Fiscal Policy

Essay by wkshrops May 2004

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"As the nation addresses its defense, homeland, and economic priorities, however, growth in the rest of government must be restrained to prevent an explosion in spending. To achieve this goal, budget process reforms are needed. Greater efficiencies must also be demanded from government. This is a good idea at any stage, but is imperative in the current environment. By highlighting good and poor performers, this budget attempts to set such a process in motion" (Bush, 2002). The United States Fiscal Policy, a government policy in related to taxation and public spending, is currently providing Tax Relief, revitalizing National Defense, establishing Homeland Security and providing incentives and unemployment payments under the Job Creation and Worker Assistance Act. Fiscal policy is expected to boost economic growth; by implementing a bipartisan economic security package, which emphasizes lower personal taxes and increased incentives for business investment. These measures, along with increased unemployment insurance payments, will provide much needed purchasing power to households and businesses this year.

In addition, Government spending in National Defense and Homeland Security should have a direct positive impact on the Gross Domestic Product (GDP).


The impact of Fiscal Policy is providing further support to the economic recovery with the passage in March 2002 of the Job Creation and Worker Assistance Act. The Act provides an incentive for businesses to invest by permitting them to expense 30 percent of the value of qualified new capital assets including equipment and software. The expensing provisions, which expire in September 2004, reduce the cost of capital and so provide an additional incentive for businesses to invest during the vulnerable initial phase of the expansion. The Act also provides up to 13 weeks of additional unemployment benefits for the long-term unemployed who exhaust regular unemployment insurance benefits. The balance is depreciated...