Obama Tax Plan Extends Bush Tax Cuts

In Obama's 2011 tax plan, the Bush Tax Cuts, originally implemented in 2001, will be extended due to pressure from the Republican party. In exchange, Obama will be able to elongate unemployment insurance for out of work Americans. The 2011 tax breaks and brackets are as such:

However, these tax rate extensions will only last two years. the new plan will include things like:
-lower social security payroll taxes, which will put more money back into your paycheck.
-extension of unemployment benefits for thirteen months
-small business owners will get capital equipment breaks
-capital gains and dividend taxes will stay the same boosting equities
-American Opportunity Credit will remain in place, giving tax breaks of up to $2,500 to college students and parents of college students
-teachers tax credit will be renewed for teachers who pay for supplies out of their own pocket
-child tax credit renewed of $1000 per child under 17 years of age


Overall, the tax plan sounds like it will be good. However the extension of the tax cuts allows the top percent of the population with the most income to pay very little in taxes when our country is full of people living in poverty. The tax money that these millionaires and billionaires could be paying would go to people who are struggling with the difficult economy. But at the same time I realize that compromising needed to be done in order to get some of the things that help people, like the unemployment extension, passed in congress.

The U.S. Economy

When discussing how well the U.S. economy is doing, one has to look at several different factors. To start with, the U.S.'s gross domestic product is currently at $14.119 trillion, making us the country with the highest GDP in the world. We have gone down only .250 trillion since 2008. Japan currently is second with $5.069 trillion, and China close behind with $4.985 trillion.

Then, we have to look at the unemployment rate. Currently 9.5% of the labor force is unemployed in the United States. From October of 2008 to February of 2009, the unemployment rate rose sharply from 6.1% to 9%. Since then the unemployment rate has stayed relatively the same, despite a spike to 10.6% in January of 2010. This unemployment rate is significantly higher than Japan and China, Japan having 4.9% and China having 4.2%.

Next there is the inflation rate. The U.S. has an inflation rate of 2.1% as of 2011. When compared to China's unfathomable 4.9%, and Japan's stellar 0%, the U.S. is average out of the top three countries.

Overall, the U.S. could be doing better in some areas, and worse in others. Our GDP and inflation rate are fair considering the recession we are in, while the unemployment rate clearly reflects that. The economy as a whole is doing fairly well for the country with the number one country economically in the world.

China Becomes World's Second Largest Economy

This Valentine's Day China officially became the world's second largest economy finally beating out Japan for the spot. China had been slowly climbing to the top for several years, so it was an inevitable thing that economists were not surprised about. China even has a faster growth rate than the U.S., which leaves people to question when it will take the top spot. China has been able to raise its economy to the top since its switch to a capitalist economy for a very simple reason. They have a cheap work force that makes lots of cheap goods. China is not a developed nation and therefore can pay their workforce far less than those of developed nations who also produce lots of products. Yet their rise due to this is what is slowly making them not be able to have this advantage. The more that China's economy develops, the more their middle lass grows and eventually the more they will have to pay their work force. Already companies are moving their factories to places like Indonesia and Cambodia form China because wages are lower. Eventually China will have to change from making things cheap for cheap to making more quality products that will cost more on the world market. As their economy becomes fully developed, they will no longer be able continue the way that they are now, because of the need to pay everyone more. Overall, China's ascent to number two will mean the slow of their steamroll, but will ultimately lead to more quality goods and services paired with the increased standard of living for the work force of China.

http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fg%2Fa%2F2011%2F03%2F03%2Finvestopedia51071.DTL