Economic And Budget Information 2001

Author : Joëlle Julie Leclaire
Publisher :
ISBN 13 :
Total Pages : 406 pages
Book Rating : 4.:/5 (179 download)

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Download or read book The United States Federal Budget Reversals of 1998 and 2001 written by Joëlle Julie Leclaire and published by . This book was released on 2006 with total page 406 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study identifies the causes of the budgetary shifts that led to surpluses in 1998 and the return to deficits in 2001. It places the federal budget within the larger context of the economy as a whole and analyses the influence of the economy and policy on the budget's position. Changes in economic growth are found to account for approximately 81 percent of the changes in the budget's position, while policy changes account for approximately 19 percent of the budget's relative position. Looking more closely at the policy changes that underpinned the budgetary reversals provides three interesting findings. First, persistence by both the Presidents and Congresses in their attempts to reduce the deficit yielded modifications of existing laws that eventually worked alongside economic growth to bring about surpluses. Second, even when the President and Congress use different economic theories to justify their policy actions, they may still have common goals, and therefore work together to modify existing budgetary conditions. This was especially true of Presidents and Congresses for the 1985 to 2005 period where Democrats held a sound finance view and Republicans adopted the tenets of supply-side economics. Both theories found common ground in the idea that deficits needed to be reduced, even if the reasons for deficit reduction differed from one economic theory to the other. Third, empirical economic events did not lead to a change of course for the administration or Congress. Despite the fact that all successful deficit cutting efforts were directly followed by recessions, Presidents and Congresses continued deficit reduction goals, except after 2001, when the War on Terror and homeland security overshadowed this priority. Especially from 1993 on, tax increases and budget cuts pushed the private sector balance into deficit, the only remedy for which, given current account deficits, is greater deficit spending. Nevertheless, deficit targeting had recently resurfaced as a major focus for the President and Congress. By analyzing how policymakers influenced the budget, the goal is to indicate how policymakers might be redirected from targeting balanced budgets to targeting social goals like full employment.