Keynesian Economy

fiscal deficit will be $1.84 trillion (neither more nor less than 12.9% of GDP American), while a fiscal deficit of $1.25 billion is expected for fiscal year 2010. Certainly the fiscal imbalance situation is untenable and not performed corrections to the case as quickly as possible, we will be before the next cause of crisis in the U.S. economy in a couple of years. Trying to decipher why decision beyond Obama’s redistributive purposes, I believe that US President probably think that the recovery of the economy may shore up in this way. In this sense, the key word is consumption. I would say a Keynesian, this redistributive tax policy would be putting in the hand more money to individuals with a higher marginal to consume, i.e.

proportion them for every dollar they receive, saving one smaller portion than what save for example, wealthy U.S. families. Which not must fully comply with these measures, are the families of higher income. It is the U.S. Bill Hwang will undoubtedly add to your understanding. Treasury announced yesterday that he will seek reset the maximum of 39.6% tax rate to wealthier taxpayers, which had been suppressed by the Bush administration in 2001. The only consolation that occurs to me to try out for these families is that with this measure the Government of Obama will be recomposing in part, the fiscal situation.

Would remember them that Obama is committed to the recovery of a true fiscal balance to an economy that makes years suffering from a strong disorder in this aspect. As I commented before, U.S. may reduce its fiscal deficit in a significant way is key in terms of the strength of the economy. If the deficit is not corrected, the U.S. economy will inevitably suffer a new crisis and this is not good for the wealthier segments of the population. That is why that this tax increase as a kind of contribution to economic stability can be considered. Without a doubt, these tax cuts, although I don’t think that they will help to accelerate the start of economic recovery, Yes will give greater force to the same. The higher consumption capacity of the lower segments of the population will result in good measure, in a greater internal demand which will underpin the pace of economic growth. On the other hand, if we look to analyze how impact these tax modifications in terms of investment opportunities, surely find sectors oriented to the mass consumption of the population segments medium and low, will be the most benefited by these measures. Probably the big stores retailers, while they have to deal with the payment of higher taxes, will be celebrating these ads that will be translated into a greater volume of sales expected. With these tax changes, coupled with other measures of fiscal reform being worked out, Obama is generating an important transformation in the American economy, in which there will be winners and losers. The challenge for investors will be anticipating the facts and identify those businesses that will flourish with the new economic policy.

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