The Impact Chrysler Automotive Company Based on Fiscal Policies

Fiscal Policy
Name
Institution
Fiscal Policy
Over the last five years, the overall government spending has been going up. Since the Great Depression, the overall government spending has been characterized by greater volatility and slowed growth. For the second half of the 20th century, the actual government expenditure went up by 3.81% per year. This government spending has been going up and has never declined albeit for short periods of time where it remained constant. For the last five years, this government spending has been increasing at 1.94% per year. This slight decline in the annual expenditure rise can be explained by the 6.15% increase that was witnessed from 2008-2009. At the present, government spending stands at 41.43% up from 37.5% in 2010. This has created a scenario where the GDP has been falling while the government spending as a share of GDP has been rising (Fraser, 2012).
Within the last five years, the income tax rate has reduced marginally especially for the rich. Although most people feel that the income tax rate has gone up, the reality is that income tax has reduced significantly. Although the government might want to increase taxes, the truth is that increased lobbying has made this impossible. Despite the obvious slump in the income tax rate, government spending has grown significantly thus creating an imbalance in the earning and spending bracket (Bognanni, & Millington, 2015).
The increasing government spending and the decrease in the income tax rate have created a tricky situation for the government. The increase in government spending has been mostly in the area of health and the military. In order to finance these two areas, the government has been forced to cut its spending in other key areas in order to finance these two sectors. This phenomenon has led to the loss of employment for many people who were relying directly on these areas where financing was cut. Due to the increased government spending and the reduced income tax rate, the Gross Domestic Product (GDP) has been declining at an alarming rate each year. Since taxes account for most of th...