Unit 6: Public Policy AP US Government

Presentation Outline Economic Policymaking Social Welfare Policymaking Healthcare and Environmental Policy 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.

Government, Politics, and the Economy 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.

Government, Politics, and the Economy 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

Government, Politics, and the Economy “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.

Government, Politics, and the Economy 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.

Government, Politics, and the Economy Unemployment: Joblessness in America, 1960-2002 (Figure 17.1)

Government, Politics, and the Economy 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.”

Policies for Controlling the Economy 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.

Policies for Controlling 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.

Arenas of Economic Policymaking 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.

Arenas of Economic Policymaking 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.

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, and Public 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, and Public 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

American Foreign Policy: Instruments, Actors, and Policymakers Actors on the World Stage International Organizations (UN) Regional Organizations (NATO, EU) Multinational Corporations Nongovernmental Organizations Individuals

American Foreign Policy: Instruments, Actors, and 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

American Foreign Policy: An Overview The Cold War Containment Abroad and Anti-Communism at Home The Swelling of the Pentagon (arms race) The Vietnam War

American Foreign Policy: An Overview 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

American Foreign Policy: An Overview 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