The Fiscal Policies Between The Clinton And The Bush Administration: A Comparative Study

There are two different fiscal policies that had been adopted during Clinton period and Bush period. For example the fiscal policy used by the Clinton government was based on Neo-Keynesian Theory and paid more attention to interfere with supply. Moreover ,because of sticky wages and price ,the government believed that the slower they run interference ,the better the development of economy is .What's more ,they adopted measures ,such as increasing taxes, encouraging to invest in high-tech industries and controlling payment and expenditure from government ,in order to increasingly stimulate the economy of the U.S and cut down the deficit budget steeply .During Bush period ,however , Keynesianism was regarded as a basis to increase output and employment .They acted against economic laissez-faire but supported government intervention and they also stimulate aggregate demand with fiscal and monetary policies. In addition, taxes have been reduced greatly to raise consumption and investment .The specific content contains a series policies of stimulating spending and consumption such as reducing the rate of personal and family income tax, enlarging the ratio of rebate and increasing the spending on national defense .As far as fiscal policies were concerned that many differences existed during the two ages. The details of Clinton policy are as follows:·Reform institutions. Fire employees and reduce fiscal payment·Increase the rate of income tax and improve regulation·Adjust the system of payment.·Adopt preferential fiscal policy, support high-tech industries Unfortunately,"9.11 fair"has played a bad role in the economy of the U.S.. When Bush came into power, he had to make urgent decisions which were totally different with Clinton's .For example, he reduced taxes sharply, increased government payment and expenditure of national defense and enriched funds of medical treatment, high technology, education, environment and so on.The main purpose of these two policies is to improve economy situation of the U.S., but different roles have been played because of different environment of economy.Fist of all, backgrounds of the two periods are important factors to formulate a policy. At the beginning of Clinton's, the situation of finance was terribly bad. Both deficit budget and the rate of unemployment are on a high point. The government had to do every effort to handle those problems in order to relieve the pressure of inflation. This means that the basic aim was to control and reduce deficit budget efficiently. It was the core of their fiscal policy. Fortunately, the situation was getting better when President Bush came into power. The new government took over lots of surplus from the former one, but the prosperity of economy had declined after high-speed development for many years. Contrary to its predecessor, President Bush had to make a reasonable plan to make good use of abundant surplus. The most important goal of the government is to get the economy out of recession and meanwhile, it is also the starting point of fiscal policy.The types and characteristics of two fiscal policies are totally different. In order to achieve the aim of cutting down the federal budget deficit completely, Clinton Government chose the tight fiscal policy that the government reduced its spending while increased tax. On the contrary, Bush Government chose the expansionary fiscal policy to reduce the federal budget deficit which means to reduce tax and increase government spending at the same time .However, when comparing with the traditional tight fiscal policy, the policy taken by Clinton is not simply cutting down government spending but a"structural"one which tried to reach the balance between increasing and reduction of government spending. This policy stressed on reducing government spending, meanwhile, it pays much attention to supply the short-term economic stimulation and to increase long-term public investment. Similarly, the expansionary policy taken by Bush Government is different from the traditional one .It contains not only the traditional reducing tax policy, increasing government spending but also many direct policies of stimulating economy.Finally, the effects of two fiscal policies are not the same .Due to a number of objective reasons, the effect of tight fiscal policy used by Clinton Government was not as good as anticipation. However, as a result of 10 years high speed development, the results were clearly to see. Though the expansionary fiscal policy to Bush government was set up for a good reason, it still played an opposite role in improving the economy. In recent years, the economy of the U.S. is going to get to a right track after Bush won his second election.In conclusion, since the 1990s, the fiscal policy of the U.S. has made a positive example to our country.·Adjust to fiscal expending system of government .It can deal with the insufficient of both effective demand and effective supply. ·Take advantage of expansionary fiscal policy effectively. Make a combination of reducing deficit and spurring economy.·Make good use of monetary-fiscal policy.·Reform tax system, reduce burden of state-owned enterprises ,expand domestic demand .