Copyright © 2009 Pearson Education, Inc. Publishing as Longman. THE AGENDA-SETTING PROCESS WHAT’S ON THE AGENDA IS… MOST IMPORTANT ALWAYS CHANGING

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. SHARED POLITICAL VALUES TRADITION AND CUSTOMS SPECIFIC EVENTS ELITE OPINION WHAT DETERMINES THE AGENDA?

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. PUBLIC DEMANDS SPECIFIC GROUPS GENERAL OPINION CHANGE IN VALUES CHANGE IN PRIORITIES SCOPE OF GOVERNMENT INVOLVEMENT IS INCREASING

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. (MORE REASONS WHY) INSTITUTIONAL DEMANDS COURTS BUREAUCRACY LEGISLATIVE BRANCH ESPECIALLY THE SENATE MEDIA PUBLICIZES… NEW IDEAS NEW EVENTS SCOPE OF GOVERNMENT INVOLVEMENT IS INCREASING

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MAKING A DECISION NATURE OF ISSUE GROUPS AFFECTED & INTENSITY POTENTIAL COSTS / BENEFITS TO WHO? (WINNERS) FROM WHO? (LOSERS) 15-2

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. MAJORITARIAN POLITICS COSTS TO LARGE # OF PEOPLE BENEFITS TO LARGE # OF PEOPLE AFFECTS ON BLOCS OF VOTERS

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. SOCIAL SECURITY IS A MAJORITARIAN POLICY

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INTEREST GROUP POLITICS CONCENTRATED COSTS CONCENTRATED BENEFITS AFFECTS VERY FEW PEOPLE

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. CLIENT POLITICS LARGE BENEFITS TO A FEW LOW COSTS TO MANY

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. ENTREPRENEURIAL POLITICS BENEFITS TO MANY COSTS TO ONLY A FEW

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. PUBLIC POLICY POLITICS MAJORITARIAN CLIENT ENTREPRENEURIAL INTEREST GROUP

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. BUSINESS REGULATION DIFFERENT VIEWS ON WEALTH AND POWER WEALTH IS GOOD = AN INCENTIVE / REWARD WEALTH CAN BE BAD, B/C IT GIVES POWER 15-3

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. BUSINESS REGULATION 1 - WEALTH = POWER 2 - POWER THREATENS MARKET ECONOMY POWER THREATENS DEMOCRACY 15-3

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. LAISSEZ FAIRE NO GOV’T INVOLVEMENT DOMINATED EARLY U.S. HISTORY ’S (Progressive Era) or , 1932 (Grt. Dep.)

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. BUSINESS-CUSTOMER REGULATION PEOPLE WANTED GOV’T REGULATION (RAILROADS, “BIG BUSINESS”) SHERMAN ANTI-TRUST ACT (1890) “PROGRESSIVE ERA”

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. LABOR-MANAGEMENT REGULATION LEGAL RIGHT TO UNIONIZE & COLLECTIVE BARGAINING LEGAL RIGHT TO STRIKE 1930s (Great Depression)

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GOVERNMENT’S PROTECTIVE ROLE FOR BUSINESS

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. TARIFFS LICENSING PRODUCTION LIMITS SUBSIDIES PRICE SUPPORTS REGULATIONS

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. TRADE AGREEMENTS BANKRUPCY LAWS COPYRIGHT LAWS PATENTS RESEARCH SUPPORT REGULATIONS

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Educator Details: Name: BROWN, MARK District Last Employed: Brookville Local School District Building:Brookville High School Credentials Type Class Teaching Area(s) High School (7-12)StandardComprehensive Social Studies 4 Year Certificate $ Year Certificate Permanent Certificate Year Temporary Pupil Activity Supervisor Validation Alternative Educator License 24.00

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. PAC Contributions from Sugar-Related Interests (1/1/89-11/28/04) Beet$5,174,101 Cane$3,005,738 Corn Sweeteners$1,990,639 U.S. FARM POLICY – PRICE SUPPRTS FOR SUGAR PRODUCERS. U.S. FARM POLICY – HIGH TARIFFS ON IMPORTED SUGAR. U.S.SUGAR PRICES ABOUT 20% HIGHER THAN WORLD PRICE. 27 COMPANIES PRODUCE 57% OF ALL U.S. SUGAR.

