The Era of Classical Budgeting

Introduction

The years between 1940 and 1960 are referred to as the era of classical budgeting. In this era the United States of America went through drastic changes and modifications. These modifications ranged from the politics to the law and legislation. The purpose of this paper is to explore the crises faced by United States of America which started in 1940 and lasted till 1960. However, according to many researchers and economists these crises left their traces which had a significant impact on the economy of United States till 1990. This paper will explore the crises faced and the modifications realized by the United States.

Discussion and Analysis

Government Functions Change (Domestic and Foreign Policy)

In foreign policy, Reagan fought to give his country a more assertive and Central was his first field test. Reagan also gave active support to the transition to a democratically elected government, but only partially succeeded his attempts to curb the activities of death squads, right-wing affiliation. U.S support helped stabilize the government, but the level of violence did not decline.

Ideological Shift (Republican and Democratic parties)

The national program of President Reagan was based on his idea that the country would prosper if they removed all obstacles to the power of the private sector in the economy. The theory behind it is the economy "supply"; he argued that the increased supply of goods and services as a result of measures to improve the investment business was the fastest economic growth. Consequently, the Reagan administration argued that the sharp reduction in taxes will lead to increased capital investment and higher profits for the company, so even with tax cuts increase government revenues.

Despite the fact that only a small Republican majority in the Senate and Democrats controlled the House of Representatives, President Reagan won approval of the basic elements of his economic program in his first year in office, including the reduction of 25 % tax on individuals, which will take place gradually, within three years. Government requested and obtained a significant increase in defense spending to modernize the armed forces and against what was perceived as an extension and the growing threat of the Soviet Union.

Due to increased military spending - along with tax cuts and increased government spending on health care - the federal government spent more than a year, received income. However, both Republicans and Democrats in Congress have refused to reduce these costs of 74,000 million dollars in 1980, the deficit amounted to 221,000 million in 1986 and then retreated to 150,000 million in 1987.

Uncompromising in its commitment to cut taxes, Reagan signed into his second term as federal tax reform sharpest in 75 years. In it, the widespread support from both Democrats and Republicans, reduced tax rates on income, simplified the tax classifications and corrected several omissions of the law. However, much of this growth was based on low costs. Moreover, far from stabilizing the vigorous economic growth, national debt nearly tripled. Most of the growth occurred in the area of technology and ...