Monetary And Fiscal Policy In US Essay Sample For College


The government of the US plays a significant role in the American economy, which is the backbone of the country’s success and also has a role in the control of firms in the industry so as to check on the supply and pricing of commodities. It is responsible for the management of all the economic activities in-country.

The government employs two important implements in realizing these objectives: a fiscal policy, that determines how much tax should be done on industries, individuals, or any other businesses in the country.

It is also used to set and check on the appropriate spending levels of the country; monetary policy finds its applicability in the supply of money within the nation.

Both of these policies work together or rather in a kind of mix in order to allow for sustained growth and stabilization of prices. The government is therefore faced with the challenge of getting a fair mix of both monetary and fiscal regulation, which would bring about the targeted results.

Friedman (2001) This should be done wisely since the poor combination of the two leads to economic depression or recession, which can easily bring down the nation.

This task is not, and there have been failures every now and then, which are addressed appropriately. The main objective of monetary policy, however, is to ensure that there is low inflation and a stable expanded sustained economic growth, while that of fiscal policy is mainly to control budget deficits.

Fiscal policy

It was noted that the fiscal policy is responsible for the control of taxation in the country as well as setting the most appropriate levels of spending of the state towards its citizens or towards other programs which include donations, giving loans and development projects in other countries so as to eliminate or control budget deficits.

When there is cash- flow deficit in the country, fiscal policy is applied to address the issue. Public spending is reduced on matters such as discretionary programs and national defense. The implication of this would be reduced inflation expectations, which would lead to expanded net interest outlays.

In case there is a budget deficit, tax receipts can be increased by hikes in legislated tax or can be boosted by robust growth in the economy or related capital gains. Budget surpluses or deficits measures such as increasing or decreasing legislative taxes or withdrawal of net interest out can not be used as bases for performing macroeconomy policies or for predicting the outcomes of the economy since they are unreliable.

These uncertainties of the budget deficit form a poor foundation for laying macroeconomic stabilization as well as an improper way of determining the appropriate monetary/fiscal mix.

Elimination of budget deficit, which is fiscal policy, has a wide range of financial and economic outcomes, among them an increase in net government saving and decreasing the deficits of the current accounts. Generally, the contractional fiscal policy by the government is used to control budget deficits by increasing taxes and reduce spending (James, 2004).

Monetary policy

Monetary policy, as noted earlier, is mainly concerned with the supply of money. In order to tackle the issue of price stability in line with economic sustainability and growth than an unquestionable knowledge on the role of monetary policy in the process of inflation is required. Inflation is realized when too much money is let to circulate into the economy.

This is because it increases the relative demand for products, which is in excess of the present production capacity. It is not realized due to unemployment or by economic growth as perceived by many people. This is evidenced by considering the curve of unemployment rate against changes in demand or supply of products.

At present, inflation has reduced due to hiking economic growth and due to much availability of employment for the citizens and also the limited opportunities for business to raise prices.

Monetary policy can, however, be used to influence fiscal policy on deficit reduction, for example, delaying before lowering interest rates. This would lead to a decline in real money balances though the objective would be reached. This would also lead to an economic recession (James, 2004).

Fiscal policy is superior to monetary policy, although the latter can be used to influence the effects of the former. Taxation provides the money available for spending by the government, and therefore, once the fiscal policy is applied in the economy, the monetary policy which controls the supply of money automatically follows suit. An example of a practical application of in the US in recent years is in the control of deficits. This is illustrated as shown below:

Returning Of Deficits through Fiscal Reform

The United States government has undergone terrible budget deficits in recent times. This deficit is so large that it has overshadowed the previous budget surpluses by far. This is because the government of the US has been spending heavily on military projects. These projects are consuming the earlier saving making the country under an economic recession.

This has not affected the federal government’s budget but also the state and the local governments. As a result of this, the government is seeking loans from other countries so that it can stabilize its economy before it leads to major economic problems such as inflation, crime, and unemployment Friedman (2001).

Due to this, the deficit of the general government is ranked among the developed nations and the third world countries. The country’s borrowing trends have made its debt levels to look similar to those of major industrial countries. The table below indicates the differences between fiscal budgets of the US with other industrialized countries.

international comparisons fiscal fiscal balance and debt

The fiscal policies have certainly been of great valuable importance as a remedy to the recovery of the budget deficit. With the budget projections showing huge fiscal deficits in this decade and the decades to come due to strategies such as decreasing of taxies, huge expenses security and defense details, and the stimulation of economic recovery, then fiscal policies must be applied to control inflation.

