President's Dilemma Speech

Topics: Inflation, Macroeconomics, Tax Pages: 3 (979 words) Published: March 23, 2014
President’s Dilemma Speech
Our nation is currently in the middle of grim economic circumstances of stagflation. Inflation is high, and getting higher. Unemployment is high, and getting higher. While all of this happens, GDP continues to drop. If nothing is done about this, our nation is sure to suffer worse consequences than we have already been forced to endure. Our economy will be flushed down the toilet. This new economic policy is the answer to our prayers. With the perfect blend of fiscal and monetary policy, we will achieve our goal of curbing inflation and will reduce the price of goods and services. Although GDP will initially go down because of the decrease in personal income, overtime the reduction in prices will eventually lead to an increase in consumption, which will help to stabilize the economy overtime. Overtime, we will see an increase in GDP and employment rates. This is exactly what we need in this time of economic crisis.

The first part of our economic policy is to raise taxes and decrease government spending. We will raise increase the income tax for those making more than $200,000 by 10%, and the income tax on those making between $150,00 and $200,000 annually by 5%. We will also put a $0.39 tax on cigarettes. The tax on cigarettes will not only increase the government’s revenue; it will also discourage the American people from partaking in such a dangerous habit. We will decrease government spending by getting rid of the US penny. We waste around $120 million per year producing pennies. This will increase government revenue and take some extra money out of the economy, causing prices to fall. This will also cause the government budget to become a surplus. This will decrease the demand for loanable funds, decreasing interest rates. Unfortunately, this will result in a phenomenon known as crowding in. When crowding in occurs, the government borrows less money and as a result, private investment increases. Because private investment...
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