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American Government Roots and Reform

Thirteenth Edition

Chapter 15

Social and Economic Policy

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Public Policy - an intentional course of

action or inaction that the government

follows when dealing with a problem or an

issue of concern.

15.1

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Roots of Public Policy: The Policy-Making Process

15.1

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 Elite Theory  Elites make the policy and the masses follow

 Bureaucratic Theory  Organizations that make up the bureaucracy dictate policy

 Interest Group Theory  Narrow, specialized groups control the process

 Pluralist Theory  No single group ever gains control, but what is good for

the public at large often loses out

Theories of the Policy-Making

Process

15.1

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 Procedural  Incremental changes to existing policies

 Substantive  Bold revisions or innovations

 Distributive  Provide benefits to individuals, groups, communities,

corporations

 Regulatory  Limit choices in order to restrict unacceptable behavior

 Re-distributive  Transferring resources from one group to another

Types of Policies 15.1

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

FIGURE 15.1 What Are the Stages of the

Public Policy Process?

15.1

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

1) Agenda Setting  Government recognition that a problem is worthy of

consideration for governmental action

2) Policy Formulation  The identification of alternative approaches to addresses

problems on the government’s agenda

3) Policy Adoption  Selection of a policy through legislative, executive, judicial,

and bureaucratic means

4) Policy Implementation  Actual administration or process of carrying out public policy

5) Policy Evaluation  Seeks to determine if a policy achieve its goals

The Policy-Making Cycle 15.1

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Fiscal Policy

15.2

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Foundations of Fiscal Policy

 Fiscal Policy The deliberate use of the government's taxing and spending policies to maintain economic growth and stability. These tools are used as needed to expand or contract the economy.

 National Debt Total amount owed by the federal government to its creditors, both domestic and international

 Deficit Spending exceeds revenues

 Recession Significant decline in economic activity lasting longer than a few months

15.2

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

The Foundations of Fiscal

Policy

 Economist John Maynard Keynes (1930s)  Government can avoid recession or depression

by stimulating demand, even if it causes deficits

 How do you stimulate demand?  Increase government spending  Cut taxes

15.2

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

The Foundations of Fiscal

Policy

 Budget Deficits  The economic condition that occurs when

government expenditures exceed tax revenues  Long term can lead to inflation - a rise in the

general price levels of an economy

 Balanced Budget  Most states are required by state constitution or

by statute to have a balanced budget  U.S. Constitution does not limit debt at the

national level

15.2

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

The National Deficit and Debt

 National Debt  Starting with the Bush administration and continuing under

Obama - tax cuts, wars in Iraq and Afghanistan, bailout bills, and raised spending – have lead to an unprecedented national debt

 Debt Ceiling  Similar to a credit card limit  Congress must vote to spend above it.

15.2

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

FIGURE 15 How Does the Federal

Government Raise and Spend Money?

15.2

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

15.2

OUTLAYS $4.0 Trillion

REVENUES $3.4 Trillion

DEFICIT $559 Billion

DEBT HELD BY

THE PUBLIC (End

of Fiscal Year)

$14.8 Trillion

Congressional Budget Office BUDGET PROJECTIONS FOR FY 2017 (https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-outlook_0.pdf Page 2, as of January 2017)

https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-outlook_0.pdf

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Monetary Policy

15.3

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Monetary Policy

 Monetary Policy A form of government regulation in which the nation’s money supply and interest rates are controlled

 The Federal Reserve System The organization in the U.S. tasked with such responsibilities as managing the money supply, stabilizing prices, moderating interest rates, and reducing unemployment

15.3

HW11

American Politics in Comparative Perspective: How Does the Federal Reserve Compare With Other Central Banks?

What should a government do when economic goals come into conflict? If, for example, combating inflation increases unemployment, which goal should be prioritized?

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Federal Reserve System (The Fed)

 Structure  Federal Reserve System - Board, Committee, 12

Federal Reserve Banks, and other member banks

 Board of Governors – makes most economic decisions regarding interest rates and the supply of money

 Current Chair – Janet Yellen

 Dual Mandate  Control inflation  Limit unemployment

15.3

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Tools of Monetary Policy

 Open market operations Buying and selling of government securities, or debt, by the Federal Reserve Bank

 Member banks buy federal bonds, reduces money available for loans, increases interest rates

 Fed buys from member banks, then more money available for loans, reduces interest rates

 Discount rate Rate of interest at which it lends money to member banks

 Reserve requirements Designate the portion of deposits that member banks must retain on hand

15.3

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Health Policy

15.4

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 Medicare  Health insurance for people sixty-five and older

