Budgets, Tariffs, Fiscal Policy

1. The move from budget deficits to budget surpluses was brought about by a number of different factors, including the Balanced Budget Act that mandates balanced budgets. In addition, the late 1990s saw an economic recovery that offset the earlier recession that began the decade, and thus tax revenues increased in the latter part of the decade as the economy gained strength. Some at the time called for tax cuts to be implemented; the arguments for these ranged from the idea that Americans had been "overcharged" to the idea that tax cuts would further stimulate the economy and help maintain robust growth. Tax cuts did not come at that time. Whether tax cuts would have been advisable depends on whether they would have led to an over-stimulated economy, which could have triggered high levels of inflation and put in motion the move to another recession. In addition, the surpluses that were so widely recognized in the late 1990s were forecast to last at least a decade by many analysts; in reality, they did not last even five years. Given the rapid rate of change associated with the global economy today, it is probably of greater benefit to follow the Fed's lead and take slower rather than more rapid action. Tax cuts are highly politically charged, and once imposed, are difficult to rescind. Had tax cuts been put into place and other key events remained unchanged--including the war in Iraq, the deficits that the nation faces today would be even greater in magnitude, an

Related Essays

Fiscal Policy and GDP .... government enacts trade policies such as tariffs on steel .... it seems reasonable to assume that their budgets will remain in .... "Does Fiscal Policy Matter?" Journal .... (5420 22 )

Macroeconomic Growth in US .... and the General Agreement on Tariffs and Trade .... that the leadership deciding US fiscal policy have developed .... the federal debt, deficit budgets and increasing .... (1236 5 )

GERMANY MARSHALL PLAN .... Having control over their own budgets, Lander could and .... fields was to influence the tariffs charged and .... Effective use of fiscal policy in economic management .... (5347 21 )

Oligopolists .... as they prepare contracts and budgets; in this way .... the United States has threatened such tariffs in order .... and what steps (monetary and fiscal policy steps) can .... (5224 21 )

Impact of NAFTA & Inflation on Real Estate in Texas Real estate .... restructure their pricing in recognition of reduced tariffs. .... As such, operational budgets do not include corporate .... The goal of monetary and fiscal policy is to .... (5764 23 )

Category: Economics - B