_1_AMERICAN_ECONOMY.mp3
Stijn, Marie, Hanne, Maxime and Niels out!
http://rapidshare.com/files/211004946/PODCAST_1_AMERICAN_ECONOMY.mp3
Stijn, Marie, Hanne, Maxime and Niels out!
zondag 15 maart 2009
Freedom To Spend Act
I have been reading an interisting opinion lately of someone who proposes the
“Freedom to spend act”. At first, he says the underlying theme of this economic crisis is the lack in confidence. Many are simply waiting for the sentiment of all that it’s OK and the people need to move forward.
Secondly, both sides of the isle of the U.S. government, Democrat and Republican, have ideologies that are limiting their scope on how to handle the financial crisis according to him.
Well, I wrote the exact same things some weeks ago so I defenitely agree with him. But further in his text, he pretends to have an idea about how to restore confidense.
He says that the government must give every American family $20,000 and individual $10,000 to spend freely as they wish. He thinks that if you give a substantial amount of cash to “the people”, they will spend, pay off credit cards, pay their mortgages, buy cars and homes, they’ll go on vacations, they will give to charities, they’ll invest again and what’s more important, they’ll be “confident” again to move America forward.
I agree that that the government must undertake actions because the problem won’t be solved by its own but this is a few steps too far. First of all, where will the governement get that much money? And I am certain that the governemnt won’t see even half the money back through taxes and so on, so I think that we will have an even bigger problem in the future.
In my opionin, it would be more achievable to stimulate the employment but it would be too easy to eliminate this proposal focusing on this part. I think there are some good parts in his Freedom to spend act too. The only solution is indeed to invest a huge amount of money in the economy in order to give the people a clear sign that the government itself believes it will get better. While doing it, we are making the people part of the solution, restoring their confidence and half the problem will be solved by then.
Source: http://economix.blogs.nytimes.com/2009/03/12/david-swensen-says-buy/#comment-42765 (the second comment)
“Freedom to spend act”. At first, he says the underlying theme of this economic crisis is the lack in confidence. Many are simply waiting for the sentiment of all that it’s OK and the people need to move forward.
Secondly, both sides of the isle of the U.S. government, Democrat and Republican, have ideologies that are limiting their scope on how to handle the financial crisis according to him.
Well, I wrote the exact same things some weeks ago so I defenitely agree with him. But further in his text, he pretends to have an idea about how to restore confidense.
He says that the government must give every American family $20,000 and individual $10,000 to spend freely as they wish. He thinks that if you give a substantial amount of cash to “the people”, they will spend, pay off credit cards, pay their mortgages, buy cars and homes, they’ll go on vacations, they will give to charities, they’ll invest again and what’s more important, they’ll be “confident” again to move America forward.
I agree that that the government must undertake actions because the problem won’t be solved by its own but this is a few steps too far. First of all, where will the governement get that much money? And I am certain that the governemnt won’t see even half the money back through taxes and so on, so I think that we will have an even bigger problem in the future.
In my opionin, it would be more achievable to stimulate the employment but it would be too easy to eliminate this proposal focusing on this part. I think there are some good parts in his Freedom to spend act too. The only solution is indeed to invest a huge amount of money in the economy in order to give the people a clear sign that the government itself believes it will get better. While doing it, we are making the people part of the solution, restoring their confidence and half the problem will be solved by then.
Source: http://economix.blogs.nytimes.com/2009/03/12/david-swensen-says-buy/#comment-42765 (the second comment)
US trade deficit
Which influence has the US trade deficit on its likely future evolution, on how the dollar will behave in the long-term, on the political aspects of the trade deficit, and on how European and Asian countries will deal with it? These questions depend on how the economy fluctuates and evolves.
A tendency: the US imported less in these hard times of economic slowdown. Furthermore the skidding oil prices caused the US trade deficit in November, these deficit was on its lowest level in five years. The Commerce Department communicated that the gap between the value of exports and imports decreased quite a lot, namely 28.7 per cent in one month.
Two affaires gives occasion to the trade deficit. First and foremost the American consumers clipped their demand for foreign-made consumer goods. Secondly the falling energy prices slashed the value of imported gas and oil. Even when we take no account of energy prices, the trade deficit still narrowed in November. The American import fell by 12 per cent or some $25 billion, which is incredibly much in comparison with the export. Contrary the imbalance with China declined 17.5 per cent, which was a negligible decline since June.
Chief US economist, Nigel Gault communicated that the US cut its demand very quickly equated to the rest of the world who cut its demand for US exports. This saying might moderate the US downturn but it isn’t so effective. Since the summer of 2008, the trade between the US and the world has shrank. This is the moment that the financial crisis scourged the global, financial markets.
In my opinion, there aren’t so many effective measures to recovery the US trade deficit. The deficit fluctuates according to circumstances, for instance the financial crisis. So the government hasn’t any impact on it, the countries in the world regulate the import and export and these two factors are very important for the trade. A deficit or surplus have you to interpret as something who evolve with the economy.
A tendency: the US imported less in these hard times of economic slowdown. Furthermore the skidding oil prices caused the US trade deficit in November, these deficit was on its lowest level in five years. The Commerce Department communicated that the gap between the value of exports and imports decreased quite a lot, namely 28.7 per cent in one month.
Two affaires gives occasion to the trade deficit. First and foremost the American consumers clipped their demand for foreign-made consumer goods. Secondly the falling energy prices slashed the value of imported gas and oil. Even when we take no account of energy prices, the trade deficit still narrowed in November. The American import fell by 12 per cent or some $25 billion, which is incredibly much in comparison with the export. Contrary the imbalance with China declined 17.5 per cent, which was a negligible decline since June.
