How the US Government plays a role in our US Economy
Fiscal responsibility is an important part of stability and the government must focus on maintaining the economic stability. As we all know, Government dept can quickly become a burden on the economy and weaken it. Macroeconomic policies change credibility of the government and strengthen political institutions. It is very important that our economy has credibility and stability because it’s vital to us Americans long term investment decisions that allow the US economy to grow. Government provide stability by ensuring to maintain stability of currency, enforce-defend property rights, and provide oversight that assures private citizens that their transaction partners in marketplaces are accountable.
Allowing market participants to begin putting their resources back to work in areas they’d be most beneficial. President Obama’s fiscal responsibility summit last February indicated that he understood the urgent need for fiscal discipline. Congress’s enactment of the American Recovery and Reinvestment Act and President’s proposed budget makes the goals of a sustainable budget and addressing nations longer term fiscal priorities, such as entitlement liabilities, even more elusive. The administrations recently released midsession reviews from the office of management and budget that over the next 10 years the accumulated deficits will total $9 trillion which means that the debt held by public will be a staggering 77% of GDP in 2019. If the debt level continues to grow faster than our economy, the US will owe more than it makes.
Government spending and deficits automatically increase during economic downturns due to more demand on social safety net provisions and falling tax revenues. Borrowing and spending to stimulate the economy using legislative discretion is more difficult to time for the right moment and is much riskier. The funds are often not spend until long after the downturn has taken place and can prolong the downturn by crowding out productive and spending that would have occurred. Economic downturns afford an opportunity to root out waste and ineffective spending both in the public and private sectors, because opportunity cost of making fundamentals reforms is lower during downturns.
A weak fiscal position can cause weak government ability to provide security for property rights, and makes it harder to borrow in the face of security crisis’s. Citizens receive value from government’s role in making and enforcing laws that give citizens the opportunity to freely pursue opportunities. The US is a developed economy but don’t mean its government doesn’t need to retake reform measures. Having an orderly governing body allows private citizens to make long term investment decisions about their personal resources. The government involvement is vital because it provides the best opportunity to accomplish its national investment and growth goals through entrepreneurial spirits of all citizens....