The Great Recession Essay

1186 words - 5 pages

The Great Recession
In 1929 the United States was faced with the beginning of the Great Depression. As the finishing bell rang on Wall Street on what become known as “Black Tuesday” the Dow Jones Industrial Average dropped thirteen percent and the following day dropped another ten percent. This was the beginning of one of the worst decades in U.S. history. Over the next four years unemployment would sky rocket from three percent all the way up to twenty-five percent. All across the country citizens were faced with the fear of economic uncertainty and the onslaught of poverty.
Americans today are faced with a similar economic uncertainty. One of the greatest challenges for the U.S. is the struggling economy. Beginning in early 2002 the United States of America began an economic downturn which has left many unsure of what will happen. There are many variables to this economic equation and the U.S. Government is having trouble determining how to prioritize these variables to produce the most effective results. The economic situation is like a patient that arrives at a hospital after being stabbed twenty times and is bleeding from multiple wounds. The wounds must be accessed and prioritized in order for treatment to be effective. The U.S. is bleeding money from interior wounds such as a crippled Social Security Program and an insolvent Medicare system. These wounds are a result of inadequate funding and misuse of funds over the past several decades. As for the exterior wounds, those can be accredited to deficit spending and the government’s attempt to manipulate the natural ebb and flow of a free market economy. This has proven to be a toxic combination for the U.S. economy which may not be able to recover from its wounds.
The first component of the economic tragedy began with the passing of the Social Security Act that was part of the New Deal signed into law in 1935 by President Franklin D. Roosevelt. Social Security was responsible for more than twenty-one percent of the annual federal budget in 2008. To put this in perspective, more money was spent on Social Security than was spent on the national defense budget. It was the belief of the Roosevelt administration that this law would encourage citizens of retirement age to retire and open up those jobs to the large unemployed population. Unfortunately the funds for this program have been poorly managed. Over the last decade current recipients in this program have depended on funds collected from present day worker contributions. For the first time since its creation the Social Security Program was insolvent in 2010 according to the Congressional Budget Office calculations which accounted for seven hundred three billion dollars in expenses with only six hundred seventy-eight billion dollars of incoming revenue. The snowballing effect of this insolvency not only purs a strain on the U.S. dollar, but also threatens to compromise the United States AAA rating with Moody’s. Both...

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