Each presidential administration cabinet has its own view on addressing fiscal policy. They have to decide to which plans are better for the economy given the time period. Right now we are faced with a few challenges; do we increase the deficit and have country to crawl out of recovery? Do we try to fix the problem with out debt? Should we increase government spending and at the same time lower the tax rate? These key issues will play a significant part in the upcoming election. Taking into account government spending, taxation, structural factors and the deficit, I will help advise President Bush on fiscal policies for his second term based on the policies during his first term and they events occurring with the United States.
September 11th 2001 was a big cause of the recession that occurred during the first part of president Bush's term. This event called for the immediate spending in Defense and Homeland Security. With the war on terror and the risk of a future terrorist attack, the government had no choice but to spend over 750 billion dollars in national defense alone in 2002 and 2003 ("Economic"). Spending this money was inevitable, but other policies during the presidents first term could have handled in a different manner. With more spending in Homeland Security and the War on Terror, the government would need a greater source or revenue to maintain a balance in the budget. But President Bush had promised tax cuts during his campaign. These tax cuts have brought this country into a deficit since 2002 with the amount of debt owed increase each year. Although the tax cuts have helped the economy grow, including nine straight months of gross domestic product growth, it is also causing our debt to increase to over seven trillion dollars ("Overview"). Before going into what the Bush administration should do about the state of the current budget and taxes, I will explain why the deficit should be considered.