Deficit Spending After World War II

This idea of reducing taxes to increase investment within the economy sounds like a good idea but hasn’t lived up to its expectations historically. The idea of supply side economics wasn’t a new idea for the American tax code. During the early 1920s, income tax rates were cut multiple times which averaged to a total of most rates being cut by a little less than half. The Mellon Tax Cuts named after Treasury Secretary Andrew Mellon under Presidents Warren Harding and Calvin Coolidge. He believed that changes in income tax rates causes individuals to change their behavior and practices. As taxes rise, tax payers attempt to reduce taxable income by either working less, retiring earlier, reducing business expansions, restructure companies or spending more money on accountants to find tax loopholes. If executed properly tax cuts can actually benefit economic growth, data from the Internal Revenue Service(IRS) showed that the across-the-board tax cuts in the early 1920s resulted in greater tax payments and larger tax share paid by those in the higher incomes. As the marginal tax rate on the highest income earners were cut from 60 percent or more to just 25 percent, the amount that this tax group payed soared from around 300 million to 700 million per year. (See Figure 2) This sudden massive increase in revenue allowed the U.S. economy to rapidly expand during the mid and late 20s. Between 1920 to 1929, real gross national product grew at an annual average rate of 4.7 percent and

When the terrorist attacks occurred on 9/11 it did more than just affect the comfort level of American citizens. It had an all around impact on how this country will be run for years to come. The one economic impact that I will concentrate on is that the attacks, arguably, but directly effected the U.S. GDP (Gross Domestic Product) and how the national budget will be handled from that day forward.

They came, unwarned. On the 7th of December 1941, the Japanese executed a full-fledged attack on Pearl Harbor. They mercilessly created havoc, with attacks that caused the sinking of eighteen American ships, as well as 170 aircrafts. The casualties were dreadful, with 1,177 of those lost lives had been of the crewmen. The very next day, President Roosevelt declared war on Japan, and thus the United States’ involvement of World War II. Americans of every state were absolutely enraged and bent on their will for vengeance against the Asian country. Within the shadows of galvanized America, Robert Oppenheimer had set his infamous Manhattan Project into action. This project was so disclosed that only a limited number of men truly knew of its purpose. The clandestine project held prior securities to the point in which famous scientists had to use codenames in order to visit Los Alamos, even wives were kept in the dark, and only key scientists could bring their wives along with them. (Source D) This project had been the discreet creation of the Atomic Bombs. Time and time again, this topic had never really dissipated, its controversial who, what and whys prompting generations to debate its palpable purpose. Was the aim really focused for the “good of all?” Was it for America’s self-preservation and wish to promptly put an end to all of the suffering? Many Americans to this day still believe and argue for the usefulness of the atomic bombings, that the droppings were justified.

Deficit spending refers to the extent at which the government expenditure exceeds revenue over the financial period. This is the opposite of budget surplus. We may apply the term to an individual, private company or government budget (Brux, 2011).

World War 2 Germany signs the Treaty of Versailles that officially ended world 1. World War 1 was a destruction to human life. World War 1 was viewed as pointless because there was nothing solved and they end the same place they started at. Due to the death toll the United States changed the Foreign Policy to Intervene to Isolation which means that the United States does not get involved with foreign country affairs.

The federal budget deficit is a much discussed and little understood subject in American politics. The current recession has dramatically decreased tax revenues, driving the United States federal government to increase spending in an attempt to stabilize the economy. As a result the current federal deficit is at over $1.3 trillion dollars. This is approximately $47,754 per U.S. citizen or $137,552 per U. S. taxpayer (U.S. Debt Clock: Real Time, 2012).

Faced with the Great Depression and World War II, Franklin D Roosevelt, or “FDR”, brought America through its hardest times. Franklin Roosevelt was brought into to office during one of America's greatest domestic crisis’s, The Great Depression, this was a time when America's economy had a rigorous decline. Roosevelt acted swiftly during these times, and did what he believed was best for America. The United States changed during Franklin Roosevelt's presidency by the creation of a new role for the government in the economy, the nature of presidency changing, and the establishment of the social security act, which is an act that set up a pension system for people who have retired, established unemployment insurance, and created insurance for victims who were involved in work related accidents. This act also provided aid for mothers and children who were in poverty, the blind, and the disabled.

