Unit 6: Public Policy AP US Government. Presentation Outline 1)Economic Policymaking 2)Social...

Unit 6: Public PolicyAP US Government

Presentation Outline

1) Economic Policymaking

2) Social Welfare Policymaking

3) Healthcare and Environmental Policy

4) National Security and Foreign Policy

1) Economic Policymaking

Government, Politics, and the Economy

• Introduction– Capitalism:

• An economic system in which individuals and corporations, not the government, own the principle means of productions and seek profits.

– Mixed Economy:• An economic system in which the government is deeply

involved in economic decisions through it role as regulator, consumer, subsidizer, taxer, employer and borrower.

– Multinational Corporations:• Businesses with vast holdings in many countries.


• Economic Policy at Work: An Illustration– Wal-Mart is the world’s largest company.– Government Regulation and Business Practices

• Securities and Exchange Commission regulates stock fraud.

• Minimum wage: The legal minimum hourly wage for large employers.

• Labor union: An organization of workers intended to engage in collective bargaining.

• Collective bargaining: Negotiations between labor unions and management to determine pay and working conditions.


– Wal-Mart and the World Economy• Wal-Mart epitomizes America’s imbedding in the

world economy.• The proportion of U.S. GDP accounted for by

international trade is 30%.• Wal-Mart takes full advantage of “comparative

advantage.”• Offshore outsourcing is a key concern of the new

global economy.

Outsourcing


• “It’s the Economy, Stupid”: Voters, Politicians, and Economic Policy– Economic trends affect who the voters vote

for.– Economic conditions are the best predictor of

voters’ evaluation of the president.– Republicans worry about inflation.– Democrats stress importance of

unemployment.


• Two Major Worries: Unemployment and Inflation– Unemployment rate: Measured by the BLS,

the proportion of the labor force actively seeking work, but unable to find jobs.

– Inflation: The rise in prices for consumer goods.

– Consumer Price Index: The key measure of inflation that relates the rise in prices over time.


• Unemployment: Joblessness in America, 1960-2002 (Figure 17.1)


• Inflation: Increases in the Cost of Living, 1960-2002 (Figure 17.2)

Policies for Controlling the Economy

• Monetary Policy and “the Fed”– The manipulation of the supply of money in

private hands – too much cash and credit produces inflation.

– Money supply affects the rate of interest paid.– Main policymaker is the Board of Governors

of the Federal Reserve System – the “Fed.”


• Monetary Policy and “the Fed” continued– The Feds instruments to influence the supply

of money in circulation:• Sets the federal funds rate• Buys and sells government bonds

– Through the use of these actions, the Fed can affect the economy.


• Fiscal Policy of Presidents and Parties– Fiscal Policy: The policy that describes the

impact of the federal budget on the economy.– Keynesian Economic Theory: Government

spending and deficits help the economy weather its normal ups and downs.

– Government’s job is to increase demand of goods.

Instruments for Controlling the Economy

• Fiscal Policy of Presidents and Parties, continued– Supply-Side economics: The policy that

says there is too much taxation and not enough money to purchase goods and services.

– Reduce taxation and government regulation then people will work harder, and thus create a greater supply of goods.

Politics, Politics, and the International Economy

• Protectionism: The economic policy of shielding an economy from imports.

• World Trade Organization (WTO): The international organization that regulates international trade.

• Free trade is controversial as jobs have increasingly been outsourced.

Arenas of Economic Policymaking

• Business and Public Policy– Corporate Corruption and Concentration

• Increased incidence of bankruptcy and scandals.

• Increased number of corporate mergers• Antitrust policy: A policy designed to ensure

competition and prevent monopoly.


• Business and Public Policy, continued– Regulating and Benefiting Business

• Congress has taken steps to regulate accounting industry practices.

• The Securities and Exchange Commission regulates stock fraud

• Government may loan businesses money.• Government collects data that business use.


• Labor and Government– Government historically sided with business over

labor unions.– NLRB: regulates labor-management relations– The Taft-Hartley Act (1947) continued to guarantee

unions the right of collective bargaining, but prohibited various unfair practices by unions.

– Government now provides unemployment compensation and a minimum wage.

