Fiscal policies can be described as policies that governments implement to stimulate their economies. Every government tries to spend within its revenue limit. In fact, rarely do governments spend beyond their income. However, United States has been spending more than its revenue since 1969. This is mainly because it pays interest on the loans. This paper will explore its spending and tax legislation. It will also explore the country’s fiscal policy and evaluate whether this is expansionary or contractionary. Finally, it will explore how American population can influence decision makers on fiscal policy (CCH Group, 2011).
Summary of government spending and tax legislation
The United States government has experienced increased government spending annually, as they try to settle both their international and internal commitments. This has led to increased spending, which exceeds its annual income. Since 1969, Congress has continued to make appropriations, which are way beyond its income. This has forced treasury to borrow a huge debt, which earns interest. The current national debt is estimated at $14.7 Trillion. This is quite massive. In fact, the president signed a new legislation in August that raised its debt limit.
At the same time, he constituted a bipartisan committee, whose aim is to reduce deficit (Heakal, 2009).
United States fiscal policy
United States fiscal policy came into play after the great depression of 1930s. This led the government into managing its economic policies. During this period, US economy expanded. However, wars such as World War II caused great deficits to economy and the huge spending continued after 1969. Current fiscal policy forces the government to spend more that it earns.
This is mainly because of factors such as military operations in Afghanistan and Iraq, among others. Other factors include tax cut, and September attacks, as well as the dot-com bubbles (The Library of Congress, 2011).
Is US fiscal policy “expansionary” or “contractionary”?
US fiscal policy can be considered as expansionary. This is mainly because most of its expenses go to defense. Otherwise, the market is expanding. In fact, its performance during peaceful years has been impressive (The Library of Congress, 2011).
How American consumers can influence decision makers on fiscal policies
American consumers have continued to increase budget deficit.
This is mainly because they opt for cheap products from China. This has forced most manufacturers to seek cheap labor in china and India, among others. The result is low income for the government and increased unemployment. In order to influence decision-making, consumers should buy American products to improve government income. This will influence change in fiscal policy as more revenue is received (The Library of Congress, 2011).
Has it has changed over the past 5 years
Consumers are continually cutting on their expenses. This is mainly because of high health insurance, recession and cheap products from China, which provide alternatives to American products. This boosted China’s economy while the US deficit increases (The Library of Congress, 2011).
Every government tries to spend within its limits.
In fact, rarely do governments spend beyond their revenues. Since 1969, Congress has continued to make appropriations, which are way beyond its income. This has forced treasury to borrow a huge debt, which earns interest. Moreover, American consumers continue to increase budget deficit. This is mainly because they opt for cheap products from China.
In order to influence decision-making, consumers should buy American products. This will improve government revenue (The White House Emblem, 2011).
CCH Group. (2011). CCH Tax Briefing: Budget Control Act of 2011. tax.
cchgroup.com. Retrieved September 11, 2011, from: http://tax.cchgroup.
com/downloads/files/pdfs/legislation/debtceiling.pdf Heakal, R. (2009). What Is Fiscal Policy? investopedia.
com. Retrieved September 11, 2011, from: http://www.investopedia.
com/articles/04/051904.asp#axzz1XivkjZay The Library of Congress. (2011).
Bill Text Versions 112th Congress (2011-2012) S.365. thomas.loc.
gov. Retrieved September 11, 2011, from: http://thomas.loc.gov/cgi-bin/query/z?c112:S.
365: The White House Emblem. (2011). White House. whitehouse.
gov. Retrieved September 11, 2011, from: http://www.whitehouse.gov/