Boston Tea Party 2009

On Wednesday, President Obama adressed our economic woes once again. He promised that his administration has taken the time to make sure that his tax cuts go to the right people. He says that the tax cuts will go to America's working class. The cuts will allow people to continue to pursue the American dream. Obama believes that the working class is the backbone of our economy and they are the ones who deserve tax cuts and the most help. When it is difficult for these people to make money and live well in our society, naturally our economy will have trouble as well. Obama has said that he will directly put $120 billion into the pockets of 120 million Americans. While this sounds great, a smaller group of people are not satisfied. A group of people dressed as 18th century Americans dumped tea into the Boston Harbor in celebration of the very same event that took place hundreds of years ago, also protesting taxes in a way. However, these people are not the only people upset over our economy. Rallies took place from Chicago to Atlanta. Many of the participants were older people concerned for their children and grandchildren's futures in our nation's economy. Even in Rochester New York, a group of people threw a cooler with "TEA" written on the side into a body of water. Many American's are concerned for our nations economy with good reason.

The Fed will be busy thes next few years

The Fed said recently that the unemployment rate this year will top 10%. To put that in perspective, the unemployment rate in March (8.5%) was the highest in 25 years. The Fed has pushed back their recovery forecast as well. The are now projecting our economy to flatten out in the second half of this year and began an upturn next year. The fed had projected the economy to experience and upward swing halfway through this year but it could be a drop in consumer credit that is playing a role. Consumers are afraid to spend money and lenders are scared to lend. Consumers need security in order to spend but they can't feel that security unless lenders are willing to lend them money. However, lenders are not willing to lend for fear that consumers will not spend. It is this lack of a balance that has caused this economic situation and caused the Fed to push back their forecast for the economy.

Senate Rejection and House Acceptance

On Wednesday, an overwhelming number of Senate members voted against a fast-track budget procedure to pass the President's cap and trade plan to fight global warming. The plan was expected to cost families $3000 per year in new energy taxes. Republicans believe this plan would not help our current economic situation and all voted against it.
After the conflict relating to AIG handing out bonuses with their bailout money, the House of Representatives passed a bill that gives Treasury Secretary Timothy Geithener the ability to ban bonuses not based on performance standards. Most party members voted with their party with only 10 representatives crossed party lines in their votes for and against the bill.
The largest proposed change to our nations budget came when the House Republicans suggested an alternative to the Democratic budget plan. They suggested $4.8 billion less in spending over the next 10 years. The only places where Republicans suggested increasing spending was a $5 billion increase in defense spending and $540 million in veterans spending.

Is President Obama to Blame for Our Situation? Two Democrats May Think So

Before President Obama took office, the stock market was at its highest level since last fall. Since taking office, the stock market has dropped to its lowest point since 1997. Coincidentally, the market took a plunge when the President announced his budget for 2009. On Wednesday, two Democratic senators urged the President to veto a proposed $410 billion spending bill. Perhaps these gentleman are aware that a large budget could potentially lead to a plunge in our nation's economy. Many feel that the bill is simply giving the government $410 billion to spend and not much attention has been paid to detail. The two senators would like the President to veto the bill and have it cleaned up. Could the President be worsening our economic situation? That's up for debate.

$646 billion health care reserve fund. $410 Billion fiscal spending bill. Lavish parties?

On Wednesday, white house officials announced that the government's budget in 2009 will include $646 billion to overhaul the nations health care. Every 30 seconds in America, our nations health care system causes a bankruptcy. The Obama administration is hoping that the $646 billion going to health care will help to reduce this number and make health care more affordable for people who can't afford it. Also on Wednesday, the House of Representatives passed a bill to give the US government an additional $410 billion to spend in 2009. They hope that this will keep the federal government operating for the rest of the year and help to improve our country's current economic situation.

In December, the Chicago based Northern Trust Bank announced plans to cut 450 jobs. Just a few months later, the bank is millions of the $1.6 billion it recieved on lavish parties. The parties were thrown to sponsor a golf tournament taking place in Los Angeles. US Senators have planned to write to the bank asking to to pay back all of the money it recieved as a result of it's irresponsible behavior.

Financial Crisis and $1 Trillion Lending Boost

Last October, the Fed surveyed 53 domestic banks. 85% of the banks surveyed said they had tightened their commercial and industrial loans. In a more recent survey, 63% had tightened their commercial and industrial loans, an obvious decrease from the October survey. However, the number of banks tightening their consumer loans has remained unchanged since October. This is a large issue since the state of our economy relies on banks willingness to lend money. If more banks lend money, more people will spend. So, if banks are not lending, people are not spending. This has become a focal point of President Obama's proposed stimulus package. With the stimulus package on the way, the Fed has begun to make predictions about the future state of the economy. The Fed has projected a decline in GDP from .5% to 1.3%. They project the unemployment rate to increase from 8.5% to 8.8%. However, the Fed predicts that the economy will grow 2.5% to 2.7% in the years after 2011. Based on the Feds predictions, the economy will continue to get worse short term, but it will improve in the long run. The Fed and President Obama have also been working together on a $1 trillion program designed to boost lending from banks. The program, called the Consumer & Business Initiative, will recieve $100 billion in funding from the Treasury Department. In the program, a bank would issue (for example) $1000. An investor would then give the Fed $50 dollars and the Fed would in return provide a loan of $950. The program is designed to spark lending by banks and get our economy flowing normally once again.