Macroeconomics Help

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There were rapid tax increases in the period between 1990-2000. Since the government was looking for a way to generate more revenues, it was forced to increase taxes in various sectors. For example, the hospital insurance tax base was increased to $125,000 (Hersh, 2014). This amount was considered as quite high by various stakeholders. Luxury taxes were also increased to collect more money from the high-income individuals. Some of the things that were taxed include furs, yachts, automobiles, and airplanes. The state also doubled the Earned Income Tax Credit to help support the low-income families. The Tax Relief and Gift and Estate Relief Act are some of the policies that were created to cushion the producers.

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The US government created a lot of subsidies in the period between 1990 and 2000. The primary purpose of these subsidies was to promote economic growth and development. The common subsidies that characterized this period include stock purchases to keep share prices high, tax exemptions, loan guarantees, and a change in the government procurement policies (Hersh, 2014). The state invested quite significantly in farm subsidies with close to $22 billion being directed to this sector (Walsh, 2017). The government wanted to avoid crises such as hunger and famine by boosting agricultural production.

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The government spending between 1990 and 2000 was also quite high. The national defense consumed a greater portion of the budget. The state wanted to make itself stronger than any country in the world and thus, invested significant resources in the military. The state also increased its spending on infrastructure, education, and health to boost the economy. The increase in spending boosted the livelihood of individuals. However, the state was unable to maintain its significant spending. Spending on Medicare and social security started decreasing after 1993.

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Due to the economic boom, the unemployment rate decreased significantly in the 1990s. The increase in government spending opened up more opportunities that could be exploited. The unemployment benefits reduced during this period since most of the households were capable of fending for themselves. However, the unemployment benefits started increasing in the early 2000s and recession started taking hold.

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