5.thieuhutnsnn

8/8/2019 5.ThieuHutNSNN

1/71

THIU HT NGN

SCH NH NC

Nguyen Hong Thang


2/71

Noi dung

Thieu hut ngan sach nha nc Quan iem

Phan loai

Nguyen nhan thieu hut ngansach nha nc

Tai tr thieu hut ngan sachnha nc

N cong


3/71

Tnh trng thieu hut ngan

sach nha ncTrng thai chi NSNN vt thu NSNN

trong mot khoang thi gian

Thieu hut NSNN va n cong comoi quan he mat thiet vi nhau

N cong la mot con so thi

iem. Thieu hut NSNN la motcon so thi ky.

Tong cac khoan thieu hut trong

qua kh cong don lai thanh d


4/71

Top Ten National Budgets (2004)

National Government Budgets for 2004 (In Billions of US$)

Nation GDP Revenue Expenditure Exp / GDP Budget Deficit Deficit / GDP

US (fed.) 11700 1862 2338 19.98% -25.56% -4.07%

US (state) - 900 850 7.6% +5% +0.4%

Japan 4600 1400 1748 38.00% -24.86% -7.57%

Germany 2700 1200 1300 48.15% -8.33% -3.70%

UK 2100 835 897 42.71% -7.43% -2.95%

France 2000 1005 1080 54.00% -7.46% -3.75%

Italy 1600 768 820 51.25% -6.77% -3.25%

China 1600 318 349 21.81% -9.75% -1.94%

Spain 1000 384 386 38.60% -0.52% -0.20%

Canada 900 150 144 16.00% +4.00% +0.67%

SouthKorea

600 150 155 25.83% -3.33% -0.83%

Ngun: www.wikipedia.org/


5/71

Phan loai thieu hut

NSNN theo thi gianThieu hut NSNN trong ngan han:

Chi tieu cong mang tnh thng xuyen

Thue thu cha kp Vay ngan han

Thieu hut NSNN trong dai han: Trong nhieu tai khoa

Cho thay tnh trang suy kem cua khu vccong

Vay dai han

Vien tr khan cap


6/71

Phan loai thieu hut

NSNN theo nguon gocThieu hut c cau:

Chnh phu chu ong

Chnh phu thay oi chnh sach thu,chi

Thieu hut chu ky:

Anh hng bi nhng bien ongkinh te mang tnh chu ky

Cung co the chu tac ong bithieu hut c cau


7/71

Quan iem co iem

Tieu bieu: Adam Smith

Noi dung: Ung ho ngan sach can bang

Chong thieu hut ngan sach vthieu hut NSNN ong ngha vi n

nan. Ganh nang n se don len vai the

he sau.

Quaniem

vethieuhut

NSNN


8/71

Quan iem hien ai

Tieu bieu: J.M. Keynes, P.A.Samuelson

Thi gian: 1929-1930Noi dung:

Chu trng kch thch tieu dung

Ung ho thieu hut Cat giam thue va tang chi cong

Co the in them tien

Tang vay n

Quaniem

vethieuhut

NSNN


9/71

The Keynesian View ofFiscal Policy


10/71

The Keynesian View of FiscalPolicy

Keynesian theory highlights the potential offiscalpolicyasa tool capableofreducing fluctuationsinaggregatedemand.

Following the Great Depression, Keynesians

challenged the view that governmentsshouldalwaysbalance theirbudget. Ratherthan balancing theirbudget annually,

Keynesiansargue that counter-cyclical policyshouldbe used tooffset fluctuationsin aggregate

demand. Thisimplies that the government shouldplan budget deficitswhen theeconomyisweakandbudget surpluseswhen strong demandthreatens tocauseinflation.


11/71

Keynesian Policy To CombatRecession

When an economyisoperating belowits potential output, theKeynesian

model suggests that the governmentshouldinstituteexpansionary fiscalpolicy, by: increasing the governments purchases

ofgoods & services, and/or, cutting taxes.


