In most countries, the government is responsible for fiscal policy, usually through a shared role between the executive branch (the president/prime minister and finance ministry) and the legislative branch (parliament or congress).

Quick Scoop: Who runs fiscal policy?

Fiscal policy means decisions about government taxes and spending to influence the economy. It is different from monetary policy, which is handled by the central bank and focuses on interest rates and the money supply.

In the United States

In the U.S., responsibility is shared:

  • The President proposes a yearly federal budget and major tax and spending priorities, advised by the Treasury and economic advisers.
  • Congress (House and Senate) writes and passes tax laws and spending bills, and must approve the budget.
  • The President must sign those laws for them to take effect.

Put simply: the President suggests, but Congress authorizes and funds; together they make fiscal policy.

What fiscal policy actually includes

Common fiscal policy actions include:

  • Raising or cutting taxes to cool down or stimulate demand.
  • Increasing or reducing government spending on things like infrastructure, health, defense, and social programs.
  • Choosing whether to run a budget deficit (spend more than tax revenue) or surplus (spend less).

These tools are used alongside monetary policy (central bank interest rate decisions) to stabilize growth, inflation, and employment.

In exam-style terms, a typical answer is:
“Fiscal policy is the responsibility of the national government, especially the executive and legislative branches (e.g., the President and Congress in the U.S.), through their tax and spending decisions.”

Information gathered from public forums or data available on the internet and portrayed here.