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macro6-1 - government to try to manage the economy...

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The main highlights of US fiscal policy over the last 100 years would have to be summed up by saying that the US moved more and more towards Keynesianism beginning with the Great Depression. In recent decades, however, the US seems to have lost the political will to have anything other than expansionary fiscal policy, regardless of the effects of such policies on the federal deficit. This may be changing in today's political climate, but it is too soon to tell. Before the New Deal, fiscal policy was not really used by the federal
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Unformatted text preview: government to try to manage the economy. Beginning with the New Deal, however, the government came more and more to use taxes and spending to try to create growth in the economy. Lately, however, the political will to cut spending or increase taxes seems to have been lost. The US has moved away from Keynesianism (which countenances the use of fiscal policy to slow the economy as well as to heat it) and has moved toward a "free lunch" fiscal policy where taxes are constantly lowered without any decreases in government spending....
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