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

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

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

4. 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

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

6. THEME B - MAKING A DECISION NATURE OF ISSUE GROUPS AFFECTED INTENSITY CONFLICT POTENTIAL COSTS / BENEFITS HOW MUCH? TO WHO? 15-2

7. 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

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

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

10. INTEREST GROUP POLITICS CONCENTRATED COSTS CONCENTRATED BENEFITS EFFECTS VERY FEW PEOPLE

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

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

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

14. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. THEME C = BUSINESS REGULATION DIFFERENT VIEWS ON WEALTH AND POWER WEALTH IS GOOD, IT’S AN INCENTIVE, REWARD WEALTH CAN BE BAD, B/C IT GIVES POWER 1 - WEALTH = POWER 2 - POWER THREATENS MARKET ECONOMY POWER THREATENS DEMOCRACY 15-3

15. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. LAISSEZ FAIRE NO GOV’T INVOLVEMENT DOMINATED EARLY IN U.S. HISTORY (1776-1890’S) or (1776-1929, 1932 [Grt Dep])

16. 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”

17. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. LABOR-MANAGEMENT REGULATION LEGAL RIGHT TO UNIONIZE & COLLECTIVE BARGAINING LEGAL RIGHT TO STRIKE

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

20. LICENSING (ATTORNEYS, TEACHERS, BARBERS) LIMITS PROFESSION MAINTAINS STANDARDS HIGHER WAGES ( QUALITY & COSTS) Client Politics USUALLY SUPPORTED BY THE PUBLIC

21. 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 $48.00 8 Year Certificate 96.00 Permanent Certificate 120.00 1 Year Temporary 12.00 Pupil Activity Supervisor Validation 21.00 Alternative Educator License 24.00

22. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. PRODUCTION LIMITS (MILK, SUGAR, SHIPPING) KEEPS PRICES HIGHER LESS COMPETITION KEEPS SUPPLY LOWER PUBLIC USUALLY UNAWARE

23. 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.

24. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. GOVERNMENT SUBSIDIES (COTTON, RICE, TOBACCO) PROMOTION OF AN INDUSTRY NOW LIMITED TO EXPORTS

25. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Tobacco Subsidies by year, U.S. Total Year Tobacco Subsidies 1995 $0 1996 $0 1997 $0 1998 $0 1999 $0 2000 $345,123,312 2001 $129,247,286 2002 $4,990,960 2003 $51,121,183 2004 $5,281 2005 $0 2006 $0 Total$530,488,022

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

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

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

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

32. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. “Pocketbook Issues” aka “People vote with their wallets” Personal economics(most studies say this #1) or National economics (Wilson says that is #1)

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

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

35. 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.

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

37. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Government, Politics, and the Economy Introduction Capitalism: An economic system in which individuals and corporations, not the government, own the principal means of productions and seek profits Mixed Economy: An economic system in which the government is deeply involved in economic decisions through its role as regulator, consumer, subsidizer, taxer, employer and borrower Multinational Corporations: Businesses with vast holdings in many countries

38. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Government, Politics, and the Economy Economic Policy at Work: An Illustration 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

39. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Government, Politics, and the Economy Wal-Mart and the World Economy Wal-Mart (the largest company in the world) epitomizes America’s imbedding in the world economy. The proportion of U.S. GDP accounted for by international trade is 30 percent. Wal-Mart takes full advantage of “comparative advantage.” Offshore outsourcing is a key concern of the new global economy.

40. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Government, Politics, and the Economy “It’s the Economy, Stupid”: Voters, Politicians, and Economic Policy Economic trends affect who voters vote for. Economic conditions are the best predictor of voters’ evaluation of the president. Republicans worry about inflation. Democrats stress importance of unemployment.

41. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Government, Politics, and the Economy Two Major Worries: Unemployment & Inflation Unemployment Rate: measured by the Bureau of Labor Statistics (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.

42. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Government, Politics, and the Economy

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

44. Dec 2011 http://www.policymap.com/Landing Pages/unemployment.html?gclid=C NXdh_yuia4CFQsBQAodrFgH7A http://data.bls.gov/cgi- bin/surveymost

45. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. THE FEDERAL RESERVE SYSTEM (THE FED) DETERMINES… –MONEY SUPPLY –INTEREST RATES –RESERVE RATE FOR BANKS

46. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Policies for Controlling the Economy Monetary Policy and “the Fed” Monetary Policy: 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”. Created in 1913 to regulate lending practices of banks and thus they money supply.

47. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Figure 18.1- Federal Reserve System  Back

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

49. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Policies for Controlling the Economy Fiscal Policy of Presidents and Parties 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

50. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Why It Is Hard to Control the Economy Some think politicians manipulate the economy to win reelection. Problems with that theory: 1-Things like the budget are prepared in advance of when they go into effect 2-Government makes economic policy slowly 3-Some benefits are indexed 4-Capitalism can also affect the economy 5-Federal government spends 20-25 percent of GDP

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

52. Figure 18.3- Federal Revenues  Back

53. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Figure 18.4- Discretionary Spending  Back

54. 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) The international organization that regulates international trade. Free trade is controversial Jobs have increasingly been outsourced. But short-term pain equals long-term gain.

55. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. 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, which is the control of a market by one company

56. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Arenas of Economic Policymaking Regulating and Benefiting Business New wave of regulation 2002 tougher penalties for stock fraud Creation of Accounting Oversight Board Regulate accounting industry Businesses benefit from regulation, too Copyrights, inventions, and patents. Government may loan businesses money. Government collects data that business use.

57. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Arenas of Economic Policymaking Consumer Policy - Consumer Lobbying Consumers had little gov’t protection. Food and Drug Administration (FDA): Created in 1913; approves foods and drugs sold in the U.S. Federal Trade Commission (FTC): Responsible for regulating false and misleading trade practices.

58. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Arenas of Economic Policymaking Labor and Government Government historically sided with business. 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 Prohibited various unfair practices by unions. Government now provides unemployment insurance and a minimum wage.

59. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Figure 18.2- Minimum Wage Growth  Back

60. 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.

61. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Understanding Economic Policymaking Economic Policymaking & the Scope of Government Liberals (generally Dems) tend to favor more government involvement in the economy. Conservatives (generally Reps) favor less government involvement in the economy.

62. Copyright © 2009 Pearson Education, Inc. Publishing as Longman. Summary Political and economic sectors are closely intermingled. Voters expect a lot from politicians, more than they can deliver on the economy. Two major instruments available to government for managing the economy— monetary and fiscal policies