Carl Icahn has accused the Republicans of being too obsessed with the deficit. He believes that Republicans should spend more.
Republican on the Counter, On to Savings and Expenditure
The Republicans believe that the Government should be held accountable for public spending and be seen to spend taxes in a responsible manner.
They have accused President Obama of adding more to the National Debt than any other president and feel that the federal government is fundamentally broken financially and structurally.
The Republicans aim to make the Government more efficient by:
- Balancing the budget – they plan to balance the budget within ten years by cutting spending, changing tax codes, and paying off the national debt
- Abolish Obamacare – Republicans feel that by abolishing Obamacare they will create better health solutions through free choice and better affordability
- Stronger national defense – there are plans to improve funding, equipment, training, and compensation
- Secure Futures – make improvements to Medicare, ensure disability and employment insurances are more secure, as well as preventing spending from the Social Security Trust Fund
- There are also plans to restore federalism, as well as cutting waste and corporal welfare while also improving accountability
Icahn’s stance on the economy and spending
Icahn has said that while a business would go bankrupt if it owes too much money, the same rules do not apply to the United States because a country is not a company.
While Icahn is not advocating that the Government go on a spending spree, he does believe that it should focus more on fiscal stimulus and less on the deficit.
The lack of a financial boost and the need to keep interest rates low has created a wealth gap which in turn has created a bubble.
Icahn has said that unless fiscal stimulus is achieved then the markets will face a ‘day of reckoning.’ He believes that Donald Trump will do what is necessary to save the US economy.
So, which direction is right for the economy? Should we be concentrating on fiscal stimulus or deficit reduction?
Fiscal Stimulus: Advantages and Disadvantages
Fiscal stimulus can be an effective way to improve living standards and defend capital markets. However, there is a chance that ineffective measures could make the economy worse.
The success or failure of fiscal stimulus entirely depends on the policies adopted. There is the added complication that while financial help may improve some areas of the economy, it could negatively impact other areas.
Deficit Reduction: Advantages and Disadvantages
The deficit needs to reduce. If this doesn’t occur, then not only will investors lose confidence in the country’s economy, but it will also result in future generations facing higher interest rates on our debts.
On the other hand, in a recession, the private sector concentrates on saving and paying off their debts. This leads to lower consumption and investment in the private sector. If the Government also cuts spending, then this creates an even bigger fall in demand.
Deficit reduction requires strong economic growth if it is to be effective.
There are positives and negatives towards both fiscal stimulus and deficit reduction. On one hand fiscal stimulus can improve economic growth however while doing this, it must not cause damage to other areas of the economy. Deficit reduction can improve the national debt but only if there is economic growth.
Carl Icahn stated that there needs to be some middle ground, and the above advantages and disadvantages of both fiscal stimulus and deficit reduction would meet with his approval.
It would appear that it would be best to increase spending in certain areas as this would improve growth, and cut back spending in other sectors which would then reduce the deficit.
If it is this simple, however, why is this not considered an option? Is this just too much of an idealistic solution?
The toughest decision would be where to cut and where to spend. Everyone has areas where they passionately feel money should be focused, whether that is more money spent on education or more on welfare. Depending on the level of the deficit it may not be possible to please everyone.
Will the Republicans ruin the economy?
Based on the Republican stance as outlined, there is very little focus on increasing public spending and more focus on accountability and balancing the budget. They have committed to increasing spending in areas like the military, but not elsewhere.
It would be premature for anyone to decide whether or not the Republicans will or won’t ruin the economy. It would seem, however, that focusing only on one element won’t fix the economy.
STUDY: Number of Billionaires Doubles in Last Decade
The number of billionaires has doubled in the past decade and the world’s wealthiest 2,153 people controlled more money than the poorest 4.6 billion combined last year, the charity Oxfam said Monday.
Meanwhile, unpaid or underpaid work by women and girls adds three times more to the world’s economy each year at least $10.8 trillion than the technology industry, the Nairobi-based charity said in its “Time to Care” report.
Women around the world work 12.5 billion hours combined each day without any pay or recognition, while the world’s 22 richest men have more wealth than all the women in Africa.
“It is important for us to underscore that the hidden engine of the economy that we see is really the unpaid care work of women. And that needs to change,” Amitabh Behar, CEO of Oxfam India, told Reuters.
“Our broken economies are lining the pockets of billionaires and big business at the expense of ordinary men and women. No wonder people are starting to question whether billionaires should even exist,” Behar said ahead of the annual World Economic Forum in Davos, where he will represent Oxfam beginning Tuesday.
“Women and girls are among those who benefit least from today’s economic system,” he added.
There will be at least 119 billionaires worth about $500 billion attending Davos this year, according to Bloomberg, with the highest contingents coming from the US, India and Russia.
“The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men,” the Oxfam report said.
“Their wealth is already extreme, and our broken economy concentrates more and more wealth into these few hands,” it said.
To highlight the inequality, Behar cited the case of a woman called Buchu Devi in India who spends up to 17 hours a day walking almost two miles to fetch water, cooking, preparing her kids for school and working in a poorly paid job.
“And on the one hand you see the billionaires who are all assembling at Davos with their personal planes, personal jets, super rich lifestyles,” he said.
“This Buchu Devi is not one person. I in India encounter these women on a daily basis, and this is the story across the world. We need to change this, and certainly end this billionaire boom.”
