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The main discussion of the article is most evidently Keynesian economics. The philosophy of John Maynard Keynes, Keynesian economics calls for a specific way to manage the economy. The basis of Keynesian economics is a call for the government to increase spending in a recession and decrease spending when there is inflation. Right now the article is debating on the reason for opposition that the middle class has with Keynesian economics which is something other than the stereotypical problems in Washington. Keynesians believe that the economy will not automatically operate at a full-employment and low inflation level. Based on the amount of a person’s income they save or spend, employment and production levels will vary. High savings by consumers will create too little demand, causing unemployment and declining production. High spending by consumers will cause demand to rise too rapidly leading to increase prices and shortages. The government has to facilitate the economy by creating the right level of demand. Therefore, during low levels of demand, the government should increase spending in public works projects and spending more than obtained by tax revenue. During the high levels of demand, the government should decrease money in the economy by raising taxes and cutting federal spending. In this way, there is not a need to balance the budget annually, and Keynesians call for managing the economy based on its performance.
Contributed by Jen Lee