Question

• Democrats are complaining that the tax cuts will add $1.5 trillion to budget deficits (and ultimately the national debt) over the next 10 years. How did Professor Kelton critique this complaint? (Write a short 2-4 paragraph essay.)

Answer 1

Prof. Stephine Kelton is a firm believer of government's role in making the changes in the economy. To quote her, "Government can never run out of money". She advocates that when a government spends to make sure a decent jobs for every american, it will take care of the value of the dollar and the economy of the state.

Let's take a look at Democrats compliant about adding burden to government's budget deficit. When the tax cut is given, it dents the government primary source of revenue. Tax cuts would make it difficult for the government to plan new welfare schemes or execute already committed plans. When given USD 1.5 trillion as a tax cut could have some serious implications on the government's spending. No wonder Democrats are dead set against it

There is a silver lining in giving tax cuts. When the government introduces the tax cuts, it increases the disposable income of the individuals. (Disposable income is defined as the income of an individual after the tax). It increases the consumption activities, in return it helps the economic activities.

Prof. Kelton argues that the government can ensure there should be a decent employment for every american in every county. This way we can make sure that the employment rate is all time high and there is a sufficient money on every one's hand. as a result, the economy improves and so is the dollar values. According to her, inflation is the most important evil that affects the people adversely. Ensuring the employment for everyone will, indeed, take away the inflation as the production activity increase and, in turn, the economy. Now, government doesn't have to worry about the dollar values being affected due to excessive budget deficit.