Government role in Economic Policies
Economy by definition is a complex system which is also dynamic in nature and best discussed and described with a good model of policy with economic variables (O'sullivan, 2007). The government economic policies are simply the measures through which the government is able to determine the economic growth of a nation. Governments have also in the past engaged in micro management of the economy through financing, and trade (market) controls. The distribution of government functions have continually increased at the start of the 20th century with federal governments and counties taking effect (Minsky & Kaufman, 2008).
The government financing is mainly concerned with the allocation of resources to the respective counties. The devolved governments highly help with the management of the economic functions in the county point. Once the decision on the sharing of the national budget has been reached, the need for cost-benefit analysis is called for by the federal government to ensure strict restriction of the government resources. According to Minsky & Kaufman (2008), this approach of government involvement, however, is a way of the government overstepping is a mandate with regards to the economic policy formation.
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The US political parties have a divergent approach on the economic policy, with the Republicans highly aligned to the government approach of economic policy. The republicans hold a strong belief that with the strengthening of the government, the economy with automatically be strengthened. The government, among all shall decide the tax policy with the focus on increasing the resources immersed by the government to boost the economy (O'sullivan, 2007). Clearly, the Republican Party oversteps its mandate with this approach of gaining resources form the public pockets who may, in the end be left alone to feel the economic pressure per say.
Republicans also have gone on record severally with its support for the reformed budget process (Richardson, 2009). The push for super-majority to either amend or pass tax policy have watered down the faith on many Americans who hold a dear view on the desperate need for expansive economy as opposed to the contractionary economic approach. According to O'sullivan (2007), the agreement on the adoption of the right approach to maintain and grow the economy is highly recommended; however, the management on the non-priority spending ought to be further audited (Richardson, 2009).
The democrats, on their part have a different approach of the economic policies. The Democrats hold a strong in on the expansionary economy as opposed to tax approach as a way of improving the economy of the country. Then democrats have placed huge budget on the shoulders of the senators and governors to manage and create employment. By doing this, the Democrats have placed a huge focus on the Market approach of the economy. According to Prasad (2006), The Democratic Party largely supports exports and processing of local resources which will accordingly aid in the support of the growing economy.
The US budget process is in two dimensions. One emanates from the national point while the other comes from the federal entities (Prasad, 2006). The budget process has been heavily managed by the government leaving very little room for the public and the entrepreneurs to have an input. The people have a strong say in the budget, but the ultimate decision still lies with the executive authorities. The executive involvement, by itself is a huge challenge to the budget (Minsky & Kaufman, 2008). The budget making process also extends to the tax policy formulation with the heavy levy on luxury goods as opposed to basic goods.
References
O'sullivan, A. (2007). Urban economics . McGraw-Hill/Irwin.
Minsky, H. P., & Kaufman, H. (2008). Stabilizing an unstable economy (Vol. 1). New York: McGraw-Hill.
Prasad, M. (2006). The politics of free markets: The rise of neoliberal economic policies in Britain, France, Germany, and the United States (Vol. 19). Chicago: University of Chicago Press.
Richardson, H. C. (2009). The greatest nation of the Earth: Republican economic policies during the Civil War (Vol. 126). Harvard University Press.
