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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Scumbria who wrote (142934)	5/5/2001 5:36:19 PM
From: gao seng	Read Replies (1) \| Respond to of 769669

You been listening to corporal cueball too much. I am bullish on the stock market and the economy because of tax cuts and lowering interest rates. As a matter of fact, I think Nasdaq will hit at least 3400 by the end of the year after Microsoft case gets settled in Microsoft's favor. And I think the retroactive tax cuts (if they pass) will start kicking in as soon as they are passed (people will adjust their deductions, etc.) And Nasdaq will see all time highs by this time next year. But without the tax cuts and lowering of interest rates, we could be in for tough times. Fiscal Policy Fiscal Policy, government policy related to taxation and public spending. Fiscal policy and monetary policy, which is concerned with money supply, are the two most important components of a government's overall economic policy, and governments use them in an attempt to maintain economic growth, high employment, and low inflation. Fiscal policy can be either expansionary or contractionary. It is expansionary or loose when taxation is reduced or public spending is increased with the aim of stimulating total spending in the economy, known as aggregate demand. Expansionary policy might occur when a government feels its economy is not growing fast enough or unemployment is too high. By increasing spending or cutting taxes, the government leaves individuals and businesses with more money to purchase goods or invest in new equipment. When individuals or firms increase their purchases, they raise demand, which requires additional production, creating jobs and generating more spending. The result is higher employment and a growing economy. On the other hand, fiscal policy is contractionary or tight when taxation is increased or public spending is reduced in order to restrict demand and slow down the economy. A tigh fiscal policy is more likely when inflation is high. A contractionary fiscal policy reduces the amount of money in the economy available for purchasing goods, thus decreasing spending, demand, and, ultimately, pressure on prices (see Inflation and Deflation). To determine its fiscal policy, a government must make judgments about a number of factors, including the level of economic growth or unemployment likely in the future. These factors will affect the amount of revenue raised through taxes and the amount of money required for government programs. Once these determinations are made, the government can decide how to raise revenue and how to allocate it. Revenue is generated through a combination of different taxes—for example income tax, sales tax, or customs duties—and can be allocated to build new roads, fund government programs, or to pay expenses such as government employees' salaries. Another important decision a government must make regarding fiscal policy is whether or not to run a budget deficit by spending more money than the government raises (see Budget). Deficits can be financed in two ways—borrowing or printing more money. If the government borrows money, it will decrease the supply of money available in the economy for lending, and the cost of borrowing money, the interest rate, may rise. If the government prints more money, it will increase the supply of money in the economy; without a corresponding increase in available goods, prices—and inflation—are likely to rise. Decisions on fiscal policy are inevitably influenced by political considerations, such as beliefs about the size of the role that governments should play in the economy, or the likely public reaction to a particular course of action. Few governments will find it easy to raise taxes or to decrease funding for programs that have strong support from the public, such as social security or defense. Fiscal policy decisions can be influenced by other, outside factors as well. In today's global economy, a government also needs to consider the fiscal policies of other countries, which may tempt companies to relocate by offering them generous tax programs or other government-controlled benefits. Some countries may find their fiscal policy decisions constrained by the requirements of the International Monetary Fund (IMF), which often grants aid packages subject to conditions relating to fiscal policy. encarta.msn.com