12/71

AD1

At e1 (Y1), theeconomyisbelowits potential capacityYF.Thereare 2 routes to long-run full-employment equilibrium:

ExpansionaryFiscal PolicyPriceLevel

LRAS

YFY1

P2

AD2Goods & Services

(real GDP)

Expansionary fiscal policy

stimulates demand anddirects the economy to

full-employment

SRAS1

P1

Wait forlowerwagesandresource prices toreducecosts,increasesupply toSRAS2andrestoreequilibrium toE3, at YF.

SRAS2

P3

Keynesians believe thatallowing for the market to

self-adjust may be a lengthyand painful process.

e1

E2

Alternatively, expansionaryfiscal policycouldstimulateAD (shift toAD2)and guide theeconomyback toE2, at YF.

E3


13/71

Keynesian Policy To CombatInflation

When inflation isa potential problem,Keynesian analysissuggestsashift

towardamorerestrictive fiscalpolicyby: reducing government spending, and/or, raising taxes.


14/71

AD1

Strong demandsuch asAD1 will temporarily lead toan outputratebeyond theeconomys long-run potential YF.

RestrictiveFiscal PolicyPriceLevel

LRAS

YF Y1

P3

AD2Goods & Services

(real GDP)

Restrictive fiscal policyrestrains demand andhelps control inflation.

SRAS2

P1

Ifmaintained, thestrong demandwill lead to the long-runequilibriumE3 at a higherprice level (SRASshifts toSRAS2).

SRAS1

P2

E3

R

estrictive fiscal policycouldreducedemand toAD

2 (orkeepAD

fromshifting toAD1 initially)and lead toequilibriumE2.

e1E2


15/71

Chnh phu vay dan chung goi lan ben trong (internal debt).

N noi bo khong tao ra ganhnang cho the he tng lai.

Chnh phu vay nc ngoai goi la

n ben ngoai (external debt).N ben ngoai co the tao mot

ganh nang cho the he tng lai.

Quan iem hien ai:

LernerQuaniem

vethieuhut

NSNN


16/71

Nguyen nhan gay thieu

hut NSNNChnh phu gia tang vai tro cua

mnh p Chi tieu cong gia tang

trong khi thu nhap cong khonghan do chnh phu chu onghoan toan.

Chnh phu chu ong ieu chnhc cau kinh te.

ieu hanh tai chnh cong kem

hieu lc.


17/71

Tai tr thieu hut NSNN

Phat hanh tien

Giam chi

Tang thue

Chong tham nhung (bt ro r)

Vay n


18/71

Tang thue hay vay n ?

Quan iem li ch: Ai hng li t nhng chng trnh gay ra

thieu hut NSNN th ngi o phai ganhchu. Neu thieu hut e au t cho tnglai th nen vay n.

Quan iem cong bang: The he tng lai la the he giau hn hien

tai. Nen vay n. Hn na hien gia cackhoan tra n thng giam i khi thi gianvay ngay cang dai

Quan iem hieu qua: Cach nao t tao ra ganh nang phu troi

va quan ly de hn th chon

Taitr

thieuhut

NSNN


19/71

Vay trong nc hay vay

nc ngoai?Vay trong nc:

De vay; Ap lc tra lai thap (tra

noi te; lam phat, tang thue,) Quy mo nho; Uy tn khong cao;

Khong nhan c t van quoc te.

Vay nc ngoai: (Ngc lai)


20/71

Fiscal Policyandthe Crowding-out Effect


21/71

The Crowding-out Effect

TheCrowding-out effect indicates that theincreasedborrowing tofinanceabudget deficit will push real interestrates up and therebyretard privatespending,reducing thestimuluseffect ofexpansionary

fiscal policy. Theimplicationsofthecrowding-out analysis

aresymmetrical.Restrictivefiscal policywill reducerealinterest ratesand "crowdin" private

spending. Crowding-out effectin an open economy:

Largerbudget deficitsand higherreal interestrates lead toan inflowofcapital, appreciationin thedollar, andadeclinein net exports.


