1. WHAT IS PUBLIC POLICY? Social and Economic Policy

2. Solving Public Problems © EMC Publishing, LLC Public policy is a government plan of action to solve:  Either a problem that affects all or most of the people  Or a problem that people cannot solve on their own When a problem occurs within the United States, the government response is called domestic policy.

3. Challenges to Solving Public Problems © EMC Publishing, LLC People disagree about what constitutes a problem.  Example: Some think our health care system is the best, while others criticize it for not covering everyone. Solutions sometimes create new problems.  Example: Policies that are tough on crime can overcrowd the courts and slow down the justice system. Solutions cost money, which is often hard to obtain. Public problems can be complex.

4. Types of Public Policy © EMC Publishing, LLC Redistributive policies attempt to redistribute resources. Examples: Medicaid and food stamps  These are difficult to introduce. Distributive policies are funded by the entire taxpayer base. Example: Federal grants for higher education  These are easier to put into place. Regulatory policies regulate or limit the actions of certain groups or individuals. Example: Limits on air emissions

5. Policy Makers and Process © EMC Publishing, LLC Congress usually creates policies. The president may create policy. The Supreme Court has been responsible for major changes in policy. All three branches of the government generally work together to establish national policies.

6. ECONOMIC POLICY Social and Economic Policy

7. Basic Economic Principles © EMC Publishing, LLC The laws of supply and demand control the economic market.  As price drops, quantity demanded goes up.  As price goes up, quantity supplied goes up. The gross domestic product (GDP) measures the health of the economy. Controlling inflation is a major concern. A recession occurs when the GDP declines for two consecutive quarters.

8. Fiscal and Monetary Policy © EMC Publishing, LLC Economic policy is designed to solve economic problems and help the market run smoothly. Fiscal policy is the government’s power to tax and spend.  Fiscal policy is set by Congress and the president through the budget. Monetary policy is the government’s power to regulate the money supply.  The money supply is most commonly changed by raising or lowering interest rates.

9. The Federal Reserve System © EMC Publishing, LLC In 1913, Congress established the Federal Reserve System (the Fed). The Fed is an independent agency that reviews the overall economy without political pressures. The Fed controls the money supply.

10. The Federal Budget © EMC Publishing, LLC The federal budget is a plan for spending and earnings. The president prepares the budget with the help of the Office of Management and Budget. They consider:  Agency requests  Income and expenses  Spending priorities, including discretionary and mