Chapter 13 Domestic Policy  To Accompany Comprehensive, Alternate, and Texas Editions American Government: Roots and Reform, 10th edition Karen O’Connor and Larry J. Sabato  Pearson Education, 2009

Theories of Public Policy Elite theory. Bureaucratic theory. Interest group theory. Pluralist theory.

The Policy-Making Process Problem recognition, or identifying a need for change. Agenda setting, or determining the issues to discuss. Policy formulation, or the crafting of proposed action. Policy adoption, or the approval of policy. Budgeting, or identifying funding sources. Policy implementation, or carrying out new policies. Policy evaluation, or determining what a policy is doing.

Figure 17.1- Policy-Making Process  Back

Evolution of Income Security Before the 1890s, government did little. Great Depression created a greater need for assistance. Civil Works and Works Progress Administrations. Social Security Act represents beginning of welfare state. Creates old age insurance program. Establishes unemployment assistance.

Roots of Health Care Policy Governments have long advocated for public health. National health insurance was considered in 1930s. Failed due to lobbying of American Medical Association. Government’s role has expanded over time. No universal coverage exists.

Non-Means Based Programs Today Entitlement programs provided regardless of income. Funded by payroll taxes. Social Security-- old age, survivors, and disability. Solvency of the Social Security program is a concern. Unemployment insurance.

Figure 17.2- Social Security  Back

AV- Unemployment Rates  Back

Means Tested Programs Today Entitlement programs provided only if individuals qualify. SSI, to help needy aged or blind. Temporary Assistance for Needy Families (TANF). TANF largely run by the states through block grants. Earned Income Tax Credits. Food stamps.

Table 17.1- Welfare Program Recipients  Back

Health Care Programs Today Government provides care for veterans and Indians. Sponsors research at National Institutes of Health. Most people use single-payer private healthcare system. Costs are rapidly increasing. Government funds Medicare and Medicaid. Also plays a major role in public health management.

Figure 17.3- Health Care Spending  Back

Roots of Energy Policy By 1970s, U.S. had grown dependent on foreign oil. Oil embargoes posed a serious crisis. Government set conservation and efficiency standards. Creation of Department of Energy. 1978 Energy Tax Act and National Energy Act.

Roots of Environmental Policy First Earth Day in 1970. Creation of the Environmental Protection Agency. Clean Air Act of 1970 and 1972 Clean Water Act. Federal policies continue to grow in 1970s.

Policy Hibernation Energy and Environment fade in 1980s. Reagan took steps to reduce government’s role. Petroleum supply became more stable. Bush and Clinton continue limited involvement.

Return to Prominence 9/11 attacks make energy security a major issue. Increasing concerns about global warming. 2007 Energy Independence and Security Act. Growing interest in alternative energy.

Chapter 13 Economic Policy  To Accompany Comprehensive, Alternate, and Texas Editions American Government: Roots and Reform, 10th edition Karen O’Connor and Larry J. Sabato  Pearson Education, 2009

Roots of Economic Involvement Regulation was limited in the nineteenth century. Prevailing attitude was laissez-faire. As business cycles changed, need for intervention grew. Growth in tariffs. Railroads required interstate regulation. Sherman Anti-Trust Act of 1890.

Progressive Era Increased regulation of railroads, business, and banking. Growth in regulation of food industry. Creation of the Federal Reserve System. Establishment of Federal Trade Commission.

Depression and the New Deal Laissez-faire state becomes interventionist. Creation of Federal Deposit Insurance Corporation. Founding of Securities and Exchange Commission. Passing Agricultural Adjustment Acts. Ratification of new labor and industrial regulations.

Social Regulation Era Economic regulation controls business and industry. Social regulation sets quality and safety standards. Social regulation emerges in 1960s and 1970s. Agencies like EPA, OSHA, NTSA. Brings new businesses into governmental regulation.

Deregulation Reduction in market controls in favor of competition. Airlines are first to be deregulated in 1978. Attempts to end crop subsidies in mid-1990s. Radio deregulated in 1996. Mixed results and calls to “reregulate.”

Stabilizing the Economy Economic stability is condition of economic growth. Instability involves inflation or recession. Inflation occurs when demand is high and prices rise. Recession is marked by a decline in the economy.

Monetary Policy Money establishes a system of exchange for goods. Supply controlled by Federal Reserve. Board of Governors sets rules and regulations. System of banks governed by reserve requirements. Establish discount rate of interest. Work within open market operations. Must cooperate with Congress and executive branch.

Figure 18.1- Federal Reserve System  Back

Fiscal Policy Use of public policy to maintain economic stability. Discretionary fiscal policy is choice of deficit or surplus. First serious use was in 1960s. Large partisan divide over appropriate policy. International economy has a important influence. Globalization creates new priorities and wage systems.

Figure 18.2- Minimum Wage Growth  Back

The Budget Process Government raises money form a variety of sources. Spending goes largely to defense and human resources. President prepares budget and submits to Congress. Congress authorizes all spending. Major budget conflicts can emerge. Bush administration spent record amounts.

Table 18.1- Federal Budget Process  Back

Figure 18.3- Federal Revenues  Back

Budget Deficits and the Debt A deficit is the amount that spending exceeds revenue. Debt is the total of all deficits, plus interest. Continual effort to limit deficits. Attempts to mandate balanced budgets have failed. Bush administration brought about record deficits.

Figure 18.4- Discretionary Spending  Back

AV- Deficit Projection  Back

Funding the War in Iraq Wars cost tremendous amounts of money. Cost of Iraq war could exceed $2 trillion. These costs place serious burden on the budget. They also detract from domestic spending.

The Subprime Mortgage Crisis Low interest rate, low down payment mortgages. Source of crisis may go back to Clinton administration. Low interest rates after 9/11 also contributed. Government was forced to intervene. Took over Fannie Mae and Freddie Mac. Congress passed $700 billion bailout bill.