22/71

Increase inbudget deficit

Higher realinterest rates

Inflow of financialcapital from abroad

Decline inprivate investment

Appreciationof the dollar

Decline innet exports

Crowding-Out in an OpenEconomy

An increasein government borrowing tofinancean enlargedbudget deficit places upward pressureon real interest rates.

Thisretards privateinvestment andAggregate Demand. In an open economy, high interest ratesattract foreign capital.

Asforeignersbuymoredollars tobuy U.S.bondsandotherfinancial assets, thedollarappreciates. Theappreciation ofthedollarcauses net exports tofall. Thus, the largerdeficitsand higherinterest rates trigger

reductionsin both privateinvestment and net exports, whichlimit theexpansionaryimpact ofabudget deficit.


23/71

The New Classical ViewofFiscal Policy


24/71


TheNewClassicalviewstresses that: debt financing merelysubstitutes higher

future taxesforlowercurrent taxes, and

thus, budget deficitsaffect the timing oftaxes, butnot theirmagnitude.

NewClassicaleconomistsargue that whendebt issubstitutedfortaxes:

peoplesave theincreasedincomeso theywill beable to pay the higherfuture taxes,thus,

thebudget deficit does not stimulateaggregatedemand.


25/71


Similarly, NewClassicaleconomistsbelievethat thereal interest rateis unaffectedby

deficitsas peoplesavemorein orderto paythe higherfuture taxes. Further, theybelievefiscal policyis

completelyimpotent that it does not affect

output, employment, orreal interest rates.


26/71

AD1

NewClassicaleconomistsemphasize that budget deficitsmerelysubstitutefuture taxesforcurrent taxes.

ExpansionaryFiscal PolicyPriceLevel

Y1Goods & Services

(real GDP)

SRAS1

P1

Ifhouseholdsdid not anticipate the higherfuture taxes,aggregatedemandwouldincrease(fromAD1 toAD2).

However, when householdsfullyanticipate thefuture taxesandsaveforthem, demandremains unchangedat AD1.

AD2


27/71

Quantity of

loanable fundsQ1

S1

Q2

Loanable FundsMarketRealinterest

rate

r1

S2

D2

Tofinance thebudget deficit, the government borrowsfromthe loanablefundsmarket, increasing thedemand(toD2).

Underthenew classicalview, peoplesave to payexpectedhigherfuture taxes(raising thesupplyofloanablefunds toS2.)

This permits the government toborrow thefunds tofinancethedeficit without pushing up theinterest rate.

ExpansionaryFiscal Policy

D1

Here, fiscal policy exertsno effect on the interest rate,

real GDP, or unemployment.

e1 e2


28/71

QuestionsforThought:

1. When thefederal government runsabudgetdeficit, it finances thedeficit byissuingadditional U.S. Treasurybonds.-- Is thisstatement true?

2.When an economyisoperating belowitspotential capacity, Keynesian economistsarguethata. taxesshouldberaisedifthe government is

currentlyrunning abudget deficit.

b. the government shouldcut taxesand/orincreaseexpendituresin ordertostimulateaggregatedemand.

c. government spending shouldbecut and thebudget shifted towardasurplus.


29/71


3. Thecrowding out effectindicates that budgetdeficits

a.will stimulateaggregate demandandsoexert astrong impact on both output &employment.

b.will lead toadditional borrowing and higherinterest rates that will reduce the level ofprivatespending.

4. Newclassicaleconomistsstress that anincreasein government expendituresfinancedbyborrowing ratherthan taxeswilllead to higherinterest rates.-- Is thisstatement true?


30/71

Fiscal Policy Changesand ProblemsofTiming


31/71

Problemswith ProperTiming

Thereare threemajorreasons whyit is difficultto time fiscal policy changes inamannerthat producesstability: It takes time toinstitutea legislativechange. Thereisa time lag between when achangeis

instituted & when it exertssignificant impact. These time lagsimply that sound policyrequiresknowledgeofeconomicconditions9 to 18 monthsin thefuture. But ourability toforecast futureconditionsis limited.