The disappearance of fiscal excesses has left the US budget prone to collapse with the retirement workers in the industry, which is set to start at the end of this decade with the effect of pressuring Medicare and social security strategies. These reforms are made possible by the fact that the country had earlier budget deficits because they give a grace period for the increment in taxes, reduction in government spending.

The Costs and Significance of Tax Reduction And Deficits

There has been a great disparity about the fiscal policies and especially tax reduction, and how it has revived the unresolved issue of the extent of fiscal reforms in handling deficits problems. Investment from the private sector, economic inducements, and tax evasion can greatly increase the supply of products to the members of the society. The current government is working hard to help solve the issue of budget deficits.


Reliability is important in ensuring economic growth control of the country. The government must be able to come up with the appropriate monetary and fiscal regulation policies mix since the two policies go together. However, emphasis so is on fiscal policies that control the amount available for spending as well as the tax that should be levied from the subjects of the government.

This is because fiscal policies address the issue of inflation, which is the core of the whole macroeconomics. The stabilizing issue of the two policies is to adjust the monetary to the fiscal policy. The discussion so far implies that the fiscal problem in the US is very large, but it can still be undertaken.

Further research has shown that it is difficult to obtain the correct monetary and fiscal appropriate name. In recent years, however, there is a progression in the use of monetary policy as the government tries to achieve its goals, which are low inflation, which is important for sustained economic development.


“Federal Reserve Act”2003. Federal Reserve Board. May 14, 2003.

Forder, James. (2004). Credibility in Context: Do Central Bankers and Economists Interpret the Term Differently?”

Friedman, B. M. (2001). Monetary Policy,” International Encyclopedia of the Social & Behavioral Sciences.

Milton, Friedman. (1990). A Program for Monetary Stability. Fordham University Press.

Immigrant Children And Poverty

For some considerable time now, the impact poverty has had on the children of immigrant workers, has gone unnoticed. It may look as if immigrant child-poverty does not merit a lot of concern, for the sole reason that they tend to look even better in their new country than in their former countries.

For example, Rector (2006, P.3) states that the American government has put in substantial efforts in poverty reduction, but still, immigration policies do work directly opposite. Rector states that these policies do rise instead of decreasing poverty.

Conversely, in the US, the rising issue of immigrant child poverty is a matter of national significance. These children who now make up to twenty percent of school-going children are a rapidly growing section of America’s population.

Immigrant child poverty poses considerable social predicaments because it is related to several long-lasting school and development linked difficulties. These problems, in turn, transforms into poor socio-economic effects in adulthood.

It is therefore important, to know why this situation is increasing because the children are America’s labor force of the future. As shown by Moore et al. (2009, p.2), from 2000, the issue of poverty among immigrant children has been on the upward trend. Moore et al. (2009, p.2), further states that the analysis done by NCCP (national center for children in poverty), shows children with immigrant parents as the most affected by poverty.

“Since the immigration reforms of the 1960s, the U.S has imported poverty through immigration policies that permitted and encouraged the entry and residence of millions of low-skill immigrants” (Rector, 2006, p.3). This has had major negative effects on the children of these immigrants.

Among other effects, poverty among immigrant families has made their children lack proper growth development. Children from poor immigrant families tend to display lower levels of attainment as matched up against those from rich families.

Children from these poor families tend to leave schooling at the early stages and with poorer grades. They are also born underweight; this, in turn, gives rise to early death and chronic ailments later in life.

Poverty among children from immigrant workers does lead to shortened life spans, malnourishment, and constant illness. This is brought about by the lack of basic necessities. Among these necessities are medicines, food, and medical services. They also lack proper schooling and thus lack relevant information on the necessary information about safety, educational attainment, and necessary survival skills.

The actions needed to address the issue of immigrant children poverty lies in governments and their policies. Many governments do not take the issue of immigrants seriously, and therefore, there is no enough support directed to immigrant families. The issue of support should be addressed from the implementation of policies on immigration.

