The Government and the Economy - Essay Example

Being the worlds greatest economy, the American economy represents an approximate of about 20% of the total global output. Besides an IMF report points out that the US economy has the sixth highest per capita GDP (Chafuen). For this reason, both employment and inflation rates are kept in check, and at the same time, the prices for oil and energy continue to fall. Nevertheless, regardless of all these positive reports about the economy, many economists contend that there are several current issues which hold back the American economy and hence an expectation of a less than 3% growth in the economy in the year 2017. This essay, therefore, seeks to address a current debatable issue about the American economy, putting much emphasis on the available solutions to the issue as well as the responsibilities of each level of government about the current economic status.

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The issue on the uncertainties about the track that the American economy is going to face with the election of a new president is amongst the main factors that conspire against the growth of the American economy. Despite President Donald Trumps grand economic plans of an annual economic growth of 4% or above and also the creation of over 25 million jobs in a span of 10 years, there are those deep-rooted obstacles in the economy that have tormented previous goals by presidents from both parties for years. For instance, the implementation of Trumps measures so as to achieve the goal of expanding the American manufacturing industry requires some sort of reversal of the trend towards a service-oriented economy that has existed for several decades (Bardes, et, al.). Thus, concerning Trumps goal to revive the economy through toughening trade deals an increase in employment will not necessarily follow. This is because over the past years the American economy has been stable through an increase in automation and fewer workers in the industry. This being said, automation will be the greatest issues derailing economic growth once President Trumps measures to achieve higher economic goals are implemented (Focus Economics).

There are, however, possible solutions to the issue mentioned above. Notably, the issue of the new presidents move to change the economy can be solved the federal government forging a new model of economic growth. This would mean the creation of an economy which allows everybody who wants to work to find a decent job and anybody who wishes to join a union to do so. Additionally, the issue of the economic instability which is alluded to the changes brought about by the new president can be solved by replacing the low-wage economic strategy with a high-wage strategy for shared prosperity. This is, therefore the preferable approach since this would include restoring the workers ability to bargain collectively, which is a measure that will reduce economic inequality and consequently build the middle class which as a result would raise the overall wages (Vallas).

While it is obvious that the consumers and the producers have the greatest role to play in making most decisions that mold the economy, the American government, which includes the federal, state and the local government have significant responsibilities that have powerful effects on the U.S economy. Firstly, the state and the local governments are responsible for promoting the States economy as well as taking operational control over various government programs for individuals such as risk management and social programs (Puth). For instance, the public education systems are primarily paid for by the state or the city governments. Additionally, the police and the fire protection, as well as their economic contributions, are the responsibilities of the local government.

The federal government, on the other hand, has the greatest responsibility in growth and the stabilization of the American economy. With the inclusion of the Congress and several other entities such as the Federal Reserve System, the federal government seeks to control the extremes of both inflation or depression, boom, and bust, among others through the adjustment of tax rates, the use of credit, and also money supply. Besides, with its primary aim to balance the federal budget, the American federal government has great significance to the economy by regulating and changing the amount of public spending by the government itself (Bush).

Works Cited

Bardes, Barbara A., et al. American Government and Politics Today: Essentials 2017-2018 Edition. 1st ed., Cengage Learning, 2016.

Bush, George W, et al. The 4% Solution: Unleashing the Economic Growth America Needs. Crown Business, 2012.

Chafuen, Alejandro. "Forbes Welcome." Forbes Welcome, 1 Jan. 2017, www.forbes.com/sites/alejandrochafuen/2016/01/01/prospects-and-challenges-for-the-u-s-economy-in-2016/#4108aad34ba8. Accessed 24 Jan. 2017.

Focus Economics. "United States Economy - GDP, Inflation, CPI and Interest Rate." FocusEconomics | Economic Forecasts from the World's Leading Economists, 20 2016, www.focus-economics.com/countries/united-states. Accessed 24 Jan. 2016.

Puth, Robert C. Current Issues in the American Economy. Heath, 2012.

Vallas, Rebecca. Strengthening America's Middle Class: Finding Economic Solutions to Help America's Families: Hearing Before the Committee on Education and Labor, U.S. House of Representatives, One Hundred Tenth Congress, First Session, Hearing Held in Washington, Dc, February 7, 2007. U.S. G.P.O, 2012.