The Next Economic Crisis : War And Terrorism

1578 Words7 Pages
Katherine Vidal
Professor Steven Hall
Accounting 5312
February 25, 2017
The Next Economic Crisis: War and Terrorism
War Finance “the fiscal and monetary methods that are used in meeting the costs of war” (www.britannica.com). There are 4 ways that the government can finance the war: taxation, borrowing, printing, and/ or increasing the currency source by making new money (Capella 22-24). How the government finance the war depends on the President and the Congress seated during the time of war. They decide accordingly by looking at the political and economical effects of their actions (“Cost of War” 4). War can cause vast tension on the federal government’s finances and to the public. Most of the time the fiscal budget allocated to funding
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They will need the full public support as evidenced by what happened in WW II (Flores-Macaas et al 837). For example, the government increased taxes and sold bonds to the public in WW II (Flores-Macaas et al 837). Whatever the case is, it will cause financial burden in America that will continue to go on, post war (Flores-Macaas et al 837). As an example, the article “Political Parties at War: A Study of America War Finance, 1789-2010” stated the debt that the Spanish-American Telephone Tax cost America lasted 108 years and only ended in 2006 (Flores-Macaas et al 837).
World War I: Expenditures World War I (WWI) was funded by loans, but mostly by taxation (“Financing the War” A4). The Congress passed the “War Revenue Act 1917” which increased the income tax to an extent level (“Full Text of War” 5). The act raised money to aid the federal government in their war effort (“Full Text of War” 5). According to the article “Financing the War”, after the war “the total gross war expenditures amounted to $ 30,177,000 of that $ 9,384,000 are from tax receipts and other proceeds” (A4).
World War II: Expenditures The government was already spending money even before President Roosevelt announced United States involvement in the war by helping the Allies (American Press 4). The Government spent 42 billion dollars in supporting them (American Press 4). The combination of taxation and war bonds funded the war effort after the attack on Pearl Harbor. Twenty- five to fifty
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