Behar said that to remedy the problem, governments should make sure above all that the rich pay their taxes, which should be used to pay for amenities such as clean water, health care and better schools.
“If you just look around the world, more than 30 countries are seeing protests. People are on the street and what are they saying? That they are not to accept this inequality, they are not going to live with these kind of conditions,” he said.
Source: New York Post
(c) 2020 2019 Vanguard Media Limited, Nigeria Provided by SyndiGate Media Inc. (Syndigate.info).
Pump Prices to Edge up After Attack on Iranian General, but Long-Term Effect Unclear
Motorists soon will see the effects of President Donald Trump’s decision to kill a prominent Iranian general. Whether pump prices rise a little or a lot depends on how quickly international tensions intensify.
Florida gas prices climbed an average of 7 cents a gallon in the past three days and could increase an additional 5 cents, AAA – The Auto Club Group said Monday.
The 7-cent increase was coming even before the U.S. air strike Thursday that killed Iranian Maj. Gen. Qassem Soleimani. That hike was a result of a rise in the price of crude oil in December.
News of the targeted killing of Soleimani sent crude oil surging nearly $2 per barrel on Friday. An increase of that magnitude typically translates to a 5-cent hike at the pump, AAA said.
The U.S. benchmark for crude oil traded Monday just above $63 per barrel, the highest level since May 2019. The price of oil makes up about half the price of a gallon of gas.
“What happens in the Middle East can have a direct impact on Americans’ daily lives by influencing what they pay at the pump,” said AAA spokesman Mark Jenkins. “Crude prices rise when there’s a threat of war, because of concerns over how the conflict could hamper supply and demand.”
Oil analyst Tom Kloza of energy firm OPIS agreed that pump prices in Florida likely will rise about 5 cents a gallon in the coming days.
“Then I have a hunch that things are going to calm down,” Kloza said Monday. “I don’t think we’re looking at $3 gas.”
The national average pump price Sunday was $2.585, while the Florida average was $2.526, AAA said.
Kloza expects only modest increases in part because of the timing of the attack. January is always a slow month for gas consumption in the United States.
There’s also the reality that sanctions leave Iran unable to export oil. Complicating the calculus is Iraq’s response to the U.S. attack. The drone strike on Soleimani took place in Baghdad, and some Iraqi politicians considered the assault an affront to Iraqi sovereignty.
While there’s no Iranian oil supply to be disrupted by a war, Iraq is an important producer.
Trump keenly watches oil prices and realizes that a price spike might erode his support in this year’s presidential election, Kloza said.
At the same time, Kloza added, “This president has proven to be unpredictable.”
Trump’s response has been typically uneven. Delivering an official statement at the Mar-a-Lago Club in Palm Beach, Trump’s tone was measured. He said the targeted killing was designed to pre-empt Soleimani’s planned attacks on American diplomats and soldiers.
“We took action last night to stop a war,” Trump said Friday. “We did not take action to start a war.”
However, over the weekend, Trump took to Twitter to threaten attacks on Iranian cultural sites.
“The United States just spent Two Trillion Dollars on Military Equipment,” Trump wrote Sunday on Twitter. “We are the biggest and by far the BEST in the World! If Iran attacks an American Base, or any American, we will be sending some of that brand new beautiful equipment their way…and without hesitation!”
##IFRAME_1##Iran has vowed vengeance, but military experts say the nation isn’t powerful enough to wage a direct war against the U.S.
“It’s still far too early to know how much of an impact this conflict will have overall on prices at the pump,” AAA’s Jenkins said.
Stocks Rally Despite Impeachment News
Stocks rose on Thursday as investors looked past the news of President Donald Trump’s impeachment as well as mixed U.S. economic data.
The Dow Jones Industrials advanced 53.85 points to begin trading at 28.293.13
The S&P 500 recovered 4.93 points to 3,196.07
The NASDAQ added 19.39 points to Wednesday’s all-time record, at 8,847.12.
The S&P 500 is up nearly 7% since House Speaker Nancy Pelosi launched a formal impeachment inquiry in September.
Cisco Systems was the best-performing Dow component, rising 1.6%. The consumer staples and real estate sectors led the S&P 500 higher, gaining 0.4% each. Micron Technology shares also contributed to Thursday’s move higher. Conagra shares surged more than 14% and were on pace for their biggest one-day gain since Oct. 16, 1989.
Micron shares climbed 3.5% on the back of strong quarterly results. The chipmaker posted earnings per share and revenue that topped analyst expectations.
On the economic data front, weekly jobless claims fell to 234,000 from 252,000 the week before. However, economists expected claims to fall to 225,000.
Meanwhile, the Philadelphia Federal Reserve’s business conditions index fell to 0.3 in December from 10.4 in the previous month. Economists expected the index to slip to 8.
The Democrat-led House of Representatives voted Wednesday to impeach Trump for abuse of power and obstruction of Congress. Trump became only the third president to be charged with high crimes and misdemeanors and will now face a trial in the Republican-controlled Senate.
Prices for the 10-Year U.S. Treasury were lower, raising yields to 1.94% from Wednesday’s 1.93%. Treasury prices and yields move in opposite directions.
Oil prices gained seven cents to $61.00 U.S. a barrel.
Gold prices moved forward $1.80 at $1,480.50 U.S. an ounce. Copyright © 2019 Baystreet.ca Media Corp. All rights reserved.
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