SYNOPSIS: Obama’s Weekly Address—April 25, 2009

By: Imran Ahmad Sajid
Obama speaks about the economic crisis in the United States and his own devised strategy to fight the crisis through restoration of fiscal discipline.

Good morning. Over the last three months, my Administration has taken aggressive action to confront an historic economic crisis. As we do everything that we can to create jobs and get our economy moving, we’re also building a new foundation for lasting prosperity – a foundation that invests in quality education, lowers health care costs, and develops new sources of energy powered by new jobs and industries. One of the pillars of that foundation must be fiscal discipline. We came into office facing a budget deficit of $1.3 trillion for this year alone, and the cost of confronting our economic crisis is high. But we cannot settle for a future of rising deficits and debts that our children cannot pay. All across America, families are tightening their belts and making hard choices. Now, Washington must show that same sense of responsibility. That is why we have identified two trillion dollars in deficit-reductions over the next decade, while taking on the special interest spending that doesn’t advance the peoples’ interests. But we must also recognize that we cannot meet the challenges of today with old habits and stale thinking. So much of our government was built to deal with different challenges from a different era. Too often, the result is wasteful spending, bloated programs, and inefficient results. It’s time to fundamentally change the way that we do business in Washington. To help build a new foundation for the 21st century, we need to reform our government so that it is more efficient, more transparent, and more creative. That will demand new thinking and a new sense of responsibility for every dollar that is spent. Earlier this week, I held my first Cabinet meeting and sent a clear message: cut what doesn’t work. Already, we’ve identified substantial savings. And in the days and weeks ahead, we will continue going through the budget line by line, and we’ll identify more than 100 programs that will be cut or eliminated. But we can’t stop there. We need to go further, and we need an all-handson-deck approach to reforming government. That’s why I’m announcing several steps that my Administration will take in the weeks ahead to restore fiscal discipline while making our government work better. First, we need to adhere to the basic principle that new tax or entitlement policies should be paid for. This principle – known as PAYGO – helped transform large deficits into surpluses in the 1990s. Now, we must restore

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that sense of fiscal discipline. And that’s why I’m calling on Congress to pass PAYGO legislation like a bill that will be introduced by Congressman Baron Hill, so that government acts the same way any responsible family does in setting its budget. Second, we’ll create new incentives to reduce wasteful spending and to invest in what works. We don’t want agencies to protect bloated budgets – we want them to promote effective programs. So the idea is simple: agencies that identify savings will get to keep a portion of those savings to invest in programs that work. The result will be a smaller budget, and a more effective government. Third, we’ll look for ideas from the bottom up. After all, Americans across the country know that the best ideas often come from workers – not just management. That’s why we’ll establish a process through which every government worker can submit their ideas for how their agency can save money and perform better. We’ll put the suggestions that work into practice. And later this year, I will meet with those who come up with the best ideas to hear firsthand about how they would make your government more efficient and effective. And finally, we will reach beyond the halls of government. Many businesses have innovative ways of using technology to save money, and many experts have new ideas to make government work more efficiently. Government can – and must – learn from them. So later this year, we will host a forum on reforming government for the 21st century, so that we’re also guided by voices that come from outside of Washington. We can’t sustain deficits that mortgage our children’s future, nor tolerate wasteful inefficiency. Government has a responsibility to spend the peoples’ money wisely, and to serve the people effectively. I will work every single day that I am President to live up to that responsibility, and to transform our government so that is held to a higher standard of performance on behalf of the American people. Thanks.
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Q 1. What did you like about Obama speech?
Well, there are a few many things which I like in this current speech of 25th April 2009. It is a short speech, focusing entirely upon economic crisis and how Obama is going to deal with that. His speech really is Page | 4 attention grabbing and is up to the mind level of a man in the street.

Q 2. Which type of words and phrases or expressions you like?
Aggressive actions Powered by Making hard choices Bloated programmes Historical economic crisis Fiscal discipline Meet the challenges Cut what doesn’t work As we do everything that we can Budge deficit Stale thinking Lasting prosperity Tightening belts Wasteful spending

Q 3. What is Fiscal Discipline?
Fiscal discipline is condition of government’s budget—a condition where the government’s budget is a balanced budget. A balanced budget is when there is neither a budget deficit nor a budget surplus – when revenues equal expenditure ("the accounts balance") – particularly by a government. More generally, it refers to when there is no deficit, but possibly a surplus.1 Alan V. Deardorff (2010) define it in a more academic way by putting that “[Fiscal Discipline is the] management of the government budget so as to avoid excessive fiscal deficits, thus restraint of government spending and/or willingness to tax.”2 In simple words it means balancing government spending and revenue.

