ABSTRACT
In general, there are two broad sets of tools available to the federal government to manage the economy: fiscal policy and monetary policy. This chapter examines how they are used, and how they are seen from the liberal and conservative ideological perspectives. The economic policies of the 1980s were a reaction to policies and problems of the 1960s and 1970s and shaped the economic policy debates of the 1990s and the early twenty-first century. For much of the 1980s and 1990s and into the twenty-first century, one of the most prominent economic issues has been the federal budget deficit. The projection of federal budget surpluses "as far as the eye could see" proved wildly optimistic. One set of solutions directed at the budget deficit and debt problems focuses on the word "austerity". The other part of austerity is often increased taxes.