D

iscretionary fiscal policyis likeatwo-edgedsword;it can both harmand help: If timedcorrectly,

it mayreduceeconomicinstability. If timed incorrectly, however,

it mayincreaseeconomicinstability.


32/71

AD0

Consideramarket at long-run equilibriumE0 whereonlythe natural rateofunemployment is present.

Timing ofFiscal PolicyisDifficult

PriceLevel LRAS

Y0Y1

AD1 Goods & Services

(real GDP)

P0

SRAS1

P1

E0

e1

An investment slump andbusiness pessimismresult in anunanticipateddeclinein AD (toAD1).Output falls(toY1)

and unemployment increases.


33/71

AD1

AD0

Aftera time, policymakersconsiderandimplementexpansionaryfiscal policyseeking toshift AD1 back toAD0.

But it will take time toinstitutechangesin taxesand

expenditures. Political forceswill slow this process.

Timing ofFiscal PolicyisDifficult

PriceLevel

LRAS

Y0Y1Goods & Services

(real GDP)

P0

SRAS1

P1

E0

e1

Suppose that shifts in ADare difficult to forecast.


34/71

AD0

By the timeamoreexpansionaryfiscal policyisinstitutedandbegins toexert its primaryeffect, privateinvestmentmay haverecoveredanddecision makersmay thereforebeincreasinglyoptimisticabout thefuture.

PriceLevel

LRAS

Y0Y1Goods & Services

(real GDP)

P0

SRAS1

P1

AD2

E0

e1

Hence, themoreexpansionaryfiscal policymayover-shift

AD toAD2.

AD1

Timing ofFiscal Policyis Difficult


35/71

AD1

AD0

The price level in theeconomyrises(fromP1 toP2)as theeconomyis nowoverheating. Thus, incorrect timing leadstoinflation.

PriceLevel

LRAS

Y0Y1

P2

Goods & Services(real GDP)

P0

SRAS1

P1

AD2

E0

e1

e2

Y2

Unless theexpansionaryfiscal policyisreversed, wagesandotherresource priceswill eventuallyincrease, shifting SRAS

back toSRAS

2 (driving the price level up toP3).

P3

SRAS2


E3


36/71

AD0

Alternatively, supposean investment boomdisruptstheinitial equilibriumshifting ADout toAD2, andprices upward toP2.

PriceLevel

LRAS

Y0

P2


P0

SRAS1

E0

Y2

Policymakersconsiderandeventuallyimplementan increasein taxesandacut in government

expenditures.


AD2

e2


37/71

By the time themorerestrictivefiscal policy takesaffect,investment may havereturned toits normal rate(shiftingAD2back toAD0).

PriceLevel

LRAS

Y0Goods & Services

(real GDP)

P0

SRAS1

AD2

In thiscase, theincorrect timing oftheshift to themore

restrictivefiscal policy todeal with potential inflation throwstheeconomyintoarecession (byovershifting AD toAD1).


P2 e2

Y2

AD1

Suppose that shifts in ADare difficult to forecast.

E0

AD0

Y1

P1 e1


38/71

Why Timing ofFiscal PolicyChangesAre Difficult: A

Summary Becausefiscal policydoes not workinstantaneously, andsincedynamicforcesareconstantlyinfluencing privatedemand, propertiming offiscal policyis not an easy task.

Further, political incentivesalsoinfluencefiscalpolicy. Publicchoiceanalysisindicates thatlegislatorsaredelighted tospendmoneyonprograms that directlybenefit theirownconstituentsbut arereluctant toraise taxesbecause theyimposea visiblecost on voters.

Thereisa political bias towardsspendingandbudget deficits. Predictably, deficitswillbefarmorecommon than surpluses.

Incorrectly timed policychangesmay, them-selves, beasourceofeconomicinstability.