Understanding Economic Policymaking

• Democracy and Economic Policymaking– Voters expect more of politicians that they can

control.– Sometimes economic theory and democratic

theory may be at cross purposes.– It is difficult to make decisions that hurt groups or

involve short-term pain for long-term gain.• Economic Policymaking and the Scope of

Government– Liberals tend to favor more government

involvement in the economy.– Conservatives tend to favor less government

involvement in the economy.

Michael

continue with slide 23 next class

2)Social Welfare Policymaking

What is Social Policy and Why is it so Controversial?

• Social welfare policies provide benefits to individuals, either through entitlements or means-testing.– Entitlement programs: Government benefits

that certain qualified individuals are entitled to by law, regardless of need.

– Means-tested programs: Government programs only available to individuals below a poverty line.

Income, Poverty, andPublic Policy

• Who’s Poor in America?– Poverty Line: considers what a family must

spend for an “austere” standard of living.– In 2003 the poverty line for a family of three

was $14,824.– Many people move in and out of poverty in a

year’s time.– Feminization of poverty: high rates of poverty

among unmarried women

Income, Poverty, and Public Policy

• Poverty Rates by Race and Hispanic Origin: 1959-2003 (Figure 18.1)

Income, Poverty, andPublic Policy

• What Part Does Government Play?– Taxation.

• Progressive tax: people with higher incomes pay a greater share.

• Proportional tax: all people pay the same share of their income.

• Regressive tax: opposite of a progressive tax• Earned Income Tax Credit: “negative income tax”

that provided income to very poor people.

Helping the Poor? Social Policy and Poverty

• “Welfare” as We Knew it– Social Security Act of 1935 was the first

major step by the federal government to help protect people against absolute poverty.

– The Social Security Act set up AFDC, a national assistance program for poor children.

– President Johnson declared a “war on poverty” and created many new social welfare programs.

Helping the Poor? Social Policy and Poverty

• “Welfare” as We Knew it (continued)– President Reagan cut welfare benefits and

removed people from benefit rolls.– Conservatives argued that welfare programs

discouraged the poor from solving their problems.

– Attitudes toward welfare became “race coded”, the belief that most people on welfare were African Americans.

Living on Borrowed Time: Social Security

• The New Deal, the Elderly, and the Growth of Social Security– Social Security has grown rapidly since

1935, adding Medicare in 1965.– Employers and employees contribute to

the Social Security Trust Fund.– The Trust Fund is used to pay benefits.– The ratio of workers to beneficiaries is

narrowing. The Trust Fund will soon be in the red.

Living on Borrowed Time: Social Security

• The Future of Social Security– The number of Social Security contributors

(workers) is growing slowly, the number of recipients (retired) is growing rapidly.

– At some time, payouts will exceed income.– Solutions of cutting benefits or raising taxes

are hard choices.– Republicans favor privatizing Social Security.

Understanding Social Welfare Policy

• Social Welfare Policy and the Scope of Government– The growth of government has been driven by the

growth of social welfare policies.

– The American social welfare system grows generation by generation.

• Democracy and Social Welfare– The U.S. has the smallest social welfare system.

– There is considerable unequal political participation by those that use the programs.

3) Health Care and Environmental Policy

Health Care Policy

• Uneven Coverage, Uneven Care– Health Insurance

• About 43 million Americans have no health insurance.

• Often linked to having a job - lose the job, lose the health insurance.

• Health insurance is closely tied to race and income.

Health Care Policy

• The Role of Government in Health Care– Government in the United States has the

smallest role.– Medicare: provides hospitalization insurance

for elderly and optional coverage for other medical expenses.

– Medicaid: public assistance program to provide health care for the poor. Paid for by national and state governments.

Health Care Policy

• Policymaking for Health Care– The Politics of Health Care

• Equality of care and cost containment take a back seat to technological advance.

• Interest groups (medical profession, elderly, business, insurance companies) play a major role in health care policy making.

Health Care Policy

• Policymaking for Health Care– The Clinton Heath Care Reform Plan.

• Main concern guaranteeing health care coverage for all• Paid for by requirement for employer insurance and tax

increases• Health alliances would collect premiums, bargain with health

plans, and handle payments.• Interest groups lobbied hard against this bureaucratic and

complicated plan.• Eventually died in Congress.

Environmental Policy

• Environmental Policies in America– Environmental Impacts.

• Environmental Impact Statements: report that specifies likely environmental impact of a proposed action - filed with the EPA.

• Used by environmental groups to challenge and delay projects they object to.

