preview

Fiscal Policy

Satisfactory Essays
Often when one thinks of the scope of business, running a country rarely enters into an individual’s mind. However; that is what the country is, a large business conglomerate for an entire country. Citizens entrust their government to maintain this feat. There are many intricate details in maintaining the nation’s financial and economic health. In the United States, the President and Congress govern the financial and economic health of the nation. The United States employs the fiscal policy to monitor and make deliberate changes to escalate or slow down the country’s economy. The fiscal policy process occurs via changing government expenditures and taxes that have a direct impact on the nation’s Gross Domestic Product (GDP).
Tax Payers
Debt, deficits, and surpluses related to the government budget have a direct impact on tax payers in the U.S. Payment for the national debt comes from revenue received by the government through the taxes it collects. If the amount of tax is not sufficient to cover the liability, the result is a deficit. The government will determine the best method to offset this deficit, such as raising tax rates. The rising government debt can also lead to the reduction of the nation’s credit rating, potentially leading to a lower standard of living for generations to come. Per a report from ABC News, “savings of taxpayers may diminish in worth, the economy could see a lag in wage increases, and create fewer jobs” (Drowning in Debt, 2010).
Social Security and Medicare Users
The U.S deficits, surpluses, and debts affect Social Security and Medicare users, because when the economy is facing any of these problems one of the ways the government acquires the funds to help is by drawing on the funds availab...

... middle of paper ...

...as debt measures against the country’s GDP. As the value of the GDP increases either through inflation or real growth the ratio of the debt-to-GDP shrinks and debt becomes less burdensome. Surpluses allow a government the ability to pay down its debt or expand its capability to incur more debt since the economy is richer. The burden of debt on future generations is the debt service or interest rate on debt times the total debt which must be paid annually.
Conclusion
Through all the economics problems, the United States have encountered in the past decade (operating with more deficits than surpluses) it has remained most powerful economic country in the world (Nordqvist, 2013). Fiscal policy affects every aspect of the nation’s communities from individual household to the federal government for managing GDP to sustain the country’s economic health and wealth.
Get Access