1. AP GOVERNMENT COOKBOOK Unit V: Public Policy.

2. SYLLABUS - Unit V Description V.Public Policy- Public policy is the result of interactions and dynamics among actors, interests, institutions, and processes. The formation of policy agendas, the enactment of public policies by Congress and the president, and the implementation and interpretation of policies by the bureaucracy and the courts are all stages in the policy process with which students should be familiar. Students should also investigate policy networks and issue networks in the domestic and foreign policy areas. The study of these will give students a clear understanding of the impact of federalism, interest groups, parties, and elections on policy processes and policymaking in the federal context. Students should be familiar with major public policies PAGE 1

3. Unit V Vocabulary: Public Policy PAGE 2

4. Unit V Vocabulary – Public Policy

5. Public Policy Overview Simple Definition: Public policy is a course of action adopted and pursued by a government. (Laws, regulations, philosophies, etc.) Foreign Policy Courses of action regarding issues OUTSIDE the Country Ex: Treaties, Trade Agreements, Alliances Domestic Policy Courses of action regarding issues INSIDE the Country Ex: Health Care, Fiscal Policy, Monetary Policy, Budgeting There are TWO main avenues of Policy Public Policy Notes: 1. Public Policy is created by iron triangles & issue networks. 2.Public Policy is constantly changing and evolving. 3.Public Policy is a summative measure of how the government views a particular topic

6. Foreign Policy Formation Top Influences on Foreign Policy: President State Department, led by Secretary of State Senate Committee on Foreign Affairs Defense Department led by Secretary of Defense Foreign Diplomats Foreign Governments Interest Groups Public Opinion FORMAL TREATIES AND TRADE AGREEMENTS: Negotiated by the President and State Diplomats Passed To The Senate: Ratified by 2/3 EXECUTIVE AGREEMENTS: Negotiated by the President and State Diplomats Signed into law by the President. Similar to Executive Orders. Subject to Judicial Review. Quicker than formal treaties; not as durable. AGENTS OF FOREIGN POLICY TEND TO BE HIGHLY SPECIALIZED.

7. Domestic Policy Formation Top Influences on Domestic Policy: President Both Houses of Congress Interest Groups Federal Bureaucracy State Governments Public Opinion INTEREST GROUPS AND PUBLIC OPINION CONGRSSIONAL COMMITTEES WHITE HOUSE AND FEDERAL BUREAUCRACY HOW DOMESTIC POLICY FORMS

8. Fiscal Policy Formation FISCAL POLICY IS A BRANCH OF DOMESTIC POLICY THAT DEALS WITH TAXATION AND FEDERAL SPENDING Taxation: Tax Policy is formulated by the President, the OMB, the IRS and Congress Spending: Spending Policy is formulated by the President, the OMB the IRS and Congress TWO TYPES OF FEDERAL SPENDING: MANDATORY: SPENDING THAT IS DICTATED BY PREVIOUS POLICY DECISIONS. COMPOSED OF ENTITLEMENTS (SUCH AS SOCIAL SECURITY) AND INTEREST PAYMENTS ON BONDS AND LOANS. DISCRETIONARY: SPENDING THAT IS AUTHORIZED BY THE CURRENT ADMINISTRATION. THIS SPENDING MAY EXPIRE OR BE RENEWED. (INFRASTUCTURE PROJECTS, MILITARY RESEARCH)

9. Monetary Policy Formation MONETARY POLICY IS A BRANCH OF DOMESTIC POLICY THAT DEALS WITH STEERING THE ECONOMY BY ADJUSTING THE INTEREST RATE AND MONEY SUPPLY. The BIG Goal- Keep the economy from overheating or bottoming out. In other words… STEADY GROWTH! MONETARY POLICY TOOL HOW DO THEY DO IT?IMPACT: LOWER THE INTEREST RATE MANDATE BANKS TO LOAN MONEY FOR LESS. MORE LOANS. ECONOMY GROWS. RAISE INTEREST RATEMANDATE BANKS TO LOAN MONEY FOR MORE. FEWER LOANS. ECONOMY SLOWS. INCREASE MONEY SUPPLY BUY T-BILLS BACK FROM THE PUBLIC MORE MONEY – ECONOMY GROWS REDUCE MONEY SUPPLYSELL T- BILLS TO THE PUBLIC LESS MONEY – ECONOMY SLOWS RAISE RESERVE RATEMANDATE BANKS TO KEEP MORE IN RESERVE. FEWER LOANS – ECONOMY SLOWS. LOWER RESERVE RATEALLOW BANKS TO KEEP LESS IN RESERVE. MORE LOANS – ECONOMY GROWS

10. The Federal Reserve Board The Federal Reserve is a unique agency in the bureaucracy, The Seven,members of the federal reserve board are appointed by the President and serve 14 year terms. THE FEDERAL RESERVE BOARD IS AN INDEPENDENT REGULATORY AGENCY THAT IS SOLELY CONCERNED WITH MONETARY POLICY. Alter Money Supply Alter Interest Rate Alter Reserve Percentage How does the Federal Reserve Board steer the economy? Approximately ONE THIRD of all banks of the United States are under the oversight of the Federal Reserve Board? All national banks MUST be members. By imposing its will on national banks, the federal reserve board controls the economy.

11. Budget Formation

12. Trends in Policy and Budget Formation Trends in Budget Formation: 1. In the last 80 years, spending on entitlement programs has been steadily INCREASING. (EX: Social Security and Disability Benefits) 2.In the last 80 years, mandatory spending has become a much larger percentage of the budget than discretionary spending (EX: Loan interest and foreign debt) 3.Presidents and Congresses are very quick to increase spending on social programs and very slow to increase taxes. This is because raising taxes may ruin reelection chances and often leads to a budget deficit. 4.The United States government has seriously considered a “Balanced Budget Amendment” that would require Congress to limit spending to tax revenues. 5.Income tax represents the largest amount of revenue for the Federal Government. Republicans (Conservatives) Democrats (Liberals) Fiscal Policy Favor Tax Cuts Favor Decrease of Federal Program Spending Favor Tax Increase Favor Increase of Federal Program Spending Monetary Policy Laissez-Faire Capitalism Favor a reduction of monetary regulation Disapproval of Federal Reserve Activity Keynesian Economics Favor an increase of monetary regulation Approval of Federal Reserve Activity