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Compare and contrast the following theories of market economics: laissez-faire, Keynesian, and supply-side. Which of these theories, if any, best represents how our government fashions the U.S. budget? Be sure to describe how the budget is created and passed. In the last few years, there has been threats of congress not passing the budget. How would you reform the process of budget passing? What consequences would you suggest for the nonpassing of a budget? Where do tax policies fit into our government’s budgetary process? How would you reform the U.S. tax policies to best serve the U.S. citizens and U.S. budget?
Laissez-faire economics is a hands-off approach to economic matters, believing in minimal government intervention and the free market’s ability to self-regulate. The primary focus of this theory is on maximizing individual liberty and economic efficiency. Under this system, supply and demand are allowed to determine prices within a free market system.
Keynesian economics is based on the premise that governments can regulate their economies by making adjustments in taxation and public spending. It was created in response to the Great Depression of 1929, advocating countercyclical measures such as increasing taxes or reducing spending during a recessionary period when private sector demand slows down. This type of economic policy focuses on stimulating aggregate demand through government actions rather than relying solely on the free market forces of supply and demand for price determination.
Supply-side economics emphasizes incentives for producers, including decreased regulation and taxes aimed at increasing investment in new technology, which its proponents believe would lead to increased production efficiency and therefore more goods/services produced at lower costs (supply) with higher profits given time. This type of policy generally involves tax cuts for businesses or individuals who invest money into new capital investments like equipment or research & development (R&D). Supply side policies could also include deregulation – removing restrictions from businesses that allow them to produce more efficiently without interference from external sources (i.e., government).
The current U.S budget process begins with President Obama submitting his proposed budget every February to Congress consisting of appropriation bills allocating funds across various departments such as Defense, Health, Education etc.. From there Congress will debate over these bills until they pass one single appropriations bill that outlines how much money each department should receive throughout the year(this typically takes place between October 1st and September 30th). Afterward Congress passes it onto President Obama who can either sign off on it or veto it if he disagrees with some part of the bill which then returns back onto congress where they try again until they find an agreement both sides can live with before calling it finalised . In recent years however some members have stalled passing budgets due to disagreements over certain parts leading up potential shutdowns in services so reforms are needed especially now since coronavirus has heightened tensions even further regarding funding allocations for different departments . Tax policies fit into our government’s budgetary process by providing federal revenue streams that help fund numerous programs including Social Security Medicare etc.. To reform US tax policies I would suggest switching away from regressive taxation systems towards progressive ones making sure wealthier citizens pay their fair share while also allowing middle class citizens relief through deductions/exemptions thus providing incentives while still being able generate enough income via taxation mediums like payroll tax corporate income tax estate tax gifts excises etc..