According to Keynes the principle objective in the context of formulating a fiscal policy for the state is to ensure that everybody is employed (Keynes, 1980). Governments might choose either a discretionary fiscal policy where the federal budgeting will be adjusted so as to rev up the deficit spending. Alternatively there is another approach called the automatic stabilizers, where the policy will be built in the tax structure. Discretionary fiscal policy has only been used in two periods in the United States. Primarily it was used in the recession of 1981-1982 and later in the time period of 2008-2009. For economic stimulation in 2008-2009, the Government attempted to create a fiscal stimulus which resulted in a large deficit. Automatic stabilizers were also used in this time, and the automatic stabilizer stimulus was seen to be more effective than the discretionary fiscal policy style stimulus. This was observed in the way the deficit created in non-discretionary was higher.
One of the prime fiscal policies that were introduced during the time of the recession was that of American Recovery and Reinvestment Act. During the time of the recession where an influx of money was desired to stimulate the economy, the then president Barack Obama authorized a 787 Billion US dollars stimulus package. The primary prerogative of this stimulus was to ensure that businesses were able to severity of the economy (Scully, 2009). People were given unemployment aids at the time and Medicaid was sourced into in order to provide this assistance. Also educational institutions were kept running by using the fiscal policy budget. The spending and the authorization of the individual allocations were regulated by means of the Office of Management and Budget. There were some concerns that existed from earlier times, such as adequate data documentation on the spending. During the period of implementation of this fiscal policy the documentations and accounting were made clearer. After much debates in 2009 between the Democrats and the Republicans, a 410 billion dollar spending bill was passed, it was signed in the same year (CFG, 2009).