QUESTION #1
A New American Model - the National Governmental Orbit of Power
The auto bailout is a good example of what the federal government can do to react to fiscal down towns. The federal government has the ability to step in and take action during times of great financial difficulty such as the Great Recession of 2008-2009. The federal government can enact policies on the macro level. While cities and local governments take action to solve their local problems, they cannot enact a strategy that will improve the state or national economy. By raising taxes and cutting services, states and cities were making the recession worse and actually were canceling out much of the stimulus being done by the federal government (Kantor & Judd, 2013). In order to counter act the trouble created by local government reaction to the recession, the federal government created a $787 billion stimulus package that included aid to state and local governments. Kantor and Judd state that the federal stimulus did not change the structure of the intergovernmental system, which requires cities to live within their revenue sources. The bail out of the auto industry was a targeted effort on the federal level to save a critical and important industry in the United States. At the time of the bailout, the auto industry contributed 3.6%, or $500 billion, to total U.S. GDP output (Amadeo, 2015). Some say the auto industry bailout was a political move because it was not really necessary. At the time of the bailout, many analysts felt that Chrysler would go bankrupt, even with a bailout, and Ford didn't really need it (Amadeo, 2015). Therefore, the main impact from the bailout was to save jobs at GM. However, the economic slowdown caused GM to slash its employment and production, whether it received a bailout or not (Amadeo, 2015). Once the recession was over the remaining United States auto