This industry classification includes government establishments primarily engaged in financial administration and taxation, including monetary policy; tax administration; collection, custody, and disbursement of funds; debt and investment administration; government employee retirement and other trust funds; and the like. Income maintenance program administrations are classified in SIC 9441: Administration of Educational Programs. Government establishments primarily engaged in regulation of insurance and banking institutions are classified in SIC 9651: Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors.
The economic policy in the United States is determined by a complex web of organizations representing both the legislative and executive branches of government. The economic policies covered in this classification can be broadly divided into fiscal policies and monetary policies.
In general, fiscal policy is the policy of a government with respect to taxation, the public debt, public expenditures, and fiscal management. These policies serve to stabilize the national income of a country. In the United States, a policy of stability and growth has traditionally been pursued. The Employment Act of 1946 explicitly required the government to create and maintain "useful employment opportunities, including self-employment" and to promote production and a high standard of living in a manner that is consistent with free enterprise. The fiscal policy of the United States is determined and implemented by the Congress and the president by changing deficit expenditures and/or changing federal tax rates. Fiscal policies can be expansionary or contractionary. Expansionary policies can take the form of either a decrease in tax rates that increases private sector expenditures or an increase in government spending. Contractionary policies are decreases in deficit spending caused by either an increase in tax rates that decreases private expenditures or a decrease in public expenditures.
In general, monetary policies are government policies that relate to the supply or the use of money. This policy is implemented through the control of credit exercised through the central banking authority. Typically the objective of a monetary policy is to achieve price stability in the economy. In the United States, monetary policy is controlled by the board of governors of the Federal Reserve. The instruments used in the implementation of monetary policy include open market operations and variations in rates for rediscounts, loans, and advances in the legal reserve requirements. All of these have an impact on both the availability and cost of bank credit.
In setting its policies, the Federal Reserve Board looks at three measures of money. The first is called M1 and refers to the currency in the hands of the public, demand deposits, and interest-bearing checking accounts. Second is M2, which includes assets in M1 plus all deposit liabilities of depository institutions, money market funds, overnight repurchase agreements, and overnight Eurodollars. Third is M3, which includes M2 plus large denomination time deposits, term Eurodollars, and all other repurchase agreements. Broad measure of liquid assets, L, is also regularly reported by the Federal Reserve.
According to industry statistics, there were a total of 2,172 finance, taxation, and monetary policy establishments in 2005, or 31.3 percent of the industry total, with a workforce of 118,855 people.
The organizations responsible for public finance, taxation, and monetary policy can be divided into two categories: government agencies and legislative committees. The various agencies and departments are primarily responsible for implementing policy measures. The most important agencies are the Commerce Department, the Congressional Budget Office, the Council of Economic Advisors, the Federal Reserve System, the Internal Revenue Service, the Office of Management and Budget, Small Business Administration, the Treasury Department, and the U.S. Trade Representative. The most important legislative committees are the House Banking and Finance Committee; the House Budget Committee; the House Ways and Means Committee; the Joint Economic Committee; the Joint Taxation Committee; the Senate Banking, Housing, and Urban Affairs Committee; the Senate Budget Committee; and the Senate Finance Committee.
The U.S. Commerce Department provides business and government with relevant economic statistics research and analysis. The Commerce Department acts as the principal advisor to the president on federal policy affecting industry and commerce. The department develops and maintains macroeconomic models and other analytical tools necessary to analyze economic policy issues such as the effect of federal legislation, regulations, and programs. The department also promotes national economic growth and development, competitiveness, international trade, and technological development. As one of the government's main sources of economic data, the Commerce Department maintains the Economic Bulletin Board; the National Trade Data Bank; and the National Economic, Social, and...