IN THE NEWS #474 - The American EconomyBy Caty Weaver
This is Steve Ember with the VOA Special English program IN THE NEWS.
Prices on the American stock market have been falling. Several big companies in the United States have announced reductions in their work forces. Federal economic officials have lowered interest rates several times this year. They did so in an effort to increase spending and investment and keep the economy growing. The administration of President Bush is calling the current situation an "economic downturn."
Both President Bush and lawmakers agree that action is necessary to increase economic activity and raise stock prices. However, there is debate about what action to take.
Democratic lawmakers are proposing that the government give three hundred-dollars to each taxpayer this year. They also would lower the tax rate on earnings for low-income taxpayers. These measures would cost sixty-thousand-million dollars.
President Bush argued against the proposals this week in a speech on the economy. Mr. Bush said he agrees with the idea of an immediate tax cut. But he said it would have to be connected to his ten-year tax reduction plan.
The President said Americans are not likely to make major investments, like buying a house or starting a business, based on one tax cut. Mr. Bush said these Americans need to feel secure about the long-term economic performance of the United States. He said they are concerned with the tax rates during the next several years.
However, Democratic leaders argue that Mr. Bush's plan will be debated for some time. They also say his plan costs too much. Congressional economic experts say one part of his plan will cost two- and-one-half times more than Mr. Bush estimated.
Both sides hope to prevent a temporary reduction in economic activity. However, some experts think a recession is unavoidable. They say government action will only delay it. And they warn that a delay could create a much more severe recession in the future.
Other experts consider a recession useful. They say a recession is often necessary to correct an imbalance created by an extremely successful economy.
American buyers may help prevent a recession. Consumer spending makes up about two-thirds of the American economy. Two recent studies of American buyers suggest that they plan to keep spending.
The Conference Board research group says American buyers are not worried about the economy. The group says consumer confidence levels in March rose for the first time in five months. The group had been expecting a decrease. An earlier study by the University of Michigan also found consumer confidence is on the rise. Researchers say Americans are less worried about a recession and expect a period of slow economic growth to continue.
This VOA Special English program IN THE NEWS was written by Caty Weaver. This is Steve Ember.