Unemployment rates are still way to high, and minimum wage just doesn't cut it for a lot of people. We need to encourage Economic growth. Has anyone else noticed that grocery's are shrinking and yet the price is increasing? Currently, this is what our economy needs. The situation will most likely change over time, but for now Expansionary is our best bet.
The current fiscal policy in America is highly expansionary, and it has been
highly effective. The stock market is again at new highs. Entrepreneurs are
finding it easy to fund their start-ups, and even housing prices have returned
to the levels they reached before the Great Recession in many areas.
However, some problems do persist. Unemployment remains stubbornly
high, and those high stock and home prices may be warning flags of inflation.
Policy makers must tread carefully in this fragile recovery.
With the current state of the United States being that in a severe recession, an expansionary fiscal policy would be beneficial towards creating a better economy. With government spending exceeding tax revenue would cause a stimulus in the economy with a decrease in taxes. Such a desperate fiscal policy would overall be a benefit towards America's economic state.
Republicans are threatening to cut spending that goes to everyday Americans like Social Security and Medicare. This clearly is government spending that reaches everyone. Even if some government spending only goes to bigger businesses, this means that these businesses will have less capacity to use for other clients, like private sector corporations and other businesses and consumers. These small businesses will get customers that the big businesses can't service anymore or which don't want to pay the same higher prices that the large businesses are now charging the government. There will also be more demand for employees from both the big businesses and small businesses as well as government itself. And democratic President Barack Obama seems to be willing to veto tax cuts that only go to the rich. So if there are tax cuts, many customers will have more money (unless your business is named "Cartier" or "Ferrari"!).
We as a country need to sit up and wake up and realize that we are not just going broke, we already are broke. We cannot afford to keep going on the path that we have been going down for several years now, lest we will become Greece before long.
An effective fiscal policy should make the country stronger, but expansionary fiscal policy is more likely to help the rich and powerful. Two prime components of this policy are increased government spending and taxes. Government spending isn't likely to be directed towards smaller business; this money will go to businesses prosperous enough to lobby for it. And tax changes generally favor the wealthy and powerful, because the law makers don't want to raise their own taxes.