Fiscal Policy and Economic Growth
In This Chapter
• Goals of fiscal policy
• How fiscal policy works
• The record of tax, spend, and borrow
Although two-thirds of the federal government’s expenditures are mandatory and many of the discretionary expenditures are not all that discretionary, government expenditures strongly influence the direction of the economy and the pace of growth. Much of that influence is long term. For instance, Social Security and the U.S. military didn’t grow to their mammoth proportions in a few years, but rather over many decades. Yet even in a given year, U.S. government spending can influence economic growth.
Moreover there are decisions about taxes, which may be even more important. Cutting taxes ...