Question

Writing Assignment #3

Compare the Obama Stimulus Package and the Trump Tax Cuts (otherwise known as the “2009 American Recovery and Reinvestment Act” and the “2017 Tax Cuts and Jobs Act,” respectively). In an AD-AS model, show the effects of each policy on aggregate demand and aggregate supply. In discussing the Stimulus, you’ll want to answer the following questions:

Why did the Stimulus make sense during the Great Recession?

Did the Stimulus crowd-out private spending?

What impact did the Stimulus have on the budget deficit?

Many commentators have taken note of the slow recovery after the Great Recession. Should we have allowed market corrections to take effect instead of resorting to the Stimulus Package? Or should the government have spent even more money?

In discussing the Trump Tax Cuts, you’ll want to answer the following questions:

Why might it not make sense to cut taxes when we’re experiencing economic growth?

What are some of the purported benefits of the tax cuts? What are some potential costs?

What might be the impact of the tax cuts on the budget deficit?

After discussing some of the costs and benefits of each policy, state your opinion about both policies’ desirability. Do you think both policies are a good idea, just one of them, or neither? Explain your reasoning using the economic way of thinking. Be sure to justify your arguments with logic and evidence. Chapters 12 and 13 in the textbook should helpful in formulating your argument, but you might also need to consult outside sources. Below is a list of think-tanks, economists, and policy analysts who might be good starting points in your research:

The Federal Reserve	Paul Krugman
The Brookings Institution	Tyler Cowen
The Cato Institute	Noah Smith
The Economic Policy Institute	Greg Mankiw
The Mercatus Center The Hoover Institution	Scott Sumner Dylan Matthews

Answer 1