Near-term policy
How might expectations of a near-term policy reversal weaken fiscal policy depend on changes in tax rates?
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A reduction in tax rates might be enacted to stimulate consumer spending. If households attain the tax cut but expect it to be reversed in the near future, they might hesitate to rise their spending. Believing that tax rates will increase again (and possibly concerned that they will rise to rates higher than before the tax cut), households may instead save their added after-tax income in anticipation of requiring to pay taxes in the future.
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Policy Adjustments: The changes to existing law or Administration policies. Such adjustments need action by the Governor and/or Legislature and change the workload budget.
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