Proposed Tax Relief

Proposed Tax Relief

Media Exercise

The current session of Congress has proposed a tax relief for the American people. The Keynesian idea that government should increase spending to stimulate the economy had been discarded since the failed stimulus package proposal of 1993.

Median household income has declined by 6.6 percent beginning when Ronald Reagan left office and ending in 1995. The 1990 tax increase under George Bush and the major increase of 1993 during the presidency of Bill Clinton have resulted in a drag on the economy. The success of the economy has mainly been due to increased productivity in the computer industry and the demographics of people having more money to buy goods and services as they get older.

The question of what impact this will have on the nations GDP can be answered by looking at each of its four contributing factors: (C + I + G + NX)

1) Personal spending, or consumption, will increase. A large portion of personal income is spent on cars and durable goods, which leads to more manufacturing jobs. After the Reagan tax cut in 1982, personal expenditures rose by 4 percent in

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