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Activist Fiscal Policy to Stabilize Economic Activity

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Publication Date: August 2009

Publisher(s): Tax Policy Center

Author(s): Alan J. Auerbach; William G. Gale

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Economics (Economic theory)

Keywords: Economic Development; Federal Budgets & Fiscal Policy; Income and Wealth Distribution; Tax Distribution and Economic Trends

Type: Report

Abstract:

Facing the most severe recession since the 1930s, and probably the longest as well, the U.S. government has adopted an aggressive countercyclical fiscal policy stance, beginning with the ?Economic Stimulus Act of 2008? in February of that year, shortly after the recession?s designated starting date, and followed one year later by the much larger ?American Recovery and Reinvestment Tax Act of 2009.? These two bills, adopted under different presidents, both contained temporary tax rebates for households and temporary investment incentives for firms, indicating at least limited bipartisan acceptance of these approaches to countercyclical stimulus.