MODERN MACROECONOMIC POLICY OF THE UNITED STATES

Modern macroeconomic policy of the United States began to take shape with the coming to power of the presidential administration

B. Clinton since 1993, and since he was re-elected for a second term, therefore, his policy was recognized by the majority of Americans. The main directions of economic reforms during this period were: 

1. Reduction of federal spending. An austerity regime was introduced for the government, and the state apparatus and non-productive expenditures were significantly reduced.

2. Federal taxes were raised. The previous Reagan and Bush administrations  unjustifiably lowered tax rates, resulting in a reduction in government revenues. The maximum individual income tax rate was raised from 31 percent to 36.9 percent.

3. A program has been developed to increase investments in the public sector of the economy. Conditions were created to attract public and private investment in science and technology, education and retraining of labor resources.

As a result, U.S. companies are far ahead of almost all other countries in the latest high-tech industries, from software to biotechnology to electronic systems maintenance . As a result, the United States became the country with the lowest costs among developed countries, with a slower increase in costs per unit of labor than in Japan and Germany. The skills of the workforce increased as more workers received the education and training required by employers. It is also important that software companies made their products more accessible to the masses, as computer-based learning tools became increasingly common among the technologically illiterate. American companies continue to pay increased wages for skilled labor. Workers who use computers earn on average 15% more than those who do not use them. All this contributed to improving the quality of products.

The administration of B. Clinton managed to eliminate the huge deficit of the state budget, inherited from its predecessor (President Bush),  290.4 billion dollars. Already by 1999, a surplus ($ 80 billion) was achieved, and the growth of public debt was suspended.

The period of the Clinton administration in power was called the “Golden Economy of Clinton”. The inflation rate fell to 2-3% per year, unemployment to 5-4.5%, economic growth at the end of 1999 was 4%.

According to A.I. Pogorletsky, the success of the United States during this period lies, firstly, in the entrepreneurship and efficiency of the Americans, for whom the government has created all the conditions for business development; second, Clinton’s successful macroeconomic policies; thirdly, in the integration processes in the North American region, which just started under Clinton. Nevertheless, it should not be denied that the foundations of the “gold economy” were laid by Presidents Reagan and Bush (in terms of tax cuts and incentives to business), and Clinton adjusted the previous neoconservative course in the right direction.

Important for the growth of the US economy in the 1990s was the policy of deeper integration into the world economic system. To date, 11% of the country’s GDP and about a third of all material values produced in the United States are sold on the foreign market. The United States is the core of the North American integration grouping  of the North American Free Trade Area (NAFTA), which also includes Canada and Mexico. North American integration has intensified the development of the region, American companies have received a powerful appendage in the form of the development of their Mexican and Canadian production base, which allows them to significantly reduce labor costs. 

A characteristic feature of the so-called “new economy” of the United States, as it was dubbed by the world’s leading economists, is the strengthening of the process of US economic integration in the world economy, in the globalization of business. More than half of U.S. TNC’s income comes from abroad. The world’s most powerful R&D system created in the United States is fueled by the influx of foreign specialists, the use of scientific and technological achievements of foreign countries. The role of American investment funds in global financial markets has increased. The role of foreign trade for the US economy has increased. The United States accounts for over 40% of the engineering products sold in developed countries. Having a very developed mechanical engineering, the country at the same time carries out a huge import of engineering products, purchasing almost all types of equipment. 

  The country, thanks to the development of high-tech industries, is experiencing a real information revolution, which, according to experts, serves as another source of economic growth.

The globalization of business and new information technologies have led to the restructuring of the US economy. Globalization has opened up new markets for American goods and services, stimulated production focused on the foreign market. The global market has allowed American companies to become competitive, product quality has increased, costs and prices have decreased. Trade barriers are largely a thing of the past, and foreign companies have gained access to the U.S. market. Cheap goods and cheap labor are becoming universally available. Consumers purchase high-quality inexpensive products, encouraging production growth and stimulating economic growth.

With the help of information technology, labor productivity and management efficiency have significantly increased, costs have decreased, and it has become possible to facilitate commerce using global computer networks. Modern technologies are constantly improving, not allowing the curve of the product life cycle to go down.

The effectiveness of the “new economy” is directly related to the American version of management, which is aimed at quick  decision-making, develops the individual abilities of the manager and his subordinates.

The  constraining factors of US economic development include persistent social inequality. In the UNITED STATES, the income stratification is much greater than in European countries with their model of a  social market economy. The lack of uniform state educational standards has led to the fact that the quality of secondary education in the United States is much lower than in other developed countries, while the continuing high level of higher education. The low level of savings and investments has a negative impact. Americans prefer to spend money rather than accumulate it, which leads to a weakening of domestic investment potential. Another major threat to the U.S. economy is an aging population,  which is  not as serious for American society as it is for Japan and Europe. Experts note that another deterrent for the American economy may be the emergence of competitors in world markets in the face of rapidly developing countries in Southeast Asia and the countries of Central and Eastern Europe.