Macroeconomic Policy Initiatives

1. Macroeconomic Policy Initiatives by Democrats and Republicans Presented by http://schoolofresearch.org/ http://schoolofresearch.org/

2. Background • In the United States of America, Democrats and Republicans constitute the main political parties and ideologies adopted. • Parties have opposing approaches in solving the macroeconomic policy problems in the country. • All presidents in the United State’s history have come from either of the two parties. • Democrats are mainly liberals who prefer greater control by the federal government on economic and social issues • Republicans are mostly conservatives who discourage the federal government’s involvement in these aspects. http://schoolofresearch.org/

3. Approaches on Tax Reform • Tax remains one of the major sources of revenue for the United States government. • Corporate taxes influence the prices and the demand of goods and services. • Democrats believe there should be no common tax rate on all the earners. • They prefer a system to ensure that higher earners are taxed more heavily. http://schoolofresearch.org/

4. Approaches on Tax Reform • Republicans prefer a tax system that ensures that a tax cut applies equally among all citizens, whether they are rich or poor.. • Policy stems from the attitude that a decrease in income taxation has the ability to encourage investment and growth in the GDP http://schoolofresearch.org/

5. Approaches on Labor Market Conditions • Labor sector is a key driving force in any economy. • Growth in the labor market indicates improving economic performance. • Democrats adopt a pro-social policy and favor an increase in the minimum wages. • They also believe that this minimum should be reviewed upwards regularly to protect the public against unfair wages. http://schoolofresearch.org/

6. Approaches on Labor Market Conditions • Republicans favor the freedom of markets, such that the market sets its own equilibrium prices and wages • Argue that this approach is more sustainable than interference • Oppose the manipulation of wages for employees, especially their increase. • Argue that an increase in the minimum wage causes an increase in the production costs and a reduction in the profits. http://schoolofresearch.org/

7. Approaches on Environmental Issues • Democrats are known for environmentalism. • Policies are geared towards ensuring that the environment is well-protected and is safe for nature. • Support the use of trains and efforts to minimize the amount of land used for roads. • Hold the view that protecting the environment rests in the hands of both the government and local communities. http://schoolofresearch.org/

8. Approaches on Environmental Issues • Republicans are also supporters of environmental efforts. • Environment is a sensitive issue, limiting the adoption of controversial policies by both U.S. parties. • A number of legislations under Republican governments demonstrate this attitude. • The Environmental Protection Agency (EPA) was established under the Republican president, Richard Nixon. • Common stand exists between the Republicans and Democrats on environmental issues. http://schoolofresearch.org/

9. Approaches on Fiscal Policy • Democrats believe in the provision of social services as a way of ensuring economic equality. • Spend more on social services than on military projects. • Evident in high expenditure on Medicaid, social security, and other welfare programs. http://schoolofresearch.org/

10. Approaches on Fiscal Policy • Republicans prefer cuts on expenditure on projects such as Medicaid, social security, and other welfare programs. • Prioritize security and the private sector, at the expense of social programs and efforts to close inequality gaps. http://schoolofresearch.org/

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