Chief US economist, Nigel Gault communicated that the US cut its demand very quickly equated to the rest of the world who cut its demand for US exports. This saying might moderate the US downturn but it isn’t so effective. Since the summer of 2008, the trade between the US and the world has shrank. This is the moment that the financial crisis scourged the global, financial markets.
In my opinion, there aren’t so many effective measures to recovery the US trade deficit. The deficit fluctuates according to circumstances, for instance the financial crisis. So the government hasn’t any impact on it, the countries in the world regulate the import and export and these two factors are very important for the trade. A deficit or surplus have you to interpret as something who evolve with the economy.
G.M. says it won’t need finance infusion in March
After all the troubles with G.M. there is finally some hope. G.M. has already borrowed
$ 13.4 billion from the U.S. government and asked an additional loan of $ 2 billion for the month of March. But the car constructing company said this week that it doesn’t need the loan of March to avoid bankruptcy.
This development shows that the restructuring plan works and they achieved more progress in reducing costs than expected. G.M. will also remain in contact with the presidential task force on the auto industry to look if the company makes further progress.
However it’s not sure if G.M. needs the other loans the request about 2 months ago for the month April ($2.6 billion) and the $4.5 billion in 2010. Although G.M. is doing well in the U.S., in Canada G.M. and Chrysler are seeking financial aid. When they don’t get help from the Canadian government it’s most likely they have to close their plants. Chrysler is not only doing bad in Canada, it also asked for another $5 billion above the $4 billion they already borrowed of the U.S. government. It’s however most unlikely that G.M. and Chrysler get financial support from the Canadian government because the government says that the current agreement is unacceptable.
This is finally some good news about the car industry in the U.S., after Ford also G.M. is trying to work further without government aid and I think G.M. has to try to keep up this good work. I also think that this is a signal that restructuring plan works and they have to do the same in Canada and the rest of the world. It’s necessary that G.M. and Chrysler do something about the situation in Canada because it’s not very likely that they get a loan under the current conditions, unless they change a lot of things.
Source: http://www.nytimes.com/2009/03/13/business/13auto.html?ref=business
$ 13.4 billion from the U.S. government and asked an additional loan of $ 2 billion for the month of March. But the car constructing company said this week that it doesn’t need the loan of March to avoid bankruptcy.
This development shows that the restructuring plan works and they achieved more progress in reducing costs than expected. G.M. will also remain in contact with the presidential task force on the auto industry to look if the company makes further progress.
However it’s not sure if G.M. needs the other loans the request about 2 months ago for the month April ($2.6 billion) and the $4.5 billion in 2010. Although G.M. is doing well in the U.S., in Canada G.M. and Chrysler are seeking financial aid. When they don’t get help from the Canadian government it’s most likely they have to close their plants. Chrysler is not only doing bad in Canada, it also asked for another $5 billion above the $4 billion they already borrowed of the U.S. government. It’s however most unlikely that G.M. and Chrysler get financial support from the Canadian government because the government says that the current agreement is unacceptable.
This is finally some good news about the car industry in the U.S., after Ford also G.M. is trying to work further without government aid and I think G.M. has to try to keep up this good work. I also think that this is a signal that restructuring plan works and they have to do the same in Canada and the rest of the world. It’s necessary that G.M. and Chrysler do something about the situation in Canada because it’s not very likely that they get a loan under the current conditions, unless they change a lot of things.
Source: http://www.nytimes.com/2009/03/13/business/13auto.html?ref=business
Q&A: Obama stimulus plan
A few weeks ago, Barack Obama signed the $787bn stimulus plan after weeks of political wrangling. He hopes the signing of this plan means the end of the economic problems of today.The economic stimulus plan has three posts. At the beginning, this hopeful plan includes a lot of measures, such as tax cuts, which are created to maximize its political support.
Further, a big part of the money will be spend on aid to states to close their budget gaps. With the signing of this plan, the government hopes to create or save jobs. The US jobless rate is surging, measures has to be taken to make the employment better in the US.
Finally, the last portion is money to invest in infrastructure projects. Roads, bridges, classrooms,… are in bad condition. This money creates a possibility and an opportunity to repair it.
The big stimulus plan has been proposed because the US economy is suffering from the worst crisis since the 1930s. Without this plan, the financial crisis could last well into 2010. The signing of this plan has the intention to make the economic situation better.
The plan is supported by 246 Democrats. Almost 200 Republicans were against. The original plan was delayed by wrangling between Democrats and Republicans. The first version of the plan hadn’t any Republican support. Modifications were necessary to gain the support of moderate Republicans, so Democrats accepted a plan with more tax cuts and less money for aid to states and local governments.
To realize this plan, they have to borrow money, but the US budget deficit is already so high this year. According to the US government, this measures are temporary. After a time, it will bring the budget back into balance.
At first sight, I thought this plan was an excellent idea. Jobs will be saved or created, Americans have to pay less taxes,… In short, I was pleased to hear that Obama tries to make an end on the economic troubles.
But after reading this article, I changed my mind. In my opinion, this plan is really too rosy. I have one essential question: “How will it be paid for?”. The US budget deficit is already that high. According to me, this plan is too expensive for the United States. This plan could push up the cost of government borrowing. The future US generation will be a victim of the troubles of today, because they will have to pay the borrowing costs.
Source: http://news.bbc.co.uk/2/hi/business/7874407.stm
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