Economic Reform

The first problem our economy is faced with is the sub-prime mortgage crisis. The nation is having this problem because banks were extending mortgages to people that could not afford them. There used to be a safeguard: home buyers used to have to pay twenty percent of the value of the home up front, and then borrow the rest through a mortgage. Nowadays buyers can get a mortgage without paying anything up front. This makes the housing market less stable. In order to bring stability back to the economy, banks should require potential buyers to pay eight percent of the property value before taking out a mortgage. Doing this would add another layer of safety, ensuring that anyone who takes out a mortgage will indeed be able to pay it off.

A second problem we face is that of outsourcing. Outsourcing is when companies move their production facilities, headquarters or both to foreign countries that have cheaper labor. This is bad for the American economy. When we buy a foreign produced product, most of the money we spend goes to paying for a foreign worker instead of staying in our economy. If the jobs stayed in the United States, the lifeblood of the economy (money) would stay in the country and simply circulate. Also, having companies produce their products in the U.S. would create more jobs and thus boost the economy even more. Businesses should be given incentive to move their companies back into the U.S. Also, those businesses that are already here should be given incentive to stay here. This incentive could be something like a substantial business tax break.

Another problem with the economy is that there are a lot of illegal immigrants. The problem with illegal immigrants is that their pay is ‘under the table’. In other words, companies don’t report that they employ illegal immigrants. When this happens, the pay that goes to the immigrants does not get taxed. This causes several problems. First, the economy suffers the loss of a sum of money that would be taken out for income tax. On top of that, illegal immigrants who recieve 'under the table' pay don't contribute to Social Security. Since these illegal immigrants are generally poor, they receive welfare when they need it. However, they do not contribute to welfare. Essentially, all the people that pay their taxes end up having to pick up the slack for those who don’t. For this reason the United States should tighten up its borders. The nation should take extra steps to ensure that people are not bypassing the system to get into this country, in order to reap the rewards without sharing the burden. In addition to these things, if there were only legal immigrants companies would have to compete more and thus raise their wages to the normal amount. This helps out the economy by helping out the poor.

Credit cards can be a good thing in some hands and a bad thing in others. For those who are responsible with them it can mean having something that that person needs. For those who are not responsible, it can mean a ruined life. Whether the spender is responsible or not, a big issue concerning credit cards is the interest rate. Presently, credit card companies can change the interest rate they charge to whatever they want, even without a reason. This is bad for the consumers because it can make it virtually impossible to get out of debt, even if you were responsible with your spending. It would be beneficial to place a ceiling on the interest rate these companies can charge. If this was done, the general public would be more likely to get out of debt and thus have more money to spend elsewhere. Also, people should use debit cards more and credit cards less. Credit cards are okay for emergencies, but everyday use is irresponsible (and causes higher debt). Debit cards encourage responsability because you can only spend what you already have and are therefore safer.

The last problem that the economy has is waste in governmental programs. There are many good programs that the government has in place. Some, like Social Security, are well regulated. Others, like welfare, are not particularly well regulated. When programs go unregulated, waste usually occurs. This is the case with welfare. Certain states, such as Maine, are not being reasonable about who gets what benefits. Someone should make a way to cut out the waste from these programs and ensure that people who actually need the programs have them, and not those who simply want them.