Role Government: The Federal Government Fiscal Policy

Role Government: The Federal Government Fiscal Policy Case Assignment Resources: The U.S. Government Printing Office Published a "A Citizen's Guide The Federal Bugdet." While recent years, information federal budget.

The Role of the Government

The most important role of the federal government is represented by properly managing the country's resources and establishing a balance between the budget's revenues and expenditures. The money allocated to different types of expenditures reveal the government's interest in different activities. Same as in the case of most countries, the U.S. budget allocates the largest proportion of its resources to social security and to defense programs. Therefore, social security receives 20%, while the defense sector receives 19% of the budget. Expenditures on health care and similar activities receive 21%.

This reflects the social orientation of the state and the interest of the government in providing different types of social services. The high level of defense expenditures reveals the government's interest in national security. This situation is attributed to the numerous terrorist threats that the U.S. is confronted with. The country's international strategy also requires increased defense expenditures.

The most reduced expenditures are represented by those of the general government. These expenditures reach 0.6% of the budget. This means that the government has correctly assessed its financial requirements.

Regarding the budget revenues, the largest federal tax receipts are represented by individual income that reaches 42%. Social security and insurance reach 40%, while corporate income reaches 9%. In my opinion, these budget priorities and revenues sources are not quite correct. This is because there is too much difference between the revenues from individual income and those from corporate income. Obviously, most of these revenues should be supported by individuals, but not in such a large proportion in comparison with corporations and companies. In addition to this, the efforts made by individuals to pay their taxes seem to be considerably higher than those made by these companies.

2. The country that allocated the smallest share of its GDP to government spending in 1998 is represented by the U.S., reaching 32%. The country that allocated the largest share of its GDP to government spending is represented by France, reaching 52%. Therefore, although the U.S. has a larger administration than these industrialized countries, it is more flexible and requires a smaller share of the country's GDP (GPO Access, 2008).

3. The chart reveals that the U.S. GDP growth rate reaches 2%. Recession is considered a period of general economic decline, usually a reduction of GDP of at least two consecutive quarters. In addition to this, recession determines stock market reductions, increasing unemployment, and declines in most important markets (InvestorWords, 2010). Some of the causes that determine recession are attributed to the management of the federal government, the Federal Reserve, and other important members of the central administration.

Although the U.S. has reported small GDP growth, the country is not experiencing a recession. This small GDP growth means the current strategies are correct, but that the government's efforts should be increased. However, there are certain tools that the government and the Obama administration can use in stimulating economic growth. The areas that require the government's attention are represented by the most important sources of budget revenues. These refer to individual income and corporate income.

In other words, the government should focus on stimulating these income sources in producing increased levels of revenues. The revenues from individual income can be increased if unemployment is reduced, and if individuals could have higher salaries. It is obvious that the government cannot influence the wages in the private sector. But the authorities can influence the level of unemployment by developing and implementing different strategies intended to help companies hire more people.

In addition to this, the government should also focus on increasing the revenues from corporate income. It is not recommended that the government influences the activity of companies. However, the government can focus on establishing an environment that helps these companies improve their activity. This leads to higher profits, and higher corporate income.

4. The opinion of most specialists in the field is that the government should reduce its intervention in the country's economy. They consider that the market and its economic agents have the necessary mechanisms required to solve the problems that it is confronted with. However, there are situations where these tools do not suffice in order to reduce the effects of recession. This is mostly because the causes and effects of the crisis affect the international markets.