39/71

AutomaticStabilizers

AutomaticStabilizers:Without any new legislativeaction, they tend toincrease thebudget deficit (orreduce thesurplus)during arecession andincrease thesurplus(orreduce thedeficit)during aneconomicboom.

Themajoradvantageofautomaticstabilizersisthat theyinstitutecounter-cyclical fiscal policywithout thedelaysassociatedwith legislativeaction.

Examplesofautomatic stabilizers: Unemployment compensation Corporate profit tax Aprogressive income tax


40/71

Fiscal PolicyasaStabilization Tool:

A Modern Synthesis


41/71

Fiscal Policy:A ModernSynthesis

Amodern synthesis viewabout theefficacyoffiscal policyemergedfrom theeconomicdebatesofthe 1970sand 1980s.

Thekeyelementsofthat vieware: Propertiming ofdiscretionaryfiscal policy

isboth difficult toachieveandofcrucialimportance.

Automaticstabilizersreduce thefluctuationofaggregatedemandand help todirect theeconomy towardfull-employment.

Fiscal policyismuch less potent than theearlyKeynesian viewimplied. Each ofthe 3 demand-sidemodelsoffiscal

policyis valid undersomecircumstancesbutnot others. Thus, all 3 are necessaryfora

comprehensive viewoffiscal policy.


42/71


1.Whyis the propertiming ofchangesin fiscalpolicysoimportant? Whyisit difficult toachieve?

2. Which ofthefollowing will makeit moredifficult

toinstitutediscretionarychangesin fiscal policyin amannerthat will exert astabilizing impact ontheeconomy?a. the lengthy time periodrequiredforpassage

ofafiscal policychange undera politicalsystemwith substantial checksandbalances

b.improvementsin forecasting devices thatprovideinformation about thefuturedirectionoftheeconomy


43/71


3. Both thecrowding out and newclassicalviewsindicatefiscal policyissubstantiallyless potent than theKeynesian viewimplies.-- Is thisstatement true?

4. Automaticstabilizersare government programsthat tend to:a.bring expendituresandrevenuesautomatically

intobalancewithout legislativeaction.

b.shift thebudget towardadeficit when theeconomyslowsbut shift it towardsasurplusduring an expansion.

c.increase taxcollectionsautomaticallyduringarecession.


44/71

N NC NGOAI TAI

VIET NAM


45/71

N nc ngoai cua

quoc giaSo d n goc va lai tai mot thiiem.

Thanh phan:

N nc ngoai cua khu vc cong (Nnc ngoai cua Chnh phu + N ncngoai cua chnh quyen cap tnh + Nnc ngoai cua doanh nghiep nha nc)

N nc ngoai cua khu vc t.Do Chnh phu thong nhat quan ly va

Bo Tai chnh la c quan au moi.

Chnh quyen cap tnh, c quan nha

nc (c quan quan ly hanh chnh),


46/71

N nc ngoai cua

Chnh phuNhng khoan vay ODA, vay thng mai

(vay e cho vay hay ao n) hoac tndung xuat khau di danh ngha chnh

phu vi ngi cho vay nc ngoai.Nhng yeu cau c ban:

S dung ung muc ch. Chu yeu dung cho nhng chng trnh d

an co kha nang thu hoi von, tranh sdung nh cap phat NS. Tranh thu vay u ai va u tien s dung

chung cho phat trien ha tang kinh te, xahoi.

S dung cac bien phap: tai c cau n,

Ncong

N i


47/71

N nc ngoai cuaChnh phu N song

phngN trc tiep theo quan he 1:1

N cua 1 chnh phu vi 1 chnh

phu khacHnh thc c ban la ODA

Co khuynh hng giam dan

Ncong

Nncngoa

i

N i


48/71

N nc ngoai cuaChnh phu N a

phngN cac to chc quoc te:

Ngan hang the gii

Quy tien te quoc te Cong ty tai chnh quoc te

Ngan hang phat trien Chau A

N lien chnh phu: Cau lac bo Paris,

Ncong

Nncngoa

i


49/71

N nc ngoai cua

Chnh phu N t nhanChnh phu n bat ky t nhan

nao mua trai phieu phat hanh ra

ngoai nc: ngan hang thngmai, to chc tai chnh khongthuoc chnh phu,

Cac khoan chnh phu vay nganhang thng mai t nhan

Lai suat th trng

Ncong

Nncngoa

i


50/71

N nc ngoai do Chnhphu bao lanhChnh Phu, thong qua Bo Tai chnh,

cam ket bao lanh vay n nc ngicho ngi vay.

