Fiscal Policy

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United States Fiscal Policy
A government’s fiscal policy is important for the country’s economic development. It determines the economy’s outcome by regulating the taxation rates and the government spending levels. Ultimately, the fiscal policy takes center stage in determining the country’s economic stability. In a large economy like the United States, the setting of the fiscal policy is not as easy as predicted. However, the Obama government has been able to enact good fiscal policies to stabilize the economy. For instance, the government made effective fiscal stimulus that was crucial in lifting the country from the deep hole in the economy caused by the great depression of 2008. Currently, many governments are prone to economic eventualities hence the need to understand hoe the fiscal policy can be used to eliminate destabilization of the economy.
Donald Trump has just been elected as the president of the United States hence numerous speculations on how he will package the country’s fiscal policy. In his campaigns for the presidency, Trump intimated that he would make American Great by cutting taxes of highest earners from 39.6% to about 33% and the corporate income tax from the current 35% to 15%. Such fiscal policy is highly influential in the country’s economy. The tax cuts are meant to benefit business owners and wealthy citizens (Irwin N.p). However, it the tax rates for the average citizen will remain the same. Further, Donald Trump has promised to increase the funding for public infrastructure to a tune of about $550 billion hence increasing the public spending to a great extent.

While Trump has not taken over from President Obama, the fiscal policies that he proposed will most likely happen since his party has majority seats in Congress. The president-elect takes over when the country has a budget deficit of more than $500 billion. His fiscal policies do not seem to decrease the budget deficit as expected. Instead, if they are implemented, the deficit will grow instead of reducing. The reason behind this is because a budget deficit is usually reduced by increasing the tax rates, reducing government spending or both. However, trumps intend to cut taxes as well as increase the spending on infrastructure. The Tax cut reduces the revenue raised by the government which reduces the money that is available for spending. Increasing the government spending will add to the budget deficit since the government will be using borrowed resources (Irwin N.p). These future trade policies do not promise a healthy economy in the United States. However, Americans may be hopeful that the president-elect will not enact these policies and instead will focus on the fiscal policies that reduce America’s budget deficit.
In conclusion, fiscal policies involve the making of important decisions on the tax rates and government spending to stabilize the economy of the country. The United States has just elected its new president who will take office in approximately two months. However, the presidential elect, Donald J. Trump, during his campaigns promised to effect policies that economists view as unfriendly to the economy. By cutting the tax rates and increasing the public spending on infrastructure, the president-elect Trump will increase the budget deficit instead of reducing it. The fiscal policies may have a negative effect on America’s economy. However, the Americans are hopeful that Donald Trump will not institute policies that will negatively affect the economy.
Works Cited
Irwin, Neil. “The Trump Administration Could Test Whether Deficits Help the Economy – The New York Times.” The New York Times – Breaking News, World News & Multimedia, 9 Nov. 2016, www.nytimes.com/2016/11/10/upshot/the-trump-administration-could-test-whether-deficits-help-the-economy.html. Accessed 14 Nov. 2016.