World War II began near the end of the worst financial crisis in American history, the Great Depression. In October 1929 the stock market crashed leading to a economic collapse that would become known as the Great Depression. The depression went on to devastate the American economy throughout the 1930’s until its end in the 1940’s. Around this time, Nazi imperialism and frayed international relationships were setting the stage for the largest global conflict ever. World War II ended the Great Depression through increasing government spending, expanding the job market, and growing the national economy. The New Deal attempted to achieve these goals, but was largely unsuccessful.

With the transition of a new President and Administration one can only think of how our economy will be in the next four years. America is a melting plot therefore we are not always going to agree on where Government spends our money. Some support more spending on education and new construction for roads while others support a less involved government. We have seen in the past that when there’s a high level of government spending our economy blooms. We can benefit from this because we have more move to spend and put back into the economy.

Before World War II the United States had a horrible economy many people weren`t working the country was just getting worse and worse. The United States getting brought into the war was a horrible mistake for the axis but an amazing tragedy and advantage for the United States. Pearl Harbor was a tragedy leaving American lives dead and an army base destroyed. As the men went off to war the women stepped in taking men`s jobs and helping the war effort. After the war the United States economy did a complete 180 and they were left booming.

The New Deal and World War II both had an effect on race relations in the American West. President Roosevelt’s New Deal was an attempt to fix the hardships of the Great Depression. The Great Depression brought about a change in ideology and opinion that made the New Deal possible because of public support to fix the burdens felt by many Americans, not just whites. World War II brought fear, intolerance and increased racism toward minority groups in the West, specifically Japanese and Hispanic. Class and ethnic differences, as well as wartime tension led to growing hostility between whites and immigrants. However, the New Deal and World War II also improved on previous race relations resulting in shifts in Native American communities, ideology and their place in society. Both the New Deal and World War II were large scale, impactful events that shaped race relations negatively and positively during the first half of the twentieth century.

World War II (WWII) had an immense effect on the United States; culturally, economically, and industrially. Although no battles were fought on American soil, the war affected all phases of American life. Among the infinite of changes experienced by Americans during this time, there was a big shift in the industrial complex, a re-imagining of the role of women in society, and economic boost. Social shifts began to shape a new national identity which would change the country forever.

When a government’s spending exceeds its revenues causing or deepening a deficit it is called deficit spending. Deficit spending is only one of numerous tools used to help manage the economy. Deficit spending is presumed to stimulate consumer demand by helping the consumer to obtain more money to spend, in turn, the demand of product will rise. There are advantages and disadvantages to deficit spending that we will discuss further below.

For as long as Americans can remember there has always been a federal deficit. In fact, the only time in American history when there was no federal debt was under president Andrew Jackson, and it only lasted a single year(Wall Street Journal). The federal government never managed to pay off the debt again, although some administrations, like Coolidge’s and Clinton’s, have managed to run brief surpluses(Wall Street Journal). Yet today there seems to be no limit on the debt and deficit spending, and a key question has been pressed into the forefront of politics and fiscal policy, “is

Deficit spending is when purchases exceed income. It is usually attributed to government spending within an economy. Although it can happen to both individual and business, when government spends more and not able to balance the budget, we say it is deficit spending. Deficit spending is created each fiscal year by congress and government because the spending by government causes the growth of the economy. For example, in the United State deficit spending is mainly caused by social, security, and medical cost. Government spends most of its revenue in each fiscal year into this payment. According to Kimberly Amadeo(2017) he said “ most people don’t realize that wars create more deficit spending than the create recession. The war in Afghanistan cost $28.7 billion in 2001.The war in Iraq for deployed military costs $72.5 billion by 2003. In 2008, the total cost grew to $186.6 billion.