Fiscal Policy of the Obama Administration: A Response to the Financial Crisis Characterized by a Keynesian Approach or by Fiscal Consolidation

Claus Richard Bernhard Nielsen

Student thesis: Master thesis


In this dissertation, I will argue that the fiscal budget policies of the Obama Administration from 2008 till the present day, represented a soft neo-liberal response to the financial crisis of 2008, rather than a Keynesian one. Soft neo-liberalism should here be understood as an approach which is primarily characterized by neo-liberal policies, while some other policy initiatives clearly were inspired by Keynesianism like, most notably, The American Recovery and Reinvestment Act of 2009 (ARRA) which has drawn much attention as being basically Keynesian in nature, while others, which is often overlooked, like The Tax Relief Act and some Annual Budget proposals point in a neo-liberal direction. Therefore, I argue that, when added up, the Obama Administration's response to the financial crisis is a soft neo-liberal one.
Furthermore, when asking why these policies as a whole can be characterized as a neo-liberal approach, I will argue that these policies partly were the result of the limits surrounding the Obama administration, i.e. that broader structural forces were at play, and partly that they were the result of ideas fostered by The White House, i.e. a construction of beliefs. The structural forces include the political framework in Washington, i.e. the Obama administration's difficulty in finding support in Congress just as some Democrats may not have been overwhelmingly supportive of Keynesian- inspired measures. Moreover, the Obama administration may have been limited by the structure of the financial markets, thus limiting the possibilities for maneuvering politically when taking US markets' response to distinctly Keynesian policy options into account.

EducationsMA in International Business Communication (Intercultural Marketing), (Graduate Programme) Final Thesis
Publication date2016
Number of pages73
SupervisorsEdward Ashbee