– Clean Air.• Clean Air Act of 1970: reduce auto pollution.• 1990 amendments allowed emissions trading.

Environmental Policy

• Environmental Policies in America– Clean Water.

• Water Pollution Control Act of 1972: intended to clean up the nation’s rivers and lakes requiring the use of pollution control technology.

• Has helped reclaim numerous rivers and lakes since its passage.

• But it misses “runoff” pollution from city streets and other areas.

Energy Policy

• Energy Sources and Energy Politics– 87% of the nation’s energy comes from coal,

oil and natural gas.– Coal is the most abundant fuel, but also the

dirtiest.– Oil accounts for 40% of our energy, but

creates a dependence on foreign (especially Middle East) sources.

– Most controversial energy source is nuclear.

Energy Policy

• The Global Warming Debate Heats Up– Scientists argue about the effects of

accumulations of carbon dioxide in the atmosphere.

– The only way to reduce the problem is to reduce the amount produced.

– The costs to do this are immediate, but the effects won’t be visible for decades, if ever.

Understanding Health Care and Environmental Policy

• The Scope of Government and Health Care and Environmental Policy– As citizens want more health care reform, the

size of government will increase.– Increased environmental protection will also

cause the size of government to go up.– With party divisions, incremental change is

most likely.

4) National Security and Foreign Policy

American Foreign Policy: Instruments, Actors, and

Policymakers

• Instruments of Foreign Policy– Three types of tools:

• Military• Economic• Diplomatic

– Military is the oldest and still used– Economic is becoming more powerful– Diplomatic is the quietest of the tools


Policymakers

• Actors on the World Stage– International Organizations (UN)– Regional Organizations (NATO, EU)– Multinational Corporations– Nongovernmental Organizations– Individuals


Policymakers

• The Policymakers– The President– The Diplomats (secretary of state)– The National Security Establishment

(secretary of defense, Joint Chiefs of Staff, NSC, CIA)

– Congress

American Foreign Policy:An Overview

• Isolationism:– Foreign policy where the U.S. tries to stay out

of other nation’s conflicts, particularly in Europe.

• Monroe Doctrine:– U.S. official statement of isolationism

• World War I:– Ended isolationism for a few years and then

the U.S. returned to isolationism in the 1920s and 1930s


• The Cold War– Containment Abroad and Anti-Communism at

Home– The Swelling of the Pentagon (arms race)– The Vietnam War


• The Era of Détente– Détente: a slow transformation from conflict to

cooperation– Strategic Arms Limitations Talks: effort to limit

the growth of nuclear arms– Originally applied to the Soviet Union, and

then to China– Not favored by everyone


• The Reagan Rearmament– Defense budget had been declining since the

mid-1950’s.– Reagan added some $32 billion to the

defense budget in his first term in office to oppose the Soviet buildup.

– Strategic Defense Initiative: using computers and other equipment to defend against Soviet missiles from space (“Star Wars”).

American Foreign Policy: An Overview

• The War on Terrorism– War on terrorism became highest priority of

George W. Bush administration after 9/11.– Bush supported preemptive strikes against

terrorists and hostile states.– International relations has entered an era of

improvisation.

The Politics of Defense Policy

• Defense Spending– Currently takes up about one-fifth of the

federal budget.– Conservatives argue against budget cuts that

would leave the military unprepared.– Liberals argue for budget cuts to provide more

money for programs here in the U.S.– Military spending is hard to cut since it means

a loss of jobs in congressional districts.

The New Global Agenda

• The International Economy– Interdependency: Mutual dependency, in which the

actions of nations reverberate and affect one another’s economic lifelines.

– International Trade• Tariffs (a tax on imported goods) are used to protect

American business.• NAFTA and GATT are ways to lower tariffs and increase

trade.

– Balance of Trade: The ratio of what is paid for imports to what is earned for exports.

The New Global Agenda

• The International Economy (continued)– Energy

• America depends on imported oil, but not as much as other nations.

• Much of the recoverable oil is in the Middle East which is often the site of military & economic conflicts.

• OPEC controls the price of oil and amount its members produce and sell.

Understanding National Security Policymaking

• National Security Policymaking and Democracy– Americans are more interested in domestic

than foreign policy.– The opinions of the people are rarely ignored.– Pluralism is pervasive in foreign policymaking.

• Foreign and Defense Policymaking and the Scope of Government

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