US Fiscal Policies Write a brief of the fiscal policy of the United s. Following the global financial crisis that occurred in 2007 and 2008, the United States fiscal and budget policy has widely focused on addressing the consequences of the aggregate demand associated with the aforementioned crisis. The government ideally seeks to lift the burden that taxpayers bear so as to improve their economic statuses. One piece of legislation that was enacted and signed into law by President Obama in this regard is the 1099 Taxpayer protection Act of 2011 (CCH, 2011).
The Act, signed on 14th of April, basically repeals the need for controversial expanded information usually reported on Form 1099 for some business and rental property payments (CCH, 2011). 2. Would you describe it as "expansionary" or "contractionary"? An expansionary fiscal policy basically is assumed when tax revenue is less than government spending according to Sexton (2010). On the other hand contractionary fiscal policy is assumed when the government spends less than the revenue it collects in tax (Sexton, 2010). Following the 2007-2008 financial crisis, the US government engaged costly bailout packages and economic stimulus to overcome the challenges posed by the crisis.
In 2008, the government had a budget deficit of over 459USD (CNN Money, 2011). The following two years saw the deficit increase to previously unprecedented levels. Considering that government spending over the last three years has exceeded its revenue collected from taxes, it is beyond doubt that the US fiscal policy is expansionary. 3. How can American consumers influence decision makers on fiscal policies? One main means by which consumers may impact fiscal policy formulation relates to their spending habits.
Anxiety faced by consumers about the economic status of the country makes them spend less and save more as a tendency. When this happens, the production of goods and services reduce. With such a situation prevailing, the level of unemployment increases and organizations lay off workers resulting in even lower spending rates. Fiscal policy makers take measures to modulate the impacts of such situations by changing certain interest rates. In the current situation, the interest rates have been lowered to an extent that borrowing for the purpose of making investments is very cheap.
There are quite a number of other ways that consumers can influence fiscal policy. Some of these include the elimination of household debt, protesting/mass action, voting and contacting federal, state and local government officials regarding matters that affect them according to Sexton (2010). 4. Explain and discuss if and how this has changed over the past 5 years. Although the US has had an expansionary fiscal policy for quite some time in the past, consumer spending was generally high especially credited to the availability of personal credit and an average lending rate.
However, in 2007 when the financial crisis hit the country, consumer spending significantly reduced prompting for the manipulation of interest rates and fiscal policy to revive the economy. After unveiling and implementing the stimulus package, the country’s budget was faced with greater deficits than it ever was before. Although the government faces such a budget deficit, consumer spending has slightly improved. The government has proposed budget cuts that have prompted mass protests in the past, for example, in Wisconsin (Channel 4, 2011).
\ References CCH (2011) 1099 Taxpayer Protection Act of 2011. Retrieved 18 October, 2011 http: //tax. cchgroup. com/downloads/files/pdfs/legislation/repeal1099reporting. pdf Channel 4 (2011) US budget cuts mass protests and political shenanigans. Retrieved 18 October, 2011 http: //www. channel4.com/news/us-budget-cuts-mass-protests-and-political-shenanigans CNN Money (2011) U. S. deficit soars to $485.2 billion. Retrieved 18 October, 2011 http: //money. cnn. com/2009/01/13/news/economy/treasury_budget_deficit_Dec08/index. htm Sexton R. L. (2010) Exploring Macroeconomics. Cengage Learning.