An economic issue due to interest Essay Example | Topics and Well Written Essays - 750 words

An economic issue due to interest - Essay Example Before President Bush left the office, he left behind a huge burden on the Americans economy that was used to finance two very expensive wars in the history of America. The debt runs for a period of years until 2011. This is what Obama government had to first deal with when he took over office in 2009. Sound economic policies guide a government to economic growth and expansion. In includes the changes made by the national budget that alters spending and taxes affecting the economy. Fiscal policies play an important role in driving the Americans economy especially after the great depression when the government decided to take a proactive role in guiding US economic affairs. The role of a fiscal policy is to influence macroeconomic productivity levels by increasing or reducing taxes and public spending. Each policy is distinct depending on what the government wants to correct or attain. For instance, a slow economy has high levels of employment, low levels of consumer spending, and les s business. Here, the government will fuel it by reducing the levels of taxation and increase the public spending. More money in circulation will increase consumer spending, boost businesses, and increase employment levels. However, the effects of fiscal policies differ with different economies. This is because in different economies one class or various classes of individuals are affected by a move to cut taxes or increase spending. For instance, in America, arguably only a small percentage pays taxes, which is about one percent of the population. Therefore, a move to increase tax or reduce tax will only affect a small percentage of the population. It is also unknown to what extent a government should get involved in an economy to get it moving, which leaves policy makers on a hanging balance. After Obama joined government, a fiscal policy of its kind was adopted in America to curb