1. Making Public Policy

2. Economic Policy and the Budget Key Concepts-  Politicians & economists have conflicting views on how to regulate the economy  Economic policy-making involves several parts of the government  The budget indicates how much the government will collect in taxes and spend

3. Government Role in the Economy Fiscal Policy – Congress, CBO, Sec. of Treasury, OMB and the President  Raising money Taxes – Social insurance, Individual income, Corporate, and excise Borrowing  Spending

4.  Spending money Entitlements National Defense Interest on Debt Grants

5. The Budget Policy document Collect in taxes Spend in revenues How these revenues will be spent 2008 = $2.66 Trillion in receipts, $2.9 Trillion in spending

6. Spending Discretionary spending – Departments and agencies = $1.4 Trillion Mandatory spending- examples - Social Security, Medicare, and Medicaid = $1.788 Trillion Iraq and Afghanistan not included in regular budget

8. Figure 16.4: Tax Burdens in Nineteen Democratic Nations

9. Figure 16.5: Federal Taxes on Income, Top Percentage Rates Source: Updated from Congressional Quarterly Weekly Report (September 18, 1993), 2488.

10. Monetary Policy  controls money supply by changing reserve rates, interest rates & treasury notes Federal Reserve Board = The Fed members are appointed by the president and serve 14 yr. terms

11. Social Welfare Two Kinds of Welfare  1. Benefit most or all - ex. Social Security  2. Benefit only a small amount – ex. Medicaid

12. Social Welfare The big Three  Old Age, Survivors, and Disability Insurance (OASDI) or Social Security  Medicare – For retired & disabled people  Medicaid – For low income

13. Social Welfare Both SS and Medicare are controversial policies. The problems with funding them cut across several aspects of the policy-making process.

14. Foreign & Military Policy The Constitution’s ambiguous definition of the foreign policy powers invites conflict

15. Defense Budget Taxes fund the military Privatization of some functions 2009 - $655 billion China - $70 billion & Russia - $50 billion

17. Figure 20.1: Trends in Military Spending (in constant dollars) Source: Office of the Under Secretary of Defense (Comptroller), "National Defense Budget Estimates for FY 2003."

18. Environmental Policy  Environmentalists v. energy producers  Protection v. costs  Rachel Carson – Silent Spring

20. Figure 16.2: History of the National Debt

21. President as Chief Diplomat 1. In charge of foreign policy 2. Appoints ambassadors 3. Executive agreements 4. Negotiates treaties 5. Recognition of foreign governments

22. A. Senate must approve appointments B. Senate must approve treaties (2/3)

23. President as Commander in Chief 1. Civilian authority over the military A. War Powers Act 1973 B. Congress declares war