Khoan vay c bao lanh u 10 tr.USD.

Ph bao lanh e 1,5%/nam.Ngi c bao lanh la to chc

kinh te thuoc moi thanh phan trctiep ky hp ong vay nc ngoai

va phai co von chu chiem 20%tong mc au t.Chng trnh/d an c bao lanh:

Thuoc trong iem quoc gia Nhap cong nghe cao cua d an c u

tien au t


51/71

Giam sat n nc

ngoaiBo trng, chu tch tnh chu trach

nhiem trc Thu tng ve giam sat

n nc ngoai thuoc nganh, aphng mnh.

Bo TC, NHNN, Bo KH-T va VP CP chutrach nhiem hng dan giam sat va

trc tiep giam sat theo chc nang.Moi n v tiep nhan n nc ngoai

phai bao cao quy, nam va ot xuatve tnh hnh s dung.

Bo TC va NHNN chu trach nhiem

N t Ch h


52/71

N trong nc cua Chnhphu Cong trai dai

hanTren 5 namc huy ong cho cac cong

trnh trong iem quoc gia t cokha nang hoan tra: To hp Kh ien am Ca Mau, ng HoCh Minh,

Lai suat thapKhong mang tnh th trngGiai oan 2003 2010 Chnh phu

Viet Nam d kien huy ong 63.000

Ncong

Ntrongnc

N t Ch h


53/71

N trong nc cua Chnhphu Trai phieu kho bac

trung hanTren 1 nam en 5 nam

c huy ong cho cac cong

trnh quoc gia co kha nanghoan tra

Co the phat hanh ra nc

ngoai

Ncong

Ntrongnc


54/71

N cua nganh

Nganh: dau kh, cao su, detmay,

Lai suat th trngThi gian tren 1 nam

Ncong

Ntrongnc


55/71

N cua chnh quyen a

phngo th: Hai Phong, Ha Noi,

Thanh Pho Ho Ch Minh.

Lai suat th trngThi gian linh hoat

Nguon tra n: so thu ngan sach

tren a ban.

Ncong

Ntrongnc

Budget Deficits and


56/71

Budget Deficits andSurpluses

Changes in the size of the federal deficitorsurplus are often used to gauge whetherfiscal policy is stimulating or restrainingdemand.

Changes in the size of the budget deficit orsurplus may arise from either: A change in the state of the economy, or, A change in discretionary fiscal policy.

The federal budget is the primary tool offiscal policy.

Discretionarychanges in fiscalpolicy:deliberate changes in government spendingand/or taxes designed to affect the size ofthe budget deficit or surplus.


57/71

Supply-side EffectsofFiscal Policy

Supply side Effects of Fiscal


58/71

Supply-side EffectsofFiscalPolicy

Fromasupply-side viewpoint, themarginal taxrateisofcrucial importance: Areduction in marginal taxratesincreases

therewardderivedfromaddedwork,investment, saving, andotheractivities that

become less heavily taxed. High marginal taxrateswill tend toretard total

output because theywill: discourageworkeffort andreduce the

productiveefficiencyoflabor,

adverselyaffect therateofcapital formationand theefficiencyofits use, and,

encourageindividuals tosubstitute lessdesired tax-deductible goodsformoredesired non-deductible goods.

Supply side Effects of Fiscal


59/71

Supply-side EffectsofFiscalPolicy

So, changesin marginal taxrates, particularlyhigh marginal rates, mayexert an impact onaggregate supplybecause thechangeswillinfluence therelativeattractivenessofproductiveactivityin comparison to leisureand

taxavoidance. Impact ofsupply-side effects:

Usually take placeovera lengthy time period. Thereissomeevidence that countrieswith

high taxes growmoreslowlyFranceandGermany versus UnitedKingdom.

While thesignificanceofsupply-sideeffectsarecontroversial, thereisevidence theyareimportant fortaxpayersfacing extremely hightaxrates sayratesof40 percent orabove.

Supply Side Economics and


60/71

AD1

What are thesupply-sideeffectsofacut in marginal taxrates?

SupplySide EconomicsandTax Rates

Price

Level

LRAS1

YF2YF1

AD2


With time, lower tax rates

promote more rapid growth(shifting LRASand SRASout to LRAS2 and SRAS2).

SRAS1

P0

SRAS2

E1

LRAS2

E2

Lowermarginal taxratesincrease theincentive toearn and useresourcesefficiently.AD1 shiftsout toAD2, andSRAS& LRASshift to theright.

Ifthe taxcutsarefinancedbybudget deficits, AD mayexpandbymore than supply, bringing an increasein the price level.

Share of Taxes Paid By the


61/71

ShareofTaxes Paid By theRich

Theshareofpersonal income taxes paidby the top one-halfpercent ofearnersisshown here.

During the last fourdecades, theshareoftaxes paidby theseearners hasincreasedas the top taxrates havedeclined. This

indicates that thesupplysideeffectsarestrong forthesetax a ers.

30 %

28 %

26 %

24 %

22 %

20 %

18 %

1960

16 %

14 %

Share of personal income taxespaidby top % of earners

199519901980197519701965 1985

1964-65Top rate cut from

91% to 70%

1981Top rate cut from

70% to 50%

1986Top rate cut from

50% to 30%

1997Capital gainstax rate cut

2000

1990-93Top rate raised from

30% to 39%

Have Supply siders Found


62/71

Have Supply-siders Founda Way to Soak the Rich?

Since 1986 the top marginal personal incometax rate in the United States has been lessthan 40% compared to 70% or more prior tothat time.

Nonetheless, the top one-half percent of

earners have paid more than 25% of thepersonal income tax every year since 1997. This is well above the 14% to 19% collected

from these taxpayers in the 1960s and 1970swhen much higher marginal personal incometax rates were imposed on the rich.


63/71

Fiscal Policyof the United States

U S Fiscal Policy 1960


64/71

U.S. Fiscal Policy, 1960-2004During the 1960s & 70s, budget

deficits were generally small exceptduring recessions.

Budget deficits generally increasedduring recessions and shrank during

expansions, primarily as the result ofautomatic stabilizers rather thandiscretionary policy changes.

Reductions in income tax rates and

sharp increases in defenseexpenditures led to large deficitsduring the 1980s.

U S Fiscal Policy 1960-


65/71

U.S. Fiscal Policy, 1960-2004

While increases in defense spending expandedthe deficit in the 1980s, the opposite was trueduring the 1990s.

The deficit shrank during the 1990s andby the end of the decade federal budgetsurpluses were present.

The combination of the 2001 recession and theeconomys sluggish recovery,

the Bush Administrations tax cut, and increasesin defense spending quickly moved the budgetfrom surplus to deficit at the beginning of thenew century.

Federal Expenditures and


66/71

Federal Expenditures andRevenues

The federal deficit or surplus as a share of the economyis shown here. Note the growth of budget deficitsduring the 1980s and the movement to surpluses duringthe 1990s.

Amix of factors a recession slu ish recover tax

Source: EconomicReport of the President, 2004, tables B-1 and B-79. Note, recessions areindicated by shaded bars.

