macro notes - Marginal tax rates for rich are lower because...

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Budget control act: phases in a bunch of cuts and spending over time. Budget control act did not solve the problem, we spend half as much. Puts limits on dsicerentionary stuff, like defense spending Federal debt held by public vs private Cutting spending or increasing taxes only would lead to increase in debt and might raise doubts about whether the long term deficit reductions would take effect Implementing spending cuts or tax increases would give little time to plan and adjust in addition and particularly important given the current state of the economy, immediate spending cuts or tax increase would represent an added drag on the weak economic expansion
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Unformatted text preview: Marginal tax rates for rich are lower because its only income tax. We don’t see rich people adjusted employment hours in data Defense non-discretionary are falling because of the budget control act Cbo says you can either raise tax, cut spending in other areas, or change benefits to elderly. Raise federal revenues significantly above the average share of GDP CHAPTER 10-inside lags: the time it takes to formulate a policy-problems with stabalization policy: it takes long to agree and there is crowding out -outside lags: time it takes for policy to work supply side economics-emphasizes role that taxes play in supply of output in the economy...
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