|Issue of the Day Posts Tagged ‘President Obama’|
At the 2009 New York International Auto Show, the future of the car industry was on display, all hope and optimism. What was not there, at least not on display, was the depressing trade numbers or the news that bankruptcy may loom for some automakers. In fact, the news of a year-to-year 37% drop in sales amounted to a sign of recovery. Chrysler, who faces bankruptcy at the end of the month, is working tirelessly on negotiations with the UWA for waived benefits and reduced creditor returns. If the car company cannot achieve this, the federal government has made clear that it will not receive any more money. An alliance with Fiat, the Italian manufacturer, seems to be almost finalized as members of the press arrived on stage in a blue Fiat Cinquecento. However, Chrysler’s only product launch was the updated Jeep Cherokee, which now gets 20 mpg, significantly better than its older model but not the car of the future.
When Congress and President Obama rejected the automakers’ initial restructuring plans, the President stated, “Year after year, decade after decade, we have seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. We have reached the end of that road.” Accordingly, the ratio between vehicles imports and exports has risen from 1.28 to 1 in 1990 to 1.69 to 1 in 2005, which accounts to a $135.3 billion US trade loss.
Secretary Gates is expected to target several major conventional warfare programs in favor of spending on technologies more useful to the ‘asymmetrical’ wars in which the US is embroiled. Projects will be cut: the Army’s $150 billion Future Combat Systems, which proposes to sync manned and unmanned ground and aerial vehicles, the Air Force’s demands for more F-22 stealth fighter jets, 11 of the Navy’s aircraft carriers and a new $20 billion satellite. The President has even suggested that upgrades to Marine One will be delayed. The Pentagon has stated that this is a shift in direction and not cuts to the bottom line.
The Obama administration has pledged to integrate the war supplemental requests into the Department of Defense’s base budget. This will, of course, reduce future supplemental budgets but will increase the department’s base budgets. After 8 years of war, the budget for the Department of Defense (DOD) has nearly doubled from $387 billion in 2000 to $709 billion in 2008. However, the fiscal year 2009 total DOD budget is $687 billion, which includes the war supplement of $144 billion, a reduction of $50 billion from the 2008 fiscal year war supplement total of $194 billion.
In two separate events, the Obama administration has started investigating tax reform. The last major tax reform took place in 1986. President Bush appointed a tax reform commission in 2005, which delivered a report in that same year, but its recommendations were not included in the 2007 budget. Prof. Elizabeth Garret of USC, who sat on the commission, has been announced to become assistant secretary of the treasury for tax policy. Also, President Obama asked Paul Volcker, who chairs his Economic recovery Advisory Board, to appoint a tax reform task force that would report no later than December 4th.
Given the composition of tax receipts over time, the percentage of each category has changed given the reforms made by various administrations. For the 2008 fiscal year, individual tax income amounted to $1,146 billion; $23 billion lower than expected. Corporate taxes amounted to $304 billion, $5 billion lower due to $4 billion lower in payments and $1 billion in extra refunds. Social Insurance and Retirement Receipts were $900 billion, $1 billion lower than estimated. Other taxes, such as customs duties, estate and gift taxes came to $106 billion, which was $1 billion more due to higher estate taxes, gifts, fines and penalties. The overall budget in 2008 amounted to $2,979 billion, which was $36 billion above the estimate due to the Department of Defense and the Treasury.
The new Afghanistan war strategy that President Obama announced will send a surge of 4,000 troops, bringing U.S. troop levels to 60,000. Their focus will not be on battling Taliban insurgents face-to-face, but on improving security in villages by winning the trust of the local population. The idea is to make the Taliban irrelevant in the everyday lives of the villagers, who to this point have come to depend on or fear the insurgence. After seven years of war, the coalition has a steep road to climb. This strategy comes from the hard earned lesson learned in Iraq where the tide is turning in favor of the coalition and Iraqi government. Furthermore, the President’s plan calls for doubling the size of the Afghan security forces by 2011 and increasing diplomatic cooperation from regional countries.
Before the change in strategy, the number of casualties in Iraq hit a steady range of 822-904 deaths per year from 2004-2007. After, the improvement can be seen in the dramatic drop from 2007 to 2008 of 314 deaths. Also, of those wounded in this global war on terror, the numbers reflect the Iraqi change in stratagy as those wounded reduced from 6107 in 2007 to 2046 in 2008. The number of casualties in Afghanistan since 2004 has climbed steadily to 294 last year. Currently, as of March 2009, there have been 78 deaths in Afghanistan; that is nearly double what the count was last year at this time.
In an op-ed running in 31 international newspapers, President Barak Obama reached out to the citizens of the world saying “We are living through a time of global economic challenges that cannot be met by half measures or the isolated efforts of any nation.” This message is ahead of the Group of 20 which will soon meet in London this month. He went on to say that “the success of the American economy is inextricably linked to the global economy. There is no line between action that restores growth within our borders and action that supports it beyond.” He then cited three recommendations for stabilizing and recovering from the global economic downturn: fiscal stimulus, restoration of credit, and efforts to stabilize emerging markets.
The premise of the President’s argument, that our economies are linked, has certainly been demonstrated by the global nature of this economic downturn. We have imported and exported so much over the years that our economies react to each other’s growth and contractions. In fact, by looking at the Gross Domestic Product for the member countries of the OECD — many members of the G20 are members of the OECD, including the US — an immediate parallel can be seen between the various growth rates of each nation and group.