For example, Rector (2006, p.13) states that a lot of unskilled immigrants do enter the US every year. He says that a lot of them have high probabilities of out-of-wedlock childbearing. This, he states he is a major indicator of poverty and welfare dependency. Therefore if this problem is not tackled at its root cause (during immigration), then it will not be contained; because unless immigration policies are altered, the current trends will certainly continue.

Negligent border enforcement that makes it possible for millions of unskilled immigrants to cross should be checked. On the other hand, immigrants who are already in the US and are residents should be granted equal rights as every other citizen and thus, the right to proper education, health, employment, and other social services.

Additionally, the recognition of the fact that low skill immigration causes poverty and the fiscal burden should make “the US government increase the average skill and education levels of incoming immigrants” (Rector, 2006, p.14).

The issue of immigrant poverty is a thorn in the flesh of the American government. The consequences pertaining to this issue on individual families and the society are embodied in the high costs this issue has on American society.

Whereas immigrants are to be net contributors to American society by paying tax exceeding costs and benefits they get, they tend to be totally dependent on the government for the provision of basic necessities. These include “direct personal benefits such as welfare, social security benefits, Medicare and education” (Rector, 2006, p.8).

The rise in poverty as a result of immigration has imposed costs that are outside the existing welfare benefits. This is consequential in the sense that, “magnifying the public perception of poverty, immigration can create political leverage for new anti-poverty programs. Immigration-induced poverty can easily have spillover effects resulting in new government entitlements to all poor Americans” (Rector, 2006, p.30).

Individually, it is noted that low education and poverty in immigrants and their children make them entitled to welfare aid. Per year every poor immigrant in the US gets about 4,461 dollars in welfare aid. This is only a small portion of expenses the government incurs on poor immigrants. Rector (2006, p.29), further states that “on average each poor immigrant creates a net cost to the government of $89, 000 over the course of his or her life”.

Immigrant child poverty is ever-growing in the US, with over 1 out of 5 children living poor. It poses considerable and ever-rising social problems. This affects their development, health (Medical care), and education, which culminates in long-term poverty (Moore et al., 2009; p.8).


Moore, et al. (2009). Children in poverty: Trends, Consequences, and Policy Options. Connecticut: Research Brief Publication.

Rector, R. (2006). Amnesty and continued low-skill immigration will substantially rise welfare costs and poverty. Massachusetts: Heritage Foundation.

Rector, R. (2006). Importing Poverty: Immigration and poverty in the United States. Massachusetts: Heritage Foundation.

Racism And Discrimination Towards African-Americans


Racism and discrimination of the African-Americans in the United States of America have been a major issue that began way back during the colonial and slavery era. One would think that after such a long period of fighting for human rights and the changes made in the constitution to make life better and equal for the black Americans, discrimination would be outdated.

On the contrary, the issue continues to gain weight, especially in the police force. For a long time, African-Americans have been victims of discriminatory racial profiling by the police.

Racism is clearly seen in more of modern socioeconomic inequality, which is in the education system, employment and politics, and in some cases, housing. Racism against blacks is mostly usually rooted in the fact that the white people are usually perceived to be superior and the blacks well, relatively inferior.

Racial discrimination

Driving as an African-American is sometimes a nightmare due to discrimination and harassment by the police. This problem is not something new to the people of color as it has been in existence since the era of slavery. The number of African-Americans that are pulled over by the police and frisked is way higher than that of the white Americans. A study showed that in New York alone, 80% of the people pulled over by the police are blacks and Latinos.

Eighty-five percent of this number was frisked as compared to only 8% of the white people stopped. In 1998, 35 years after the civil rights legislation, that is the civil rights act, US army sergeant Rossano V. Gerald and his son were driving through Oklahoma. Throughout this drive, they were stopped not just once but twice. In addition to this, they were greatly harassed on their second stop.

Not only did the stop last approximately two and a half hours, but they were locked in a car with fans blowing hot air and no air conditioning. Moreover, they were told that if they tried to escape, the dogs would attack. It is clear that no person of color is generally safe from these acts of harassment.

It does not matter whether one is a law-abiding citizen with a good job, the car they drive, their age, or which parts of the country they live, as long as their skin tone is black, they will be subjected to this kind of treatment (Nunnally, 2012).

