Fiscal and Budget Policy

August 1, 1962

Report Outline
Tax Reduction and Threat of Recession
Variations in Budget and Fiscal Policy
Budget Policies of European Countries

Tax Reduction and Threat of Recession

Current Debate About Anti-Recession Tax Cut

Advocacy of immediate reductions in individual and Corporation income taxes to reverse the current slow-down in business activity has given rise to wide discussion of federal fiscal and budget policies. The government in-curred a $6.3 billion deficit in the fiscal year which ended June 30. A tax cut large enough to bring about the de-sired economic effects would produce a still bigger deficit in fiscal 1963. The only way to hold down that deficit would be to slash expenditures, but drastic cuts in spend-ing might offset the economic stimulus sought from a tax cut.

Main Question in Debate on Immediate Tax Cut

The main question, therefore, is whether a deliberately incurred deficit of substantial proportions is a risk worth taking in the hope that it will ward off a recession that would be more costly to the Treasury and to the country. The question involves the clash between defenders of ortho-dox fiscal policy and proponents of a compensatory fiscal policy, and also differences over the merits of various concepta of budget accounting.

The fiscal and budget policies of Western European countries, credited in part for the present health of their economies, are being studied by American economists to determine if they hold lessons of value for the United States. Different accounting methods appear to simplify the task of budget balancing among the European govern-ments. In this country, on the other hand, changes in budget and fiscal policy have to be weighed against the possibility that they would accentuate an adverse balance of international payments and a prevailing outward flow of gold.

ISSUE TRACKER for Related Reports
Federal Budget and National Debt
Sep. 01, 2017  National Debt
Jul. 12, 2013  Government Spending
May 15, 2012  State Capitalism
Mar. 18, 2011  National Debt
Nov. 14, 2008  The National Debt
Dec. 09, 2005  Budget Deficit
Apr. 13, 2001  Budget Surplus
Feb. 01, 1991  Recession's Regional Impact
Jan. 20, 1984  Federal Budget Deficit
Sep. 09, 1977  Federal Reorganization and Budget Reform
Nov. 24, 1972  Limits on Federal Spending
Jan. 08, 1969  Federal Budget Making
Dec. 06, 1967  National Debt Management
Aug. 01, 1962  Fiscal and Budget Policy
Nov. 27, 1957  National Debt Limit
Mar. 20, 1957  Spending Controls
Dec. 24, 1953  Public Debt Limit
Feb. 13, 1952  Tax and Debt Limitation
Nov. 30, 1949  Government Spending
Jan. 06, 1948  Legislative Budget-Making
May 23, 1944  The National Debt
Feb. 01, 1943  The Executive Budget and Appropriations by Congress
Dec. 27, 1939  Revision of the Federal Budget System
Oct. 10, 1938  The Outstanding Government Debt
Nov. 20, 1937  Budget Balancing vs. Pump Priming
May 02, 1936  The Deficit and the Public Debt
Oct. 19, 1934  The Federal Budget and the Public Debt
Feb. 10, 1933  Extraordinary Budgeting of Federal Finances
Dec. 01, 1932  Reduction of Federal Expenditures
Dec. 01, 1930  The National Budget System
Oct. 02, 1930  Federal Revenues and Expenditures
Nov. 02, 1927  The Public Debt and Foreign Loans
Nov. 15, 1926  Rising Cost of Government in the United States
Feb. 05, 1925  Four Years Under the Budget System
Budget and the Economy
Deficit, Federal Debt, and Balanced Budget
Tax Reform