 Administered by the Department of Health & Human Services

 2015 - $632 billion; projection for 2026 - $1.085 trillion

 Medicaid  Health insurance for the poor and disabled

 Recipients must meet eligibility requirements

 Joint venture between the national and state governments

Health Policy 15.4

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 The Affordable Care Act (ACA 2010)

 Goal: ensure Americans access to health coverage

 Major Provisions  Government-run health insurance exchanges  Individual mandate requires coverage or subject to a fine  Coverage under parents until age 26  Elimination of insurance denial due to pre-existing conditions

 Some States Have Challenged the Program

 Supreme Court decisions:  2012 upheld constitutionality of individual mandate  2015 upheld the legal status of the insurance exchanges

 Republicans Vow to “Repeal and Replace.”

Health Policy 15.4

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 Tools to Protect Public Health  Immunizations, education, advertisements, regulations

 Government Agencies  National Institutes of Health – medical research

 Centers for Disease Control and Prevention (CDC)

 Food and Drug Administration (FDA)

 Health Threats Related to the Environment  Environmental Protection Agency (EPA)

 Air and water pollution

 Lead poisoning

Health Policy – Public Health 15.4

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Education Policy

15.4

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 Every Student Succeeds Act (ESSA, 2015)  Returned control to the states

 Withdrew federal support for the Common Core

 School Choice  Vouchers

 Charter schools

 Semi-private, thus different controls on curriculum

 Not large enough to accommodate all – possible inequality in access

Education Policy – Primary and

Secondary Education

15.5

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

 Title IX - Educational Amendment Acts (1972)  All schools that receive federal funding must comply

 Bars discrimination on the basis of sex in admissions, financial

aid, athletics

 Improving access to affordable education  Federal Direct Student Loan Program; Work Study

 Pay As You Earn loan repayment plans (2015) - Cap

repayments at 10% of income

Education Policy – Higher

Education

15.5

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Social Welfare Policy

15.5

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Social Welfare Programs

 Entitlement Program  Government benefits that all citizens meeting eligibility

criteria are legally entitled to receive

 Non-Means-Tested Program  Programs that provide cash assistance to qualified

beneficiaries regardless of income

 Means-Tested Program  Programs that require that beneficiaries have incomes

below specified levels to be eligible for benefits.

15.6

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Social Welfare Programs

 Non-Means Tested Programs

 Old Age, Survivors, and Disability Insurance (Social Security)

 Current workers fund benefits for retirees

 Unemployment Insurance

 Covers people who lose their jobs through no fault of their own

 Administered by states – differences in benefit amount, length, and eligibility

15.6

American Government: Roots and Reform, 2014 Election Update, 12e O'Connor | Sabato | Yanus

Social Welfare Programs

 Means-Tested Programs

 Supplemental Security Income (SSI)  Covers needy elderly and disabled citizens

 Family and Child Support  Temporary Aid for Needy Families (TANF)

 Supplemental Nutrition Assistance Program

15.6

Energy and Environmental Policy

Environmental pollution is the by-product or consequence of development that imposes unwanted costs, or externalities, on society at large.

Evolution of Energy and

Environmental Policy

 Industrialization and Conservation  Abundant coal and oil

 Teddy Roosevelt and the U.S. Forest Service (1905)

 Environmental Protection  Rachel Carson's Silent Spring (1962) highlighted

environmental damage due to toxic and hazardous waste

 Earth Day 1970

 Energy Concerns  Oil Dependency - OAPEC (embargo) & OPEC (prices) 1970s

 Department of Energy (1977)

 Climate change concerns (1980s)  Greenhouse gases and global warming

Energy Policy

 Policy addresses consumption and production  Consumption – i.e. efficiency requirements for

cars, buildings  Production – i.e. extraction (drilling) and

transport (pipeline)

 Party Platform  Republicans more likely to support business

opportunities  Democrats more supportive of developing

alternative energy sources and concerned about potential environmental damage

Environmental Policy

 National Environmental Policy Act of 1969  Required environmental impact statements when the

government proposed a project

 Environmental Protection Agency (1970)

 Clean Air Act of 1970  Established national primary (human health) and secondary

(non-health) air quality standards

 Clean Water Act of 1972  Goal to make all surface water "swimmable and fishable" by

1985

Climate Change

 Difficulties for comprehensive federal reform  Exact impact unknown  No easy solution

 Lack of federal action has led to states taking their own initiatives (individually and collectively)

 Paris Climate Agreement (Accord)  Agreement signed by 195 United Nations (UN) member

countries.  June 2017, President Trump declared the U.S. will withdraw

from the agreement. Earliest possible date will be November 2020.