Sherean Ali, Claire Edelson, Christian Lyon, & Lisa Reimann.
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Transcript of Sherean Ali, Claire Edelson, Christian Lyon, & Lisa Reimann.
BACKGROUND ON ECONOMIC
POLICY CHAPTER 18
Sherean Ali, Claire Edelson, Christian Lyon, & Lisa Reimann
ECONOMIC POLICIES• Monetarism=inflation occurs when too
much money is chasing too few goods. • Economic Planning=plans like wage and
price controls or direction of investment, can improve the economy.
• “Reaganomics”= combination of monetarism, lower federal spending, and supply-side economics will stimulate the economy.
• Keynesianism= spend more money when in a recession and cut spending when there is inflation & economy performance
BACKGROUND ON CHAPTER “Troika” (OMB, CEA, Treasury) +
President + “The Fed” + Congress = Work together to make Econ Policies
Pocketbook Issue= economic conditions are strong association of amount of success the incumbent party has for staying in the White House & seats held by WH party in Congress.
Economic choices made by politicians are shaped generally by ideological differences in parties. All politicians want low unemployment & no inflation
DEFICIT DEBT & GPPDeficit=governments spends more
money than it collects in taxes in a given year
National Debt= total amount of deficits since 1st Presidency
GDP=total of all goods & services produced in country in a given year
Raising Taxes & Cutting Spending can reduce deficit and create progress to lower national debt
THE FEDERAL RESERVE BOARD (EST. 1913)
monetary policy Board of Governors: 7
members appointed by President and
confirmed by Senate 14 year term. The chairman
is appointed or reappointed every 4 years from the board.
the fed can increase and decrease money supply and interest rates
selling and buying federal government securities
reserve requirements Discount rate
"Greenspan Says U.S. May Soon Reach Borrowing Limit - Bloomberg." Bloomberg - Business & Financial News, Breaking News Headlines. Web. 03 Jan. 2011. <http://www.bloomberg.com/news/2010-06-18/greenspan-says-u-s-nearing-limits-on-borrowing-capacity-restraint-needed.html>.
"FRB: Chairman Bernanke." Board of Governors of the Federal Reserve System. 18 Nov. 2010. Web. 03 Jan. 2011. <http://www.federalreserve.gov/aboutthefed/bios/board/bernanke.htm>.
CONGRESS AND FISCAL POLICY Expansionary: ↑ gov’t spending & ↓ taxes Contractionary: ↓ gov’t spending & ↑ taxes Fiscal year: October 1st to September
30th
10/1/10-9/30/11 is “fiscal 2011” or “FY 2011”
Budget Enforcement Act of 1990
THE BUDGET Budget 1974 Congressiol Budget Act
Feb. Presidential budget submitted to 1 House & 1 Senate committee
Committees w/analysis from Congressional Budget Office (CBO)
Budget Resolution congressional decision on where to cap government spending.
Entitlements Reagan ’81 cuts to authorization &
appropriations
TAXES Majoritarian politics (everyone pays
them) Client politics (exemptions,
exclusions and deductions) US taxes are slightly progressive lighter burden than much of the
world
INCOME TAX & REFORM 1913 16th Amendment b/c 1895
unconstitutional Taxes remained high after WWII The tax reform of 1986 shifted
industry savings to people and cut down on legal and illegal tax evasion.
Deductions work like subsides Cut out loopholes and lowered rates Loopholes are client politics