We Are Lagging Behind

As the U.S. Economy continues to under-perform and thousands remain unemployed and risk losing their homes, other economies in the world are experiencing growth. In India, they are experienced the fastest growth rate in more than two years during the last quarter with a GDP growth of 8.8% (BBC News Business, 2010). The Russian economy showed a 4% growth in spite of a drought and businesses having to shut down due to wild fires (Google News a, 2010). The unemployment rate in Germany remains stable at 7.6% while the rate in the U.S. hovers around 10% (Google News b, 2010).

These numbers show that the U.S. economy continues to struggle while much of the rest of the world is starting to recover. The question we must ask is what they are doing that we are not.

In India, they credit their growth with strongly rising sales of Goods at home to Indian customers (BBC News Business, 2010). This means that demand for goods in India is increasing which causes us to assume the Indian people must have more income to spend or they are incurring debt. However, India has raised its interest rates four times to curb inflation. This increase in the cost of borrowing makes it more probable that the increase in demand is due to rising incomes in the developing economy of India.

In Russia, the recovery of energy prices has made up for the effects of the drought and wildfires. Russia is also experiencing increased economic activity, which led to a strong performance in the second quarter. We could therefore expect that the growth rate will increase as Russia recovers from the effects of the wildfires and drought (Google News a, 2010).

Germany’s stable employment picture is due to stimulus that subsidized shorter working hours so companies did not have to layoff workers but could keep them on their payroll with the government subsidizing the shortfall of income for these individuals. As the economy recovers, these workers are returning to full-time hours, reducing government subsidies and government deficits (Google News b, 2010). Since these employees were never fully on unemployment, and never experienced a reduction in their incomes, Germany avoided an increase in home foreclosures like those that we have experienced in the U.S.

The U.S. lags behind the rest of the world because threats of higher taxation due to the expiring of the Bush tax cuts, assessment of fees to pay for the new health care program, and higher energy costs because of cap and trade are stifling innovation and consumer demand. Instead of recovering energy prices, the U.S. has placed a moratorium on offshore drilling because of one accident on one oil platform. The BP oil spill was a tragic ecological disaster but it was an isolated incident and does not require the stoppage of all offshore drilling.

We also lag behind because the U.S. idea of a jobs bill is not the creation of more private sector jobs but the extension of unemployment benefits. Instead of following Germany’s lead by encouraging companies to cut hours instead of employees, and subsidizing workers who work less hours so they could remain on company payrolls, we opt to let the companies layoff workers and pay them unemployment benefits in perpetuity.

What our economy needs is a freeing up of capital through lower taxation. Encouragement of innovation through reduced regulation. With these incentives, U.S. companies will have capital for research and development and expansion. This will lead to more jobs, increased consumer demand, and lower unemployment. In November, we have an opportunity to vote for change that results in smaller government that is more responsive. We must vote for government that will begin freeing up capital so America can get back to work doing what made us great.

References
BBC News Business. (2010, August 31). India growth rate rises to 8.8%. Retrieved from http://ww.bbc.co.uk/news/business-11135197

Google News a. (2010, August 31). Russia grows 4% as economy recovers from crisis. Retrieved from http://www.google.com/hostednews/afp/article/ALeqM5iakitYFiqHmNaZPjcLXg29BJ5Kw

Google News b. (2010, august 31). German official unemployment rate stable at 7.6%. Retrieved from http://www.google.com/hostdnews/afp/article/ALeqM5hpC20s4vZTTZQwJRzslwIdKy6Uug

Attention U.S. Secretary of Education

In 2004, after working for 10 years at my present job, I decided to look for something better but after much searching, I discovered that the only way I would be able to better myself would be to finish my degree. Therefore, at the age of 48 I decided to return to school and complete my degree. However, a working professional like me must find a way to return to school, maintain a career, and care for their family.

The person I sold my home to the year before mentioned he was returning to school to complete his Masters Degree at the University of Phoenix. Knowing he was a busy professional himself, I decided to check out the program at the University.

I discovered that the program was tailored to the working professional and therefore, decided to enroll at the University of Phoenix to complete my Bachelors Degree in Accounting, earn a MBA, and sit for the CPA exam. Believing this was my ticket to financial success, I used student loans to pay for my education, believing that upon graduation, I would move into a better job. However, my timing was off for I graduated with my MBA in 2008, the same year the economy started declining. In addition to this, my wife’s job was eliminated in January of this year so we are now a one-income family. This, and not the curriculum at the University of Phoenix, is why I am among those who have applied for a deferment of my student loans.

I still have not found a better job but do not blame the University for this. Instead, I blame it on the down economic cycle the country is currently experiencing. I have experienced economic downturns in my life, and know that even though this one has lasted longer than most, it will end. I also do not regret my decision to continue my education.

Unfortunately, the proposed “Gainful Employment” regulation threatens to take away options for adult learning from individuals like myself. Many in our society have recently lost their jobs. I believe many of them find themselves in the same situation I did in 2004 and need to further their education to find gainful employment. They also need to find work and need a university tailored to the working individual. The “Gainful Employment” regulation threatens to take this opportunity away from them by making it difficult for universities like the University of Phoenix to offer student loans to their students.

I urge you to stop consideration of the “Gainful Employment” regulation option as a means to decrease the percentage of student loans in deferment or default and instead focus on growing our economy so their will be increased opportunities for professionals like myself to earn the resources they need to begin repayment of their student loans.