Generally, the economy doesn’t require additional intervention and the established laws on taxation and government spending remain in effect for extended periods. So, most of the time, taxation levels and government spending remain consistent or rise fairly steadily—they don’t change much from one budget to the next.
This steady pace helps maintain stability and consistency in the economy. People simply go about their business, earning income, buying goods and services, making decisions about saving and investing, and so on. So when the economy keeps moving at a healthy pace, fiscal policy changes generally aren’t necessary and fiscal policy is passive. Passive fiscal policy means the federal government allows existing policy to remain unchanged and leaves the laws as they are written.
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