As I began my research on plans offered by both the Republicans and the Democrats to fix unemployment rates, I noticed that both plans rarely appear on the same web page. Although the sites I found mainly focus on one party over the other, they do mention the plan of their counter part. That being said, one of the main ideas for lowering unemployment rates was to extend the Bush Tax Cuts, and perhaps lower them even more. According to Justin Quinn, if congress pushes to extend the Bush Tax Cuts the result would be "huge private sector corporate spending." This is just the thing a failing economy needs. While both parties have surprisingly come to an agreement that the Bush Tax Cuts need to be extended, the problem now lies with who gets the breaks.
Democrats like Republicans both agree that small businesses need to receive tax cuts. Janet Peterson, a writer for Finance News, claims the Democrats plan to tax the rich in order to make up for lost revenue brought on by the credit crisis. This is where the parties split on their ideas. Republicans want to also extend the tax cuts for big businesses along with small businesses. They do not want to place heavier taxes on the rich because they think that this will encourage more spending that will help the struggling economy.
I think that both sides make valid arguments to their side. However, I don't understand why the Democrats don't want to extend the tax cuts to bigger businesses as well. Seeing as they are a huge and vital part of the economy, not assisting them in this economic downturn seems foolish. It makes sense that Democrats don't want to lose revenue which would further extend the national debt, but once businesses can get back on their feet, then we can worry about debt. In my economics class I learned that large firms (in a competitive market, meaning no monopolies) are very important for economic success. If big businesses all begin to fail, because they are not being offered any help and are actually being punished for being successful then the entire economy could potentially collapse. Having many large corporations fail at the same time would put so much stress on the economy that it would completely fail, creating a worse situation than before. Extending the Bush Tax Cuts would be a huge first step in fighting unemployment, but they must be offered to all businesses, both small and big if they are to be successful. The whole point is to create jobs and promote spending, which cannot be done if no one has money to spend or is too scared to do so.
I just want to clarify that while tax cuts are one solution to help this struggling economy, it is not the only one. After rereading this post I realized I made it seem like tax cuts were the only way to help the collapsing job market. However, this is not the case. After researching this issue more, I have learned of other plans the government has to help resolve this issue. Limiting the power of labor unions is one possible solution, because sometimes unions make demands to companies that they just cannot afford so they outsource American jobs. Limiting a union's power would help keep jobs in America. Another plan is extending unemployment benefits (which the government eventually did) to help unemployed workers. However, a problem with this is that it adds to the national debt, but like I have said before, I think we can worry about that issue later. Unemployment is a severe problem and there are many solutions that have been proposed, but the government is in disagreement on almost every plan. This delay has definitely hurt the American people and the job market. While tax cuts would surely help unemployment as a whole, it is not the only possible solution and it does not necessarily have to be the first step to fixing unemployment.
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