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Tobacco Subsidies by year, U.S. Total Year Tobacco Subsidies 1995 $ $ $ $ $ $345,123, $129,247, $4,990, $51,121, $5, $ $0 Total$530,488,022

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COWBOY / CORPORATE WELFARE

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Economic Policymaking Chapter 17 Edwards, Wattenberg, and Lineberry Government in America: People, Politics, and Policy Fourteenth Edition

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. MAJOR TYPES OF WORLD ECONOMIES

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. “Pocketbook Issues” aka “People vote with their wallets”

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. POLITICS AND ECONOMICS PEOPLE HOLD THE PRESIDENT ACCOUNTABLE FOR THE ECONOMY... BUT THE PRESIDENT CAN’T CONTROL THE ECONOMY.

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Progressive Era  Increased interstate regulation  Railroads, business, and banking.  Growth in consumer protection  Eventual Food & Drug Administration  Creation of the Federal Reserve System.  Establishment of Federal Trade Commission.

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. 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.

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Social Regulation Era  Economic regulation controls business and industry.  Minimum wage  Social regulation sets quality and safety standards.  1960s and 1970s.

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Government, Politics, and the Economy “It’s the Economy, Stupid”: Voters, Politicians, and Economic Policy Economic trends affect who voters vote for. Republicans worry about inflation. Democrats stress importance of unemployment.

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THE FEDERAL RESERVE SYSTEM (THE FED – Created in 1913) DETERMINES… –MONEY SUPPLY –INTEREST RATES –RESERVE RATE FOR BANKS

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Figure Federal Reserve System  Back

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Policies for Controlling the Economy Fiscal Policy of Presidents and Parties Fiscal Policy Impact of the federal budget on the economy. Keynesian Economic Theory Government spending and deficits help ease the ups and downs of the ‘business cycle’

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Policies for Controlling the Economy Fiscal Policy of Presidents and Parties Supply-Side Economics (Laffer Curve) Too much taxation Not enough money to purchase goods / services. Relax government regulation Business will create a greater supply of goods Reduce taxation People will work more (More $) & produce more

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. t* represents the rate of taxation at which maximal revenue is generated, however, the curve need not be single peaked nor symmetrical at 50% The Laffer Curve

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Government can’t Control the Economy 1-Budgets prepared in advance 2-Government makes economic policy slowly 3-People disagree on plans 4-Some benefits are indexed 5-Federal gov’t spends % of GDP

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Figure Federal Revenues  Back

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Figure Discretionary Spending  Back

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Politics and the International Economy Protectionism The economic policy of shielding an economy from imports. Use of tariffs common. World Trade Organization (WTO) Free trade is controversial General Agreement on Trade and Tariffs (GATT)

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Arenas of Economic Policymaking Business and Public Policy Bankruptcy Corporate mergers Antitrust policy: prevent monopoly ensure competition

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Compare USA spending and taxes To other countries

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Government Support of Workers National Labor Relations Board (NLRB): Created in 1935 by the Wagner Act Regulates labor-management relations The Taft-Hartley Act (1947) The right of collective bargaining allowed Prohibited various unfair practices by unions Government employees protections Unemployment insurance Minimum wage

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Figure Minimum Wage Growth  Back

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Understanding Economic Policymaking Democracy and Economic Policymaking Voters expect what politicians can’t control Eg: Stop outsourcing, control oil/gas prices Sometimes economic theory and democratic theory may be at cross purposes. It is politically difficult to make decisions that hurt groups or involve short-term pain for long-term gain.

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Understanding Economic Policymaking Economic Policymaking & the Scope of Government Liberals (generally Dems) tend to favor more federal government involvement in the economy. Conservatives (generally Reps) favor less federal government involvement in the economy. Establishment – Business support OK Tea Party – Much less gov’t support

Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Summary Political and economic sectors are closely intermingled. Voters expect politicians to control what they can’t. Government economic tools –Monetary policy –Fiscal policies