Recommendations to the President, Article Writing Example

Economic consultant Raymond Burke first points out that we must differentiate between monetary policy and fiscal policy. Monetary policy is set by the Federal Reserve Bank (Fed), and is called “discretionary” policy.  It refers to changes in the money supply through such factors as setting interest rates and buying or selling bonds, while fiscal policy refers to government taxing and spending (ETSU, 2010).

Burke then suggests that the President lower interest rates, despite the fact that such a decision is up to the Fed. Former Economic Advisor Kathy Lee suggests raising taxes and reducing government spending. Though the President, along with Congress, could do this, the higher taxes would slow a recovery (ETSU, 2010). Patricia Lopez suggests that the President should leave interest rates as they are, sell bonds to raise money, and raise the bank reserve requirement. Again, none of these are the job of the President, and none would actually help the economy. Lower interest rates would increase the flow of money, selling bonds would take money out of the economy, and a higher reserve requirement would tighten the flow of money (Hassett, 2007). And finally, Allison Tanney recommends that the President work with Congress to increase spending and lower taxes, and that the Fed raises interest rates, raises the reserve requirements, and buys bonds. While the suggestions to the President are helpful, as is the suggestion that the Fed buy bonds, higher interest rates and reserve requirements would take money out of the economy (“Reserve Requirements,” 2007).

I recommend that the President work with Congress to lower taxes and increase spending. Though we must be careful about increasing the deficit too greatly, the lower taxes and increased spending will hopefully serve to give the economy a boost right now by keeping money in the economy; taxpayers will have more money in their hands just as the government is also putting more money into the economy, thereby giving us the chance to get out of the recession.

Works Cited

“Fiscal Policy Vs Monetary Policy.” Office Of Information Technology. East Tennessee State University, n.d. Web. 10 Jun 2010. <http://faculty.etsu.edu/hipples/fpvsmp.htm>.

Hassett, Kevin. “How the Fed Works.” American Sep/Oct 2007: n. pag. Web. 10 Jun 2010. <http://www.american.com/archive/2007/september-october-magazine-contents/how-the-fed-works>.

“Reserve Requirements.” Federal Reserve Bank of New York. Federal Reserve System, May 2007. Web. 12 Jun 2010. <http://www.newyorkfed.org/aboutthefed/fedpoint/fed45.html>