18%

20%

22%

24%

1960 1965 1970 1975 1980 1985 1990 1995 2000

Expenditures

Revenues

Deficits

Federal Government Expenditures and Revenues(as a share of GDP)

2003

Fiscal Policy & Economic


67/71

Fiscal Policy & EconomicPerformance:

The 1980s versus the 1990s Even though the federal deficits were large

during the 1980s and small during the 1990s,real economic growth was strong and theinflation rate low during both decades.

This result is consistent with the view thatfiscal policy exerts only a modest impacton aggregate demand, much like thecrowding-outand new classicalmodelsimply.


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Questions for Thought:

1. How does the supply-side view of fiscal policydiffer from the demand-side view? Does thesupply-side view stress the potential of fiscalpolicy as a tool to smooth the ups and downsof business cycles? What does it stress?

2. The share of personal income taxescollectedfrom high income taxpayers has steadilydeclined during the last 20 years.-- Is this statement true?

3. Public choice theory indicates that vote-maximizing politicians severely restraingovt. spending because they have a strongincentive to achieve and maintain budgetsurpluses. -- Is this statement true?


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Questions for Thought:

4. The following quotation is from the mid-1980sby Paul Samuelson, a leading AmericanKeynesian:

In the early stages of the Keynesian revolution,

macro-economists emphasized fiscal policy as themost powerful andbalanced remedy for demandmanagement. Gradually, shortcomings of fiscalpolicy became apparent. The short-comings stemfrom timing, politics, macro-economic theory, andthe deficit itself."

Explain what Samuelson means by each of theshortcomings he refers to.


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X l thiu ht tm thi 1.Ngn sch trung ng c tm ng Qu d tr tichnh ca trung

ng, tn ngn Khobc Nh nc theoquyt nh ca B trng BTichnh; nu cn thiu th tm ng t Qu Bo himx hi v ccqutichnh nh nckhc theo tho thun ca B Tichnh viHi ngqun l ccqu ny.

Trng hp tm ng ccqu trn m vn cn thiu, th B trngB Tichnh boco Th tng Chnh phquyt nh tm ng vn cangn sch Nh nc.

2.Ngn sch cp tnh c tm ng t Qu D tr tichnh ca tnhtheoquyt nh ca U ban nhn dn cp tnh. Trng hp sdngQu D tr tichnh ca tnh nhng vn khng chi tr cc nhucu cp thit khng th tr hon th ngh B Tichnh xemxt tngtin cp s bsung cn i ngn sch hoc tm ng t ngn schtrung ng (nu ngn sch trung ng ckh nng) hoc tm ng Qu

D tr tichnh ca trung ng. 3.Ngn sch cp huyn, ngn sch cp x c tm ng Qu D tr ti

chnh ca tnh theoquyt nh ca U ban nhn dn tnh. Vicxemxtcho tm ng i vi ngn sch cp x, ngoi ngh ca U ban nhndn xcn phicn c vo kin ca Ch tch U ban nhn dn huyn.Trong trng hp Qu D tr tichnh ca tnh khng p ng c thc th ngh c quan tichnh cp trn tng tin bsung hoc tm

ng t ngun ngn sch cp trn (nu ngn sch cp trn ckh nng).


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4.Cckhon tm ng x l thiu ht tm thi phi c hontr trong nm ngn sch, tr trng hp c u ban thng vQuc hicho php i vi tm ng t Ngn hng Nh nc.

5.Trng hp cbit, nu thc hin cc gii php trn mvn khng p ng nhu cu chi, c quan tichnh phi mbo ngun chi tr, thanh ton chocckhon v tin lng vc tnh cht lng, chi u t xydng c bn cccng trnhquan trng, chichng trnh mc tiu quc gia v cckhon chimang tnh thng xuyn phichikp thi mbo hot ngbnh thng cac quan, n v; i vicckhon chikhc, spxp theo th t u tin. ng thic thyu cu Khobc Nh

nc tmdng thanh ton i vimt s khon chi v muasm,sacha theo tng nhim vc th bo mcn iqungn sch nhng khng c nh hng n vic tchc thchin nhim vchnh c giaoca n v.

5.thieuhutnsnn

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