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Q: Should the U.S. Government Stimulate the Economy During Recessions?

yes

“Inevitable to nearly all capitalistic systems is the regular fall into a recession. Because recessions are always inevitable, it is important that the government intervene to mitigate the effects of the recession and help support those who will be most impacted by it. There are many different ways for a government to respond to a recession. As such, the efficacy of such responses often vary wildly. However, even though some forms of helping the economy are better than others, they are all usually still better than if the government does nothing or very little to address the situation. While economic recessions normally hurt everyone, they especially hurt the poor. When a recession hits, many businesses will lay off workers in an effort to save money. These workers, as a result, no longer have the money to buy things that help prop up the economy. If enough people lose their jobs that they can no longer go out to eat, restaurants will begin to fail and may even lay off even more workers to prevent a total collapse. Without government intervention, it can take a very long time before the cycle stops perpetuating itself. Government intervention, in whatever form, usually seeks to stop the cycle by giving money to individuals and businesses to stop economic decay and layoffs. While one could argue that this system is far from perfect and may not help the country get out of a depression, it often helps prevent the situation from getting worse. Consider FDR and his depression. Although Roosevelt’s New Deal programs helped get the country out of the depression, his programs definitely alleviated the hardship that millions of Americans were facing. In the first years of the depression, President Hoover accomplished very little in terms of helping alleviate the strain of the depression. As a result, the unemployment rate skyrocketed to nearly 25% and the depression got worse than what would have happened if intervention had taken place. However, when Roosevelt came into power, he initiated tons of programs to help employ Americans and boost GDP and the economy. By the time the depression ended with the start of WWII, Roosevelt had lowered the unemployment rate from 25% to less than 10%. Those who argue that the government should not prop up the economy during recessions may argue that the market will fix itself. This is an incorrect notion as the market can take a very long time to escape a recession and often also does not reflect the actual economic situation the country is in. Even though millions of Americans are unemployed and at risk of being evicted or losing their jobs or insurance, the stock market has since recovered from the losses caused by Covid. Not only that, but many of America’s richest have gained wealth since the start of the pandemic. America’s billionaires gained a trillion dollars since the start of the pandemic, with some even doubling or tripling their wealth (Elon Musk quintupled his wealth to 126 billion dollars). This disparity between the rich and most Americans highlights how the stock market does not reflect the situation for most Americans. Those against government intervention may also argue that government spending will increase the nation’s already gigantic debt. While this is true, it fails to realize the severity of the situation. The people most affected by economic recessions tend to be the poorest of Americans, who often have very little to any savings. As such, economic recessions can greatly hurt their livelihoods, health, and even lifespan. When people’s futures, jobs, and lives are on the line, the debt argument becomes irrelevant. In conclusion, government intervention, while far from perfect, can help a nation deal with an eventual recovery from a financial recession by protecting those most vulnerable and keeping the economy afloat.”

James from Kentucky

no

“While the U.S. economy is suffering gravely as a result of the coronavirus, stimulation from the government is not the answer. For example, during the New Deal era, the government doubled federal spending, but even the extra funds failed to fix the 20% unemployment rate (Heritage.org). Additionally, in 2001, President Bush attempted to stimulate the economy when he implemented tax rebates, but that also failed to boost the economy (Heritage.org). Evidently, the U.S. government has tried to stimulate the economy in the past and always fails. Also, how will the government pay for the boost? There are two possible methods: taxpayers and private investors. However, by increasing taxes and using private investors, the economy is not getting stimulated at all. In fact, the money that the taxpayers would use to stimulate the economy themselves, through purchases or investments, would go toward taxes to be redistributed to lower income individuals. The same issue occurs with private investors. If they invest to boost the economy, they lose the money that they would have invested anyway. Therefore, the government’s stimulus bills do not add money to the economy but rather redistribute the money that is already in the economy. Those who think that the government should intervene in the economy argue that businesses need loans from the government in order to reopen. However, when taxpayers, the Americans footing the bill for these loans, invest privately, both the business and the investor benefit which results in economic stimulation. When the business benefits, it has more money to expand and increase employees. This results in a decrease in unemployment. When the investor benefits, they have more money to buy goods and stimulate the economy. Moreover, when the government gives loans, they take money from taxpayers, or would-be consumers, to pay for the loans, so only the businesses benefit for the short-term. It is best for the government to let the economy run its course through private investments. Government stimulation is salt in the wound of the economy.”

Jonah from Kentucky

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“Let both sides explore what problems unite us instead of belaboring those problems which divide us.”

– President John F. Kennedy, Inaugural Address, January 20, 1961