Final answer:
The $122 billion tax cuts passed in 2002 were enacted to boost the economy and address the recession that began in 2001. Tax cuts are a fiscal tool used to stimulate aggregate demand and were part of a supply-side economic strategy despite debates over their efficacy and distributive effects.
Step-by-step explanation:
The tax cuts totaling $122 billion over two years passed in 2002 were primarily designed to boost the economy and attempt to offset the effects of the recession that had begun in March 2001. This approach aligns with the AD/AS (Aggregate Demand/Aggregate Supply) framework, which many economists use to analyze the impact of fiscal policy on the economy's overall performance. During times of recession, tax cuts are often seen as a way to stimulate economic activity by increasing aggregate demand, as people have more disposable income to spend.
Following this strategy, President George W. Bush signed into law the 2001 tax cuts with the intention of spurring investment and growth, despite the potential risk of budget deficits. It was hoped that these tax cuts, particularly for those in higher income brackets, would lead to job creation and economic expansion. Nevertheless, the practice of supply-side economics underpinning such tax cuts has been a subject of debate, as critics argue that these cuts often benefit the wealthy disproportionately and do not necessarily lead to sustainable job creation or economic growth for all.