After the major U.S Tax cut, economists say fiscal policy is adding fuel to the
ID: 1158485 • Letter: A
Question
After the major U.S Tax cut, economists say fiscal policy is adding fuel to the largest economy. “The National Association for Business Economics said its semi-annual survey showed most of its members also say the tax cuts would swell budget deficits in the longer term.” (US fiscal policy 'too stimulative': business economists, 2018) According to results from a recent survey more than fifty percent say the tax cuts are too exhilarating. A little over sixty percent say the budget deficit would surge in response. “The result was a pronounced shift from six months ago, when survey respondents said fiscal policies were about right. The panel expects near-term boosts in economic growth but is less optimistic about longer-term results” (US fiscal policy 'too stimulative': business economists, 2018) NABE survey respondents say the tax cuts will boost growth at around .25 to .49 percent. Outlays for defense will be raised significantly due to the spending legislation adopted this year. White house deficits forecast exceeds the congressional office. “With an estimated $666 billion deficit last year, or 3.5 percent of GDP, the budget gap should swell to nearly a $1 trillion, or 4.7 percent of GDP, by next year.” (US fiscal policy 'too stimulative': business economists, 2018) The top tax rates for businesses dropped to twenty-one percent from thirty-five percent. However, rise in inflation could result from higher interest rates. “59 percent, believed economic policy should do more to mitigate climate change, while 36 percent said economic policy should not be used toward this end. Nearly 80 percent, however, said economic policy should do more to combat income inequality.” (US fiscal policy 'too stimulative': business economists, 2018) Over fifty percent of this group says low-skilled workers need more education as an effective policy. Another quarter stated progressive federal income tax system would be the best policy.
also here is the link to the article: https://phys.org/news/2018-02-fiscal-policy-business-economists.html
Explanation / Answer
After US tax cuts, according to major economists fiscal policy is fuelling economy. Most of them are of the view that though in the short term economic growth will rise by .25 to .49 percentage points but in long term the prospects remains grim. The budget deficits will surge and reaching 4.7% of GDP by nexy year to $ 1 trillion with increased outlays on defence spendings.Much thinks that policies should be to contain income inequalities while some thinks that it should be used for climate mitigating steps.