Essay/Term paper: Economic policy

Essay, term paper, research paper:  Economics

Economic Policy


Chad Stigall
Econ 100
11/26/96

The new economic policy of the united states should include cutting
taxes, reducing governmental waste, and balance the budget by having a smaller
more efficient federal government. It should include equal opportunity for
financial security but not through a government sponsored redistribution of
wealth program.
Cutting taxes across the board including income tax rates, capital
gains and estate taxes among others should provide a growth spurt for the
economy. Allowing people and businesses to keep more of their hard earned money
would enable them to spend more money. People would be able to buy more cars,
refrigerators, homes etc. The businesses would be able to build new factories
with better more efficient high tech equipment. These new factories and
expanded businesses would employee more highly paid workers which would expand
the tax base and allow us to be more competitive in the world marketplace.
Reducing the taxes would also motivate people to work harder and save
more. The way things are now people can not seem to get ahead no matter how
hard they work. The harder they work the more the government takes while others
who choose not to work hard or have not developed the skills to earn a decent
wage reap the same and in many cases more benefits. For example student loans
and grants for college board and tuition fees are largely unavailable to lower
middle class families let alone middle and upper middle class people. Reducing
taxes on businesses would also allow them to invert more on new product
development and research which in many instances the federal government now
subsidizes which requires management. This government management bureaucracy
cost tax payers money and is unnecessary because free market demands and the
extra money they would save from tax cuts would motivate businesses to fund
these programs themselves. This is just an example of what a smaller more
efficient federal government. "Citizens in the united states today pay 38.2
percent of there income in taxes every year" (RNC Talking Points). This is way
to much money for Americans to be paying. "Cutting everyone's taxes by 15
percent and giving them a 500 dollar per child tax credit would cut a typical
families tax bill in half, allowing them to keep an average of $1,600 more of
its hard-earned money"(RNC Talking Points).
The question is often asked as it was in the recent presidential
election, how can we balance the budget and have significant tax cuts? There
are several ways in which the government can cut taxes while maintaining
worthwhile government subsidized programs, which will be discussed in this paper.

To have funded tax cuts the government will have to cut spending by
eliminating waste and by reforming while preserving needed entitlement programs
such as Welfare, Social Security and Medicare though slowing the rate of growth
in spending on them. As quoted in a Business Week editorial "Cutting the growth
in Medicare spending by $150 billion would help open the way for a truly
balanced budget, lower interest rates and higher economic growth" (A Vote for a
Sensible Center 194).
To eliminate waste the government will have to cut programs that are no
longer needed and programs that overlap each other. "The federal government
today has 163 separate job training programs, 26 food programs and 180
educational programs. The government needs to eliminate some, consolidate some
and change others" (The Balance Sheet). The government can also cut waste by
cutting the amount of money that some of the governmental agencies receive for
example the "Republicans want to cut funding for the Commerce Department and the
department of Urban Development budget by $715 million, Foreign Aid by 11.5
percent, Defense budget by $6 billion and the congresses budget by $205 million"
(The Balance Sheet). They can also reduce waste by spending money more wisely
which can be accomplished by reforming some of the government agencies such as
welfare, Social Security and Head Start. One proposal inparticular seems fair
and powerful "New York senator Daniel Patrick Moynihan has been pushing for
several years- a recalculation of the consumer price index so that it no longer
triggers a higher-than-necessary cost of living adjustment in Social Security
checks and other entitlement. That fix along with companion reduction in other
programs tied to the consumer price index would save $1 trillion over the next
twelve years" (A Very Good Place to Start 70).
By reducing waste the government will be able to increase funding for
programs that are needed, and put our hard earned tax dollars to good use.
There are many programs that need to be increased, the first is Social Security
because our senior citizens need money to live on when they retire. Second is
Medicare because its important to the health care of our seniors. Third,
Student Loans because young people need higher education to get good jobs and
compete with the rest of the world. Fourth is Law enforcement, law enforcement
is an essential part of modern society. Fifth, Medical research And Health to
make life better and find cures to deadly diseases. Sixth the Job Training
because it helps to get people job which reduces the number of people on welfare.
Next, Food and Nutrition will help women, infant and children program (WIC),
and the school lunch program. Last the National Parks we need to save the
wonders of our beautiful country.
The Republican national committee says "the government needs to pass a
balance the budget amendment to the constitution ensuring that the federal
budget stays balanced and that Washington no longer continue to pile more and
more debt on our children and grandchildren, mortgaging their future" (RNC
Talking Points 1). At one time our country had a very small debt and "no other
currency on earth was as 'Sound As The Dollar'" (The National Debt 1). Now the
national debt is five trillion dollars and climbing and the dollar is not nearly
as strong. To keep inflation and interest rates from rising the government
needs to balance the budget; "As seen during the Carter presidency when
inflation skyrocketed and interest rates hovered near 20%" (The National Debt 2).
If the inflation increases and interest rates rises it will slow the economy
down because no one will be able to afford to buy anything or barrow money.
Cutting taxes across the board will not just give people more money but
will benefit the economy. By cutting taxes citizens as well as business will be
able to keep more of their money they worked so hard to get. By cutting taxes
this will also allow people to buy things that they can not afford now because
taxes are so high. The business will not only have more money from tax cuts but
they will have more money from citizens buying more highly priced items. With
this money the business will be able to invest in building new factories and new
products, which will in turn make more high paying jobs for the for the hard
working American people. By cutting governmental waste they will be able to
spend more on the entitlement programs that are truly needed. Cutting waste will
also ease the task of Balancing the budget which will ensure that the debt does
not continue to grow at an unsubstainable rate. Balancing the budget will help
ensure that inflation and interest rates remain at an affordable rate.

Works Cited

Kramer, Micheal. "A Very Good Place to Start." Time 18
Nov. 1996: 70. "Review and Outlook Dole and Taxes." The Wall Street
Journal 29 July 1996: A12 Sepp, Peter J. "Are Republicans Serious
About Cutting
Fat?" New York Times 30 Aug. 1995: A17 "Dole Hopes Tax-Cut Move Will
Energize His Campaign, but
Which taxes to Cut?" The Wall Street Journal 15
may 1996: A16 "A Vote for a Sensible Center." Business Week 18 Nov.
1996: 194 "The National Debt. It's Eating Us Alive!" Internet
http://www.europa.com/~blugene/deficit/debt.html "The Balance Sheet --
August 11, 1995." Internet
http://www.rnc.ogr/news/balance/bal-950815.html "RNC Talking Points
Cutting Taxes and Balancing the Budget
Bill Clinton's Dirty Little Secret: A $64 Billion Tax
Increase" Internet
http://www.rnc.org/news/talking/tp-960913.html