With the presidential election fast approaching, the economy remains one of the key issues that could be a decisive factor for many voters. President Barack Obama and GOP challenger Mitt Romney offer vastly different visions for turning around the economy and putting Americans back to work.
Q: What is the state of the U.S. economy?
A: The economy is showing signs of improvement, albeit slowly. The country has seen 23 consecutive months of jobs growth that resulted in the creation of some 3.2 million jobs, according to the U.S. Bureau of Labor Statistics. But that is still a far cry from replacing the 7.9 million jobs lost during the Great Recession.
Despite the job gains, the unemployment rate remains stubbornly high. The jobless rate hasn’t fallen below 8 percent since January 2009. In August, the most recent month for which figures are available, unemployment stood at 8.1 percent.
What’s more, many of the jobs lost during the recession have been replaced by those paying $13.83 per hour or less, according to the National Employment Law Project. Some 60 percent of the jobs lost during the recession paid hourly wages between $13.84 to $21.13, yet 58 percent of the jobs recovered since 2010 have been low-wage jobs, the project said.
In another sign of the slow economic recovery, the U.S. Census Bureau recently announced that median household income in 2011 had fallen to $50,054, a 1.5 percent decline from the year before.
Q: What is President Barack Obama’s plan to improve the economy?
A: Obama has offered the $447 billion American Jobs Act, which he says will put Americans back to work without increasing the federal deficit. The plan includes a combination of tax cuts and incentives for employers, such as cutting in half the taxes that businesses pay on their first $5 million in payroll and offering tax credits of up to $5,600 to encourage the hiring of unemployed veterans and $9,600 for the hiring of unemployed workers with disabilities.
The plan also calls for modernizing at least 35,000 public schools across the country and pumping money into roads, rail, airports and other infrastructure projects. In addition, the package includes a number of proposals to help Americans looking for jobs, such as requiring states to come up with more rigorous re-employment services for the long-term unemployed and giving states more money to help those workers start their own businesses.
Q: What is Mitt Romney’s plan to improve the economy?
A: Romney initially offered a 59-point jobs plan but has recently boiled it down to five points that he says will create 12 million jobs over the next four years. The package focuses on making the United States energy independent, improving jobs skills, opening up new opportunities for international trade, cutting the federal deficit and reducing regulations on small businesses.
Specifically, Romney wants to: allow for more oil and gas drilling off the nation’s shores and in the Arctic National Wildlife Refuge, provide more affordable higher-education options, open up new markets for American goods and services, curtail the unfair trade practices of countries like China, cap federal spending below 20 percent of the economy and reduce the taxes and bureaucratic red tape that he says burden small businesses.
Q: What is the “fiscal cliff”?
A: That refers to a one-two punch to the economy that could occur next January when $109 billion in automatic cuts to the federal budget are slated to take effect and tax cuts passed under President George W. Bush are scheduled to expire.
The mandatory budget cuts were set in motion last year when a congressional “super committee” failed to agree upon a deficit reduction plan, triggering automatic cuts of $1.2 trillion over the next 10 years. The first round of cuts total $109 billion and will kick in next January unless Obama and Congress reach a deal to stop them.
If the cuts take effect, the White House says millions of dollars will be slashed from federal programs such as Medicare, farm price supports, national parks, food safety, border patrol and many others.
Contact reporter Michael Collins of Scripps Howard News Service at firstname.lastname@example.org.