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Balanced budget. (2011, March 3). In Wikipedia, The Free Encyclopedia. Retrieved 18:29, March 4, 2011, GOVERNMENT BUDGET from http://en.wikipedia.org/w/index.php?title=Balanced_budget&oldid=416890090 2 Alan V. Deardorff, 2010, Deardorffs' Glossary of International Economics. Retrieved 04 March, 2011 from http://www-personal.umich.edu/~alandear/glossary/f.html

Fig 1: - THREE (3) CONDITIONS OF

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Comparison of Fiscal Discipline of Pakistan And USA
SIMILARITIES Both the economies are under huge public debt. • Pakistan = $58 Billion (49.9% of GDP) • United States = $14 trillion (93% of GDP) Huge Defense Spending • Pakistan = 2.6% of GDP • USA = 4.3% of GDP DIFFERENCES Pak • USA • Pak • USA • Both the countries are cutting of extra spending through various means Pak • USA • deficit is covered through external loans deficit is covered through internal loans Policies depends upon the conditions of foreign funding agencies policies depends upon the economists expert opinions No serious, solid, and concreat measures to restore fiscal discipline Serious strategies adopted by Obama administration for restoring fiscal discipline

Q 4. What did you learned about Obama’s policies for development?
From his speech of 25th April, 2009, it is evident that Obama has focused his attention on bringing the US economy out of the fiscal crisis the county is facing. One of his major strategy for fulfilling this objective is the fiscal discipline. The US budget was in $1.9 trillion deficit when Obama stepped into the White House as the president of the state. This deficit, Obama explained, was due to wasteful public spending and bloated programmes and inefficient results. The solution formulated by Obama was very simple—cut what doesn’t work. His policy includes four (4) major steps. First, restoration of PAYGO law which states that for every dollar spent there must be a dollar saved. It means that all new entitlement programmes (social security etc.) should be paid for. Obama put in his radio and internet address as;
“Now, Congress will have to pay for what it spends, just like everybody else. After a decade of profligacy (‫ ,)انتہاءیی فضول خرچی‬the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility. It’s easy to get up in front of the

cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do.”3

Defending this policy, he further mentioned that;
“It was the abandonment of this rule that allowed the previous administration and previous congresses to pass massive tax cuts for the wealthy and create an expensive new drug program without paying for any of it. In a perfect world, Congress would not have needed a law to act responsibly, to remember that every dollar spent would come from taxpayers today — or our children tomorrow. But this isn’t a perfect world. This is Washington.”4

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It indeed is an attention grabbing and quite an impressive speech. However, there are numerous problems with PAYGO policy. The second step is to reduce wasteful spending and to invest in what works. The third step is the introduction of bottom-up approach for the agencies regarding how to save more money. The final step Obama intended to take for restoring fiscal discipline is the utilization of innovative skills of the private businesses for saving money. At first, when I listened to Obama’s speeches, I was pretty impressed by the way he expressed his policies and painted them as the panacea for the crisis ridden US rotting economy. As a research, I started researching the criticism on his policies. Gradually, I came to know that all what is said by Obama is not true—or at least does not seem true to some Republicans. His policy of PAYGO which is a short for Pay-as-you-go was heavily criticized by various experts and researchers. Part of the policy/law which was mentioned by Obama in his speech was about shining side. What Obama ignored to tell the US people was the provision that the PAYGO law/policy will lift the federal debt limit from $1.9 trillion to $14.3 trillion. It means spending will continue to increase and further stretch federal budget deficit. In a final analysis, I am not for all Obama’s policies. Despite the fact that I am a Structural-Functionalist in my approach, I interpret Obama’s policies using critical framework.

Q 5. What do you think; can we apply those policies for the development of Pakistan and will hey be fruitful for development? If yes so how?
In short, the answer to me is “Not at All.” Obama’s policies for development are totally flawed. His policies based on the ideologies of fiscal conservatism. It says to reduce the government spending as much as they can be. It means they believe in a very strict budgeting for public welfare. The government, based on fiscal conservative ideologies, will cut the spending on health care, social insurance, social security,

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Josh Gerstein, 2/13/10, “President Obama hails return to PAYGO”, In POLITICO.COM. Retrieved 04 March, 2011 from http://www.politico.com/news/stories/0210/32921.html
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Josh Gerstein, 2/13/10, “President Obama hails return to PAYGO”, In POLITICO.COM. Retrieved 04 March, 2011 from http://www.politico.com/news/stories/0210/32921.html

unemployment benefits, child benefits, and all other entitlement benefit programmes. The same Obama did. This policy is totally in negation to the human rights basic principles. It is also against the rightest ideologies of welfare. I my self believe in more spending on public welfare because more spending on Page | 7 public welfare means better mental, physical, emotional and social health by the workers. Better health of the works lead to better production. Better production leads to more goods in the market for sale or export. It means more consumption, which expands an economy. So, spending on public welfare leads to the expansion of the economy, a must condition for development.

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