Two Main Categories of Policy Decisions - Essay Example

All policymakers should be wary of any unintended negative outcomes of policy decisions made.

The world experienced the Great Recession of 2007 to 2009 describe by a rise in inflation, loss of the dollar value to other foreign currencies, and general stagnation of the US economy. This called for government involvement in saving the economy and other adverse effects of the recession. The then-president, George Bush instructed government officials to come up with measures to save the economy. An economic policy was devised where the government used economic interventions such as comprehensive tax rebates, control of business entities, and funding the Toxic Asset Relief Program.
Controlling businesses received significant amounts of resistance from conservative economists (Lind, & Tamas, 2006). This is because they believed that businesses can act rationally and maximize efficiency and profit. As a result, profitability in business will eventually stabilize the economy. However, Bush’s administration was keen to indicate that the government played a role in the private sector business.

Economists and conservative policymakers viewed the recession issue as a result of inadequate regulation in the financial industry of the USA. The perception of economic regulation changed since it offered an opportunity for recovery. Consequently, the policymakers decisively concluded that economic regulation would maintain a good level of equity in the country’s economic system. The regulation aimed at changing some tax laws, adjusting ownership of property, and implementing the concepts of individual accountability. However, the issue of ownership of property was believed to have led to the supreme mortgage crisis. Moreover, there were minimal measures to regulate the financial institutions, especially for individuals who could not afford to own property.

The government can implement fiscal policy as a way of regulating the economy. Fiscal policy refers to the government’s ability to tax and spend indiscriminately. The fiscal policy helps the government earn more revenue from taxes. Regulation of the economy through the use of fiscal policy would help in balancing the federal budget. This is where the government will have collected taxes of equal amounts with its expenditure. As an economic policy, the fiscal policy would also help the government in budgeting for future expenses and avoid the possible reoccurrence of the recession (Lind, & Tamas, 2006).

The economic policy also sought to regulate the financial sectors. Allowing the self-regulation of financial institutions is believed to be another major cause of the recession. As a result, the policy would help the government in regulating the institutions through the Securities and Exchange Commission and Alan Greenspan. President Bush felt the need to revise the financial regulatory structures to keep up with the changes in the 21st century and the global economy. His economic policy sought to reverse some of the distress indicators such as a rise in unemployment, income disparity, and stagnating economic growth.