the nation's infrastructure that provided long-term economic stimulus.
However, the 1930s also saw the implementation of Social Security, a fiscal program that relies on current payroll taxes to pay pensions to retired workers. Godley and McCarthy suggest that Social Security and the related Medicare and Medicaid programs account for three-quarters of all federal outlays (p. 47), but fail to indicate how these payments boost GDP. They do suggest that such expenditures result in an increase in the fiscal stance.
It is not difficult to understand how the government as consumer approach to economics can result in an increased GDP. Just as private industry can purchase goods and services and thus boost the GDP, so the government can do the same using funds collected from taxpayers. In some areas, the government is the single largest consumer of goods (military hardware and aircraft, for example), although private industry may sell to foreign governments as well as the federal government.
For Boeing, fiscal policy has a direct effect on the company's fortunes. If the corporate income tax rate remains steady or declines, the company has more resources that it can invest in other activities. If the income tax rate increases, the company must divert resources to cover the payments. Boeing also relies on the government to purchase its military hardware and aircraft, although it can sell these to foreign governments, as well. Boeing competes against other aircraft manufacturers, but it certainly would encourage the government to expand military spending since it stands to benefit directly as a result.
Companies that receive these military contracts are able to provide increased numbers of jobs to Americans, which provides additional discretionary income, which in turn leads to greater economic activity in both ancillary business and those industries which are not directly related to aircraft manufacture. Boeing is also a sig...