PUBLIC POLICY NEED TO KNOW: Unit 5

POLICY-MAKING PROCESS Chapter 17

Policy-Making Process Costs vs. Benefits; Distributed vs. Concentrated Majoritarian Politics  Distributed Costs, Distributed Benefits  Ex, Social Security, National Defense Interest Group Politics  Concentrated Costs, Concentrated Benefits  Ex, Labor Disputes Client Politics  Distributed Costs, Concentrated Benefits  Ex, Pork-Barrel Legislation Entrepreneurial Politics  Concentrated Costs, Distributed Benefits  Ex, Superfund

ECONOMIC POLICY Chapter 18

Economic Decision-Making Deficit  Spending more than Revenue National Debt  TOTAL owed  All deficits since beginning of USA – today = $17 Trillion Economy and Politics  Pocketbook Voting Troika – President’s economic advisors  CEA – expert analysis  OMB – helps prepare budget  Secretary of Treasury – link to finance industry

Economic Theories Monetarism  Fix economy by regulating the money supply Keynesianism  Government should SPEND to stimulate economy Economic Planning  Government should use wage and price controls to direct economy Supply-Side Theory  Tax cuts will lead to increased productivity Reaganomics  Mix of Supply-Side tax cuts, decreased domestic spending, monetarism, and increased military spending – Successful in short-term, terrible in long term

Monetary Policy Monetary Policy = Supply of money, interest rates Federal Reserve is in charge of Monetary Policy FED  7 members of Fed Board (appointed & confirmed)  14 year, non-renewable terms  12 Regional FED banks  6,000 Member banks  Independent of Prez and Congress? What the Fed Does  Buy & Sell bonds to increase/decrease money supply  Require banks to keep money on hand (affects interest on loans)  Change interest rates

Fiscal Policy Fiscal Policy = Taxing and Spending (Prez & Congress) Federal Budget  Process: Prez & OMB prepare budget proposal, send to Congress  Congress studies budget with CBO & pass Budget Resolutions (budget ceiling).  Specific Appropriations bills need to be passed individually  New budget amount based on previous year  Mandatory Spending (Entitlements) vs. Discretionary Spending  Largent Mandatory = Social Security & Medicare (2/3 of budget)  Largest Discretionary = Military  Entitlements = required spending on programs to help those who qualify Attempts to bring down budget deficit  Gramm-Rudman-Hollings  Caps on Spending, Sequester  Budget Enforcement Act of 1990  Pay-as-you-go approach

Taxes Largest Sources of Revenue  Income Taxes (US tax rates much LOWER than World)  Payroll Taxes (Social Security)  Corporate Income Taxes Kinds of Taxes  Proportional – Same %, no matter the income  Progressive – Higher income = Higher %  Income Tax  Regressive – Higher income = Lower %  Sales Tax

SOCIAL WELFARE Chapter 19

Social Welfare Entitlements Means-Test = only for people below certain income level Social Security = biggest entitlement  Contributory (we pay into it – so do employers)  May go bankrupt soon-ish Medicare (old people – no means test) vs. Medicaid (poor people – means test) AFDC (welfare) – very controversial – no longer exists

FOREIGN AND MILITARY POLICY Chapter 20

Foreign Policy Groups Sec of State  Diplomacy Sec of Defense  Administrative (Civilian) Head of Military Joint Chiefs of Staff  Military leaders of each branch National Security Council  Prez, VP, Sec of State & Def, Chairman of JCoS, NSA

Congress vs. President Congress  Declare War  Power of the Purse  Oversight  War Powers Resolution  Approve Treaties and Ambassadors President  Commander-in-Chief  Treaties  Ambassadors  Power of the Public  The 2 Presidencies

US Military Civilian Control of the Military Chain of Command Defense Budget  Bigger than other top 11 nations combined Defense Cuts very difficult Military-Industrial Complex  Defense Contractors too powerful  War is used to make profit

ENVIRONMENTAL POLICY Chapter 21

Environmental Policy EPA Global Warming Debate Pollution  Offsets  Bubble Standards  Pollution Allowances Superfund