An active, “big” federal government is best for the American people  President Obama believes in an activist government’s role in improving society. Without public intervention, private markets will not sufficiently address inequality or several other public needs, such as environmental preservation and public transportation. Financial returns from investments in such areas are often insufficient to incentivise private sector investment. However such schemes generate high levels of welfare benefits that are desirable from a societal perspective.  Obama’s economic policy draws on Keynesian economic theory, which is the belief that a mixed economy of public and private enterprise, bolstered by a strong welfare state, can jumpstart the economy. In order to create public enterprise, the government needs to spend, either by building a deficit or from tax revenue.[1] This is the policy he has pursued in his first term with a successful stimulus of $787 billion.[2]  Obama’s tax policy boils down to the empirical belief that taxing the rich will help the economy grow, because the revenue can be used on important government programs that can spur growth, and the philosophical argument that the American economy should be more equal and that the U.S. government can and should do more to directly address inequality. It should therefore not be a surprise that Obama wants the Bush era tax cuts for the richest reversed arguing "I just believe that anybody making over $250,000 should go back to the income tax rates we were paying under Bill Clinton."[3]  [1] Blinder, Alan S., “Keynesian Economics”, The Concise Encyclopedia of Economics, 2nd Ed., 2008, Library of Economics and Liberty,   [2] Grunwald, Michael, “Think Again: Obama’s New Deal”, Foreign Policy, Sept/Oct 2012,   [3] Bendery, Jennifer, “Obama Calls For One-Year Extension Of Bush-Era Tax Cuts For First $250,000 Of Income”, Huffington Post, 9th July 2012,