Macroeconomics Over the Last Several Term Paper

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Since their introduction in the early 2000s, the tax cuts have diminished the nation's tax bill by hundreds of billions every year. Over the next ten years, they are expected to add $3.6 trillion to the debt. Without these cuts, our medium-term budget (say, over the next decade) would be sustainable. As long as new revenues are off-limits, attacking the deficit is equivalent to attacking the functions of government. That gives the anti-deficit argument strong ideological support from small-government advocates. But there are others who are not motivated by anti-government ideology but are misguided nevertheless. The Recovery Act, with a price tag of about $800 billion, was a historically large stimulus, and it was wholly paid for by borrowing. But by 2012 it will add less than 0.5% to the deficit-to-GDP ratio, and nothing to the growth in the debt (it does add to the level of debt, of course; in other words, it raises the share of debt to GDP, but it does not contribute to the growth in that share). The Bush tax cuts, on the other hand, which are essentially permanent in terms of ten-year budget windows, keep adding to both annual deficits and the growth of the debt -- on the latter point, they add 20% to the debt-to-GDP ratio this year and, if they remain in place, 34% by 2019."

This is significant in showing how the stimulus package was not a main contributor to the national debt. Instead, it was two wars, a rough economy and the Bush tax cuts.

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As a result, this is illustrating how government spending is good for growth by: providing added amounts of stimulus (when the economy is facing a number of challenges). This is because, it is not same as other categories (based their unlimited ability to tax). This makes it easier to deal with high levels of debt and continue to provide the assistance that everyone needs. The combination of these elements, are showing how government spending is good for growth. Therefore, the impact of the stimulus package is that it helped the economy to stabilize (during the middle of a credit crisis which was becoming worse)......

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