Monday, May 04, 2009

 

Recovery Watch: Shift in direction not unusual

Increased levels of investment in certain programs through the American Recovery and Reinvestment Act and the Fiscal Year 2010 Budget Resolution passed last week by the U.S. House and U.S. Senate reflects a shift in priorities under the Obama Administration. In recent history, it has been common for a sweeping change in budgetary and fiscal direction during the first year of a new President’s term. During their first seven months, Presidents Ronald Reagan, Bill Clinton, and George W. Bush all signed the most significant economic legislation of their presidencies.

Reagan’s Economic Recovery Act included tax cuts, regulatory relief, higher defense spending, and tight monetary policy to control inflation. After several years of increasing deficits, Clinton changed course and proposed one of the most aggressive deficit reduction programs in history. Clinton’s plan coupled tax increases with modest spending reductions. Bush’s tax cuts, which sought to spur economic growth by putting money in the hands of consumers rather than government, were included as part of his first budget proposal.

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