chapter  2
Fiscal Policy
WithDouglas Dowd
Pages 13

The United States (US) Treasury is the instrument of US fiscal policies—it banks the taxes and writes the checks. The architects of the policies are Congress and the president; the realm of fiscal policies is the spending and taxing by the federal government. As with so much else in the realm of economic affairs, contemporary discussions of fiscal policies are presented in almost purely quantitative terms. The biggest social spending item is Social Security and its health care counterpart, Medicare. Social Security provided pensions for people over sixty-five, assistance for the disabled, and Aid to Families with Dependent Children. It is financed by payroll taxes on workers and employers, which go into the Social Security Trust Fund; from there the checks flow to the beneficiaries. The budgetary shift of federal grants-in-aid to block grants will mean at least two changes: damage to the social fabric and increased sales taxes.