Fiscal Policy of the United States: A Classic View

Abstract The Fiscal Policy of the United States over the decades has changed back and forth between classic and Keynesian principles. This paper examines the effect of both on the economy and how classic is a better approach to fiscal responsibility then Keynesian. Fiscal Policy of the United States: A Classic View The Fiscal Policy of the United States (US) is well known to operate using the Keynesian principles. By the government manipulating the availability of money and thereby interest rates, they have not necessarily helped the economy. What has happened is that the younger workforce has become accustomed to “wealth”, that is their parents wealth. This is not the percentage of the workforce that makes over $100k a year, but the $40 to $80k range, middle income America that is making manual labor jobs and the under $40k jobs difficult to fill. Today, those coming into the workforce for the first time don’t “wish” for the $60k a year job, they EXPECT it, and if they don’t get it they tend to stay at home and never leave the nest living off their parents income. This of course hurts the economy by not freeing up more disposable income of the parents. The 1980’s and `90’s technology boom was a leap forward for middle income families, new businesses were being built, which meant more employment, more demand for supplies and more money to spend. Children no longer for the most part had to “earn” money, they just asked their parents for it and they gave it to them, and this also meant an increase in personal debt as more Americans began using credit cards more freely. So what happened? nobody growing up learned the value of money, they didn’t cut grass in the summer, or baby-sit after school, and nobody learned how to pump gas. (I mention it as meaning, with the self-service gas stations the gas jockey was no longer needed, which was at the time a rite of passage for a young adult to learn the value o…

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