US monetary and fiscal policy in the 1930s: Please read, I included pictures (pg 401-407) Hoover and the Great Depression: Please watch the video, https://youtu.be/18dFdWe2n4s FDR and the role of the president: Please watch the video, https://youtu.be/fgb__H5NNPo

Please answer questions:

1. What are the differences in fiscal policy between the two administrations?

2. What was the impact of those two policies on the economy and society at the time?

US monetary and scal policy in the 1935s 403 falling apart and despite Hoover's desire to maintain a balanced budget. Congress and the Hoover Administration tried to reverse the drop in tax revenues, partly by a 'soalc the rich' tax increase under the Revenue Act of 5 June I932. Less than It]I per cent of households earned enough to pay income taxes throughout the 1935s because individuals wir less than $2,500 in annual income and families of four with less than 35,955 were exempt. These who were required to pay saw their tax. rates jump sharply. For example, individuals earning between 52,090 and $3,139!) per year saw their rates rise from [Ll per cent to 2 per cent. The rate rose from 13.9 to 5 per cent for incomes from Elli} to SIS thousand, and the top rate rose from 23.! to 5'5" per cent for those earning over a million. Families of four did not pay taxes until their annual incomes reached 55,000. Those with incomes above $5,913!) saw their rates rise across income categories in a similar fashion. The tax on corporations rose from I2 to 13.25 percent {US Bureau of the Census, 1925, pp. IIll; Revenue Act of 1932}. The rise in income tax rates did little to stem the drop in tax revenues because receipts from household and corporate income taxes and estate taxes fell 3? per cent from SI.1 billion to $2Rm between I932 arid I933. The only reason total tax collections {shown in Figure 3',I stayed roughly the same in I932 arid I933 was an extra $3llm in revenue delivered by the I932 Revenue Act's new excise taxes on oil pipeline transfers, electricity, bank cheques, corn- munications, and manufacturersparticularly, autos, tyres, oil, and gasoline {US Bureau of the Census, I925, pp. Ilt]'ir and Ill I;Commissioner of Internal Revenue, I933, pp. I4I5}. After Roosevelt's landslide win, the Roosevelt administration and the new Democratic Congress proceeded to raise annual nominal goven'rment spending {Figure 3] by $2 billion to roughly 5.5 billion in both scal years I934 arid I935, and then reached a temporary peak in I935 at $3.4 billion. After a reduction to $5.3 billion over 2 years, the spending ramped up again to $3.8 billion in I939. Yet, only the decits of I934, I935, and 1939 tFigures 3 and 4] are much larger than Hooverh I932 and I933 decits. 'Ir'r'hy'? Tax receipts rose steadily from I933 to I933 before tailing o' slightly {Figure 3]. Much ofthe rise reflects an increase in income tart and excise tax collections associated with the recovery. Income tax rates largely remained at the new higher levels. The Roosevelt administration readjusted the household income tax rates slightly in the Revenue Act of E934 by lowering the rates paid by individuals earning between $2,000 and $25,0 per year by a few tenths ofa per cent and raising them a few tenths for people earning between $25,001] and lm, with similar adjustments for families. In the Revenue Act of I935 the tax rate was raised from 3|.4 to 33.4 per cent on individuals and families earning more than Sl, and from 52.2 to 53 per cent for individuals and families with more than $Im in income. In scal years I934 and I935, the administration temporarily collected 23 and I5 per cent of its revenues from Agricultural Adjustment Act [AAA] processing taxes used to pay farmers to take land out of production. By the time the AAA was declared unconstitutional in I935, excise taxes on new alcohol sales after the end of Prohibition had risen to $505m, roughly I4 per cent ofta.x revenues {Commissioner oflnterrral Revenue, E934, pp. 252; I935, pp. 323: I935, US Bureau ofCeners, 1925, p. ll'l'}. The Hoover and Roosevelt administrations ran decits in most years, but economists do not consider them to be Keynesian stimulus attempts because the decits were small relative to the economic declines during the 1935s. At the time, John Maynard Keynes was intro- ducing his theories that the economy could be brought out ofa low employment equilibrium by increasing govemment spending and lowering taxes and thus increasing government budget decits (Keynes, I954]. Even though Rnosevelt had ramped up spending, Keynes chastised him for not doing enough to stimulate the econorrry. In an open letter carried in several newspapers in December 1933, Keynes announced that more spending was not 139,2: stressed 31 us is anti: r'iu 913113;Ey'ljQE_-'E,.'Qa_.'a13t_]rr-_'_.'tla-rx::l_.'L|Jr:-G-'Ite'LtIUJeps 3+1_.'_-'I'3:ll|r.| UJ or; pace cl umcg