Restoring the American Dream

America’s looming fiscal crisis is a relevant issue concerning the state of the nation’s economy. Numerous consequences of this crisis could possibly harm the livelihoods of the American people for years to come. The long term effects incurred by the looming fiscal crisis include an end to social security for successive generations, as well as increasing prices for Medicaid and Medicare users, as the elderly population continue to grow rapidly. Both of these issues are affecting the American population widespread. The fiscal crisis has also begun to influence individual states as budgets are being cut severely around the country, with state employment on the decline.

Overall, the main concern of the fiscal crisis is that America could in fact become a third-world country if these problems continue, causing the American dollar to become worthless in comparison to other world-wide currencies. Consequences that are currently plaguing the American people include a pension reduction from thirty to fifty percent. Also, families are unable to borrow money to send their children to school because of the American banking system’s risk adverseness.

Another major contributor to the fleeting economy is the unbridled entrance of immigrants by the current Presidential administration. On numerous occasions immigrants have come to America, to work for American dollars and then returned to their own countries. This means that the money worked for and earned is not circulating back into the economy. For this reason, President-elect Barack Obama proposes the decision to penalize American companies who ship jobs overseas with higher taxes. This will hopefully deter these companies from not just seeking cheaper labor rates but instead, pumping money into the American economy and alleviating the unemployment rate. An article in the Washington Post outlined the plan by Democrats to strengthen to nation’s economic situation. The article reads:

Some Democratic economists say it is just a matter of setting priorities, with immediate stimulus measures coming first and broader reforms later. Infrastructure and green-jobs spending would lead off, along with a middle-class tax cut and expanded food stamps, unemployment insurance and aid to state governments, followed by an expansion of children's health insurance, and then by broader health-care, education and labor law changes. (MacGillis 2)

As a result of all of these factors combined, the American people will find themselves paying off an enormous national debt. This will then affect the financial security of the United States as a whole, as the burden is moved to the American tax payer to supply the revenue to pay off the debt, which has reached approximately 10.2 trillion dollars as of October 2008 (Bankrate.com).

I would support a number of possible reforms in order to reduce debt and promote a healthier economic future for the United States. First, I would stop the Wall Street investments in risky, derivative products. The deals made on Wall Street could essentially be equated to betting at a gambling table. Wall Street has been driven by greed over the past 20 years with brokers gyrating the financial markets for their own profits leaving American retail investors in their wake. The S&P 500 Index is lower today than it was ten years ago. This is a clear indication that Americans have not made money, they have lost it. In addition to the business on Wall Street, hedge funds are private equity funds managed by money managers who bet against the market on a daily basis. This practice is constantly creating volatility in the market resulting in a short-term vision of expedient profit. This short-term vision directly contrasts the American public who are trying to build wealth over time. Secondly, the mortgage rates are too high for taxpayers. Mortgage rates have not gone below 5.5% since 1963, and the banks are reluctant to reduce rates requiring people to apply for higher mortgage payments than they can afford (Bankrate.com). It is crucial that the banking system modify their way of thinking or the government has to intervene and subsidize mortgage interest rates to allow Americans to essentially afford the true American dream -- owning a home. This would also reduce the amount of homes being foreclosed on. Thirdly, the American banking system has continually used a nonsensical and antiquated barometer for setting interest rates called the ten year T Bond. A bond bares no relationship to the amount of money people can afford for a mortgage, which is why the rates never go down. Also, the banks are paying half a percent of interest on savings accounts and time deposits, but at the same time are loaning out funds ranging from seven to nine percent for consumer and commercial loans for businesses. Overall, I would vehemently support the reform of modifying the American banking system and governmental intervention on Wall Street.

I would also support the reform for searching for alternate forms of energy. The United States is currently shipping trillions of dollars overseas because of foreign oil resources instead of creating incentives to explore and extract energy in our own country. I would also support the exploration of the multiple other alternatives such as solar, wind-power and hydropower energies for the country to become more energy efficient. Ideally, our country would eventually become sufficient enough where outside resources would no longer be necessary.

Ultimately, the looming fiscal crisis on the United States of America is an important and serious matter for each and every American to consider. It is affecting the daily lives and future plans of all demographics whether it is a recent college graduate, a parent awaiting retirement, or the elderly. Possible reforms must not only be considered but implemented quickly in order to restore the American dream of living prosperously for all citizens.

Works Cited

MacGillis, Alec. “Economic Crisis Boils Democratic Message Down to Jobs:

Health Care, Energy Still Part of Agenda.” Washington Post. 16 Nov. 2008.

Bankrate.com. “Mortgage.” Bankrate, Inc. 3 Dec. 2008.