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Fiscal Policy Paper

Essay by   •  May 4, 2013  •  Essay  •  398 Words (2 Pages)  •  1,293 Views

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The condition of the economy is an issue of great concern for every individual, but it is extraordinarily important to those eligible for future Social Security and Medicare benefits. A surplus condition of the economy would permit the government to provide greater benefits and reduce or eliminate any tax implications that may be placed upon SSI or Medicare recipients. Through the creation of a surplus economy the quality of life offered to these individuals could be dramatically increased due to the larger availability of funds and the possibility of becoming eligible sooner than later. The deficit is also of great significance as it implies that the health of the economy is in a state of despair or unrest. In this state, the government would have to take necessary steps to help relieve the deficit, impacting programs such as SSI and Medicare. The government would be compelled to borrow against the funds appropriated for these programs causing greater restrictions and available funds for beneficiaries. Debt would also have a vastly negative impact on the remuneration of the future beneficiaries. Debt would cause the devaluation of the dollar and impact the ability of the beneficiary to obtain goods and services due to increased price points and potential inflation.

The United States deficit affects unemployed individuals due to it make it harder for them to find a job. Businesses are not hiring individuals due to the lack of work available to the business. Most of the unemployed individuals are in receipt of unemployment benefits. A deficit will lead eventually to even more people being put on unemployment due to businesses will have to lay off more people. The unemployed will not be capable of spending any money into these businesses due to they are not receiving any money. The unemployment rate will rise during a deficit in the United States.

A surplus lowers the number of people unemployed due to businesses are looking for individuals to work to make more goods and offer more services. During a surplus the goods and services are in high demand due to people can afford to purchase them. The bad part about a surplus is the interest rates increase, the taxes on goods and services increase, and the inflation goes on a rise. The inflation increases the money worth decreases, which eventually leads back to a deficit.

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