Since the first well-known Great Depression in the world which started from the late 1920s from the Europe basically, and later spread to the world, America not being an exception to it, the policy differentiations for the recovery are well seen. United States of America seems to have a good control over the fiscal policy measures, thus uses them whereas Europe basically seems to use monetary policy measures to recover itself from the crises situations. Even if we look into the latest crisis situation, we will find Bank of England and other central banks in Europe taking monetary policy measures to overcome the crisis situation whereas USA working with tax cuts showing up the intervention in the fiscal policy to overcome crisis situation. Recently, USA has come up with its new budgetary plans and its potential effects on to the financial market are yet to be seen.

Budget is a short term policy of a government to work along the development policy of the country and achieve the economic growth objectives. The budget amounting $3.77 trillion (£ 2.4 trillion) has recently been made public in USA which has thought of increasing taxes further on wealthy ones and cutting the benefit programs.  It does not look like common people are going to like this budget as the plan is to crop the pension and healthcare costs countering the $700 billion revenue. The chances are very miserly that the Congress will actually give a clean chit to this budgetary plan. One of the Republican Senate leaders Mitch McConnell has termed the budget to be “left-wing wish list”. A dinner was organized by Democratic Party for the Republicans yesterday to convince them for the budgetary pan. Even the Democrats in Congress have waffled over the budgetary plan to cut the Social Security pension payments.

The budget targets to bring down the US deficit by another $1.8 trillion over 10 years, also decreasing the potential reduction to $4.3 trillion. The major cut plans include $400 billion in health spending and $130 billion from Social Security urging its people to adjust their cost-of-living. The estimate plan suggests that only the adjustment in the cost-of-living by the US citizens would rise the revenue generation of the government by $100 billion, after changing the tax brackets. Reductions of $100 billion from Military & domestic programs and farm subsidies & pension programs also is the major proposal. The households whose income is above $1 million will be levied upon at least 30% as tax. Infrastructure spending is promoted by the budgetary program.

As much of the facilities of the citizen are cut down, there are few chances that opposition parties accept this proposal and many people might get demotivated, thus the financial market definitely seems to suffer for few months if this proposal is accepted.