Wednesday, April 6, 2011

Fiscal Policy

Too often people think national fiscal policy should follow their own fiscal plans. As individuals when things are going good we typically spend spend spend living it up thinking the good times will never end. When we lose our job we go into panic and quickly reduce spending. Although, this is not the best way to financial plan our reduction in spending has a minuscule effect on the national economy.

The problem occurs when people apply that same philosophy to their opinions about the national fiscal policy. When things were going good for George Bush nobody worried too much about him running up the deficit. Now that things have collapse people want to immediately balance the budget. The problem is Herbert Hoover and republican controlled congress tried this approach in 1932 (Smiley G).  They sharply increased taxes to balance the budget and made things drastically worse. This policy caused a disaster then and will cause a disaster now.

Smiley G. "Great depression" concise encyclopedia of economics
http://74.6.117.48/search/srpcache?ei=UTF-8&p=did+hoover+raise+taxes+during+the+depression&fr=yfp-t-701&u=http://cc.bingj.com/cache.aspx?q=did+hoover+raise+taxes+during+the+depression&d=4826929245652377&mkt=en-US&setlang=en-US&w=3e7824bc,c97bfd43&icp=1&.intl=us&sig=3XwLaJNH.PXB_.KiXLKvgw--

No comments:

Post a Comment