It is mostly perceived that drug trafficking is a crime mostly committed by minority ethnic groups. The abuse of power by law enforcers can be blamed on the government war against drug abuse. It is apparent that the war on drugs in the United States targets blacks and Latinos.

The police, in the name of fighting drugs, tend to stop people according to their skin color routinely. In the past, there have been many African-Americans who have been arrested because of drug trafficking and drug offenses. This has fostered the perception that blacks are mainly the offenders in this particular crime.

Consequently, the police stop more African-Americans, while the white drivers receive less attention. In addition to this, once arrested, 21% of African-Americans receive mandatory minimum sentences, and 20% are imprisoned (Alexander Jr, 2005).

Racial profiling by the police is mostly seen in the manner that they treat African-American suspects and crime offenders. More often, the police are seen using deadly force when dealing with people of color. Moreover, according to a certain poll, 45% of African-Americans said that the police have discriminated against them while only 7% of the white Americans could say the same.

There are numerous cases of people of color that have been brutally gunned down by the police on the streets. This fostered the development of ‘the stolen lives project’ (Amaranto, Steinberg, Castellano & Mitchell, 2003). This project came into being after the justice department failed to provide a detailed report on how the police use force.

This article gives a list of lives that have been taken by the police as they abuse power and get to get away with it because of the lack of evidence against them (Allah, 2006). There are cases of the police killing people who do not even resist arrest; they make them lie on the ground and blatantly shoot them.

Many are the times that African-Americans have taken to the streets to demonstrate, taking the Ferguson case as an example, where Darren Wilson shot Michael Brown. Michael and his friend Dorian Johnson had just stolen Cigarillos from a convenience store when they got an encounter with Wilson, the police officer (“Don’t Shoot,” 2014).

He confronted the two young men, and they got into a fight as Brown struggled to get the gun from officer Wilson, and this struggle led to the shooting of Brown. This particular incident brought uproar from the African-Americans of Ferguson. Brown was unarmed, and his friend, Dorian, claimed that right before Wilson pulled the trigger, Brown had put his hands in the air and shouted, “don’t shoot”(Perez, 2015).

A report released later showed that there was a struggle between the victim and the officer, but no proof of Brown uttering those words; thus, the claims were dismissed. On the brighter side of this incident, further investigation was done to highlight the reasons behind the mistrust between blacks and the police.

The report showed that police blatantly abuse the Constitutional rights of the people, specifically the African-Americans, in Ferguson. It showed that there had been cases of mistreatment by the police, courts, and the municipal government (Karl, 2004). This clearly showed why the small town exploded and went on protesting in the streets for weeks.

The African-Americans population is also discriminated against when it comes to employment. The number of jobless African-Americans is relatively higher than that of their white counterparts. This has fueled a lot of tension between the Obama administration and the black congressional caucus.

Blacks are generally viewed as less intelligent and hardworking and are mostly tied to violence and gang-related activities. They have fewer job connections in their communities, and their credit history is not as good as required (Alexander Jr, 2005). Most companies tend to ask for credit history, which is not good for those who have been unemployed; therefore, it is relatively hard for some blacks to get employment opportunities.


Racism and discrimination are issues that are still in existence in the United States. The department of justice should keenly look into the amount of prejudice and discrimination that African-Americans face. The fact that police officers in Ferguson have to wear cameras is a positive start, but they should work to foster a community where this is not necessary. The government should also ensure that jobs are equally available for all races. This will be a step towards getting rid of the unnecessary evil of racial discrimination.


Alexander Jr, R. (2005). Racism, African-Americans, and social justice. Lanham: Rowman & Littlefield Publishers.

Allah, M. (2006). Police brutality and Stolen Lives. New York Amsterdam News. 33-42.

Amaranto, E., Steinberg, J., Castellano, C., & Mitchell, R. (2003). Police stress interventions. Brief Treatment and Crisis Intervention, 3(1), 47.

Don’t shoot. (2014). Christian Century, 131(26), 7.

Karl, J. (2004). Police-Black community relations in postwar Philadelphia: race and criminalization in urban social spaces, 1945-1960. 89, 118-134.

Nunnally, S. C. (2012). Trust in Black America: race, discrimination, and politics. New York: NYU Press.

Perez, E. (2015). Justice report finds systematic discrimination against African-Americans in Ferguson.

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