Answer to Question #181976 in Macroeconomics for King

Question

Politically, we historically defined Republicans as deficit hawks; that is, individuals who preferred small deficits.  Alternatively, we historically associated freer spending with Democrats. What does your graph of the deficits since 1980 suggest about this general statement? Write a paragraph to support your conclusion? What other events might help to explain why deficits rise and fall?

Background:

Party in the White House:

• 1981-1989: Ronald Reagan, Republican
• 1989-1993: George H.W. Bush, Republican
• 1993-2001: William Clinton, Democrat
• 2001-2009: George W. Bush, Republican
• 2009-2017: Barack Obama, Democrat
• 2017-present: Donald Trump, Republican

Answer 1

Solution:

According to the deficits graph since 1980, it is true that Republicans are related to deficit hawks, and Democrats are associated with free spending. Republicans prefer having less deficits and putting great emphasis on keeping budgets under control to ensure there is a balanced budget at almost any cost. On the other hand, Democrats always go with a spending spree having no regard for budget deficits. They advocate for massive government spending on the economy.

 

Other events that contribute to the rise and fall of deficits include the following:

·        Recessions – This contributes to the rise in deficits due to a weak economy and the government spends more while collecting less taxes.

·        Fiscal stimulus and tax cuts – These events can result in an increase in deficits due to increased spending and less tax revenue being collected.

·        Economic prosperity – This contributes to a fall in deficits since the economy is much stronger and the government is able to collect more revenue.