Economic Irregularities Pepper Obama’s Second Term

The first quarter of Barack Obama’s second term threatens to end with the same economic turmoil as 2008. Only it will come with the added annoyance of lower approval ratings and more critical, proselytizing opposition from Republicans.

Four years ago, when Obama arrived at the seat of executive authority in Washington, the White House was the main target for finger pointing at the federal level because of its controversial decision to financially support automotive companies like General Motors and banking consortiums like CitiBank.

According to experts, for almost half a decade, the domestic unemployment and underemployment rates have been double what is acceptable. Considering current data on wages, expenditures, income and consumption, this number would be 4.5 percent in the convoluted macroeconomic landscape of the U.S. During the same period, leaders from both parties in Congress and the Obama administration have reached a gridlock. The storyline goes that Republicans have become steadfast in their defense of lower taxes and a variety of budget cuts, while Democrats espouse the exact opposite view.

Meanwhile, annual expenditures continue unabated at more than $1 trillion; as a result, the national debt has reached $16 trillion — well surpassing gross domestic product. The number of unemployed and underemployed workers is almost 15 million. Almost 43 million people have reached the poverty line.

The current situation has become an excellent pretext for the president’s adversaries to open fire against the Oval Office. According to one Republican leader, Obama’s federal entitlement programs are unsustainable, and the U.S. will face another economic crisis in the midterm because of the bloated government debt.

“We all know what is looming ahead, and we know that the only way to avoid it is to reform the wasteful budget plan designed by the White House for the next fiscal year,” warned Rep. John Boehner, R-Ohio.*

According to Speaker of the House Boehner, we do not have an immediate debt crisis, but problems and serious irregularities can occur in three to four years.

“Washington has a responsibility to our grandchildren to solve this issue, because if we do not, we will have a serious debt crisis around the corner,” remarked Boehner.*

In the congressman’s opinion, the only permanent solution is to cut spending and keep taxes at their current rates. However, this compromise is apparently not so easy.

In the first week of March, experts at the Economic Policy Institute warned that more than 2 million jobs in the U.S. will be lost in 2014 if the Republican program that aims to reset the federal budget is approved. The same source signaled that if the White House agreed to implement Rep. Paul Ryan’s, R -Wis., bill, the nation’s economy would contract by 1.7 percent, and unemployment would increase by 0.8 percent.

Ryan’s idea is to cut $4.6 trillion of domestic spending over 10 years, and this option will greatly harm the U.S. middle class’s standard of living, according to the Economic Policy Institute report. The Wisconsin representative also aims to repeal the healthcare law approved in 2010, suspend restrictions on Wall Street, modify Medicare and reduce taxes on big corporations.

According to the former Republican vice-presidential candidate, this plan would balance the budget by 2023, but would involve repealing “Obamacare,” reforming the government’s welfare system and overhauling the tax code. Skeptics emphasize that this is no trivial matter.

For the moment, a temporary remedy in the form of an $85 billion sequester — first drafted in 2011 — came into effect at the beginning of March, initially having a serious impact on the federal government’s support of crucial social sectors like education and public health. According to an institutional report, public schools in the U.S. are pressing for $270 billion for capital repairs to counteract poor structural conditions in many buildings. According to a report from the Center for Green Schools — backed by former President Bill Clinton — in order to modernize and upgrade the technologies in these institutions, Washington would have to spend double the money it spends today: $542 billion [over a decade].

The figures were announced by Center for Green Schools in the context of a political controversy between Republican and Democratic congressmen, with both parties preoccupied with a disproportionately large federal fiscal imbalance and an excessive debt that surpasses the GDP. Experts from the Government Accountability Office called attention to a previous statistic from the same sector in 1995, when it was estimated that the nation’s schools needed less than $112 billion for renovations.

“We have the moral obligation to resolve this issue if we want to talk about quality education. No one wants to send their kids to a school that has problems with its bathrooms, electricity or broken air conditioners,” emphasized O’Shea Jackson, a representative of the American Federation of Teachers.**

The automatic budget cuts in the U.S. will affect not only national security and economic growth, but also the education sector, according to the University News Agency.*** According to the analysis of this nongovernmental organization, the sequester will have a negative impact on funding for public schools and the labor market for teachers in the country.

After March 27, millions of students at all levels will feel the pernicious effects of the almost $3 million subsidy reduction, admitted President Obama in a press release. Ten thousand teachers’ jobs are in danger during the next three years. In addition, 7,200 special education teachers will be left without financial support for their careers, according to a report by the University News Agency. It also stressed that more than 70,000 children could lose access to the federal Head Start program, which has provided services to school-age children from low-income families since 1965. Education Secretary Arne Duncan acknowledged that the cuts would affect almost 70 percent of school districts in the U.S. and would put 14,000 public education jobs at risk.

After weeks of blaming one another for the possible budget crisis, which would sequester $85 billion, Obama and his adversaries have not come to an agreement on a political solution. The sequester affects millions in funding for the Pentagon, and to the same extent, it would also impact civilians through higher unemployment and less backing for public health and other domestic programs.

Analysts estimate that the budget contraction — slated to take effect on March 27 — will eliminate 750,000 jobs in total and will cause a 0.6 percent slowdown in industrial growth by the end of the year. Additionally, almost 4 million jobless Americans will have their benefits reduced, while state payments to doctors and hospitals could be reduced by $10 billion. Senate Democrats submitted a budget fix that eliminated $110 billion from the deficit, but Republicans refused to give the green light to an initiative that would also increase taxes on millionaires.

What is certain is that less than half of Americans think President Barack Obama is doing a good job, according to an opinion poll carried out by CNN and ORC International. According to these sources, the approval rating for the Democratic president was 47 percent during the third week of March, which represents a decline of eight percentage points since last December.

It is also the first time since September 2012 that the leader’s popularity numbers are less than 50 percent. Meanwhile, 41 percent of those surveyed have a favorable impression of the Republican Party. The same study showed that 48 percent of citizens interviewed have an unfavorable view of the two-party system in the U.S. More than 55 percent of those surveyed said that the head of state is not doing enough to collaborate with his political opponents in negotiating a resolution to the nation’s bloated deficit.

*Editor’s note: It seems that the author is loosely quoting from the following interview published on ABC News on March 17, 2013: http://abcnews.go.com/Politics/week-transcript-speaker-house-john-boehner/story?id=18740183&page=2#.UVhtARxtgy6

**Editor’s note: Though accurately translated, this quote could not be verified.

*** Editor’s note: The actual English name for this news source could not be identified.