Fiscal Policy Paper

Topics: United States public debt, Tax, Public finance Pages: 6 (1749 words) Published: December 5, 2012
Fiscal Policy

June 11, 2012

Fiscal Policy
All the people in the United States are effected by the fiscal policies. Team C will address the how and why the U.S. budget deficits, budget surpluses and debt effect different individuals and institutions. There are a wide array of individuals effected by fiscal policy, which include tax payers, future Social Security and Medicaid users will be effected. The unemployed individuals and University of Phoenix students will be effected by fiscal policy. The U.S. financial reputation , an exporter, and importer, and effects of the GDP will also be covered about the effects of the U.S fiscal policy. Effects on Tax Payers

The U.S. budget deficits can affect tax payers in a negative aspect by subjecting the tax payers to increased taxes within the country to offset the deficit. This increase could be aimed at the middle and lower class citizens, which may cause financial difficulties. Also the budget deficit does impose interest costs on tax payers, meaning that the national savings totals are lower and this decreases the amount of private investing (Ackerman 2004). This higher interest cost will have a direct affect on the trade deficit, which will cause Americans to become even more dependent on exports for their consumer needs.

The U.S. budget surpluses would affect tax payers in a positive aspect by refunding tax payers any previous overpayment of taxes. This could also decrease income taxes that are being paid by tax payers, since the surplus will increase national savings. Another benefit from a surplus is that it will stimulate investing by offering lower interest rates, which would increase tax payers savings when filing taxes (Hall 2012). For example: new mortgages would offer interest write-offs on personal tax returns. The U.S. budget debt affects the tax payers in several different areas: higher taxes, reduced benefits & programs, and higher interest rates. The U.S government cannot sustain the economic level of owing more than they are receiving, meaning the taxes from tax payers would increase to pay down the debt. The other option for shortening the debt is to limit spending, which means the programs and benefits could be reduced. The interest rates may rise due to a decrease in the purchase of Treasury bonds from foreign investors (NDT 2012). Effects on future Social Security and Medicare user

The United States Budget Deficit is only going to hurt the future Social Security and Medicare Users if the deficit does not reduce. Over spending is going to lead to no money in these accounts. The retirement age will continue to go up as long as there is no money to support the aging Americans. The Budget Surplus however would help Social Security and Medicare users as money increased and the deficit decreased. Effects on Unemployed Individuals

The U.S. budget deficits affect unemployed individuals directly as the higher the deficit, the higher the unemployment. The reverse is also true, by lowering the deficit and investing in programs that will stimulate growth, the unemployed individuals are more likely to find work and contribute to paying off the deficit (Ginsburg 2009).

The U.S. budget surplus would positively affect unemployed individuals because this would allocate more funds to be used in further economic development, such as increasing the support to infrastructure improvements. This increase in the allocation of funds to support an infrastructure improvement would lower unemployment which would increase expansion (Hall 2012).

The U.S budget debt affects unemployed people directly but the government has set up debt management programs to assist the unemployed people on getting back on the correct financial track. These programs include: the making home affordable program, VA debt management program and the department of education assistance program. The Making Home Affordable program is funded by the government and is available...

References: Ackerman, S. (Nov/Dec 2004). The Budget Deficits Bigger Brother. Retrieved
Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.
Ginsburg, H. (2009) National Jobs for All Coalition: Increasing Unemployment Increases the Deficit. Reducing Unemployment Reduces the Deficit. Retrieved from
Hall, S. (2012) How does the government surplus affect the economy? Retrieved from url:
Huntley, J. (2010). Federal Debt and the Risk of a Financial Crisis. Retrieved from
NDT (2012) No Debt Today: How the National Debt Affects You. Retrieved from url:
Nelson, L. A. (2011). Inside Higher ED. Retrieved from
Quinn II, C. (2011), THE FAMUAN. Retrieved from
Worksham, R. (2012) Government Debt Relief Programs for the Unemployed. Retrieved from
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