For my advanced policy paper, I will be using the consumer expenditure survey. The survey for 2009 was released this past week by The Bureau of Labor and Statistics. The data describes the income of Americans and details their buying habits. The survey can help to answer such questions as: How much does an American making $32,000 a year spend on household appliances; How much does the average American spend on eating out, etc. The Bureau of Labor & Statistics has posted the excel file, but it is not yet available in SPSS format. Attached is the 2008 survey, provided by the ICPSR:
2008 Consumer Expenditure Survey
I want to answer whether or not Congress should extend the Bush tax cuts. Historically, consumer spending has been the largest part of GDP. It is our spending that drives the economy forward. Despite the recession, spending continues to make up the majority of our gross domestic product calculations. The data will tell us who the largest spenders are in the economy. If those at the higher end of the income spectrum are spending less proportionally than the rest of Americans, should we really extend their marginal tax-rate at its lower amount? Conversely, if only wealthier Americans are purchasing goods like automobiles, do we need the purchase of higher-end goods to move the economy forward?
I'd also like to research how people have responded to normal tax rates in the past. Since this is an extension of a tax cut, and not technically a raise in the marginal tax-rate, I'd be interested in knowing how spending differed between the Clinton years and the Bush years immediately before and after changes in tax policy. Where would you go to find information on how people's behavior changes as a result of tax policy? The savings rate of Americans has risen during the recession. Is it possible that the tax-cut extension will only create larger savings and an increase in debt payments? Where can I go to get more information of consumer behavior during recessionary times?
