Fiscal Policy is driven by Washington. They collect tax revenues and plan government expenditure.
Following the great depression, Economist Keynes influenced the decision that the government take an active role in driving the US economy.
Fiscal Policy has since tended to become
Expansionary i.e. government spending more than the revenue it collects, during periods of recession and
Contractionary i.e. generating excess revenue and paying down debt when the economy stabilized.
The elected President outlines government policy, but Congress holds the purse strings.
The political debates that are very commonly heard is usually about how much debt as a percent of GDP can the economy sustain.
As of Jan 2013, total US Public Debt was $16.432 trillion. US GDP was approximately $15.6 trillion.
The US Debt to GDP ration was around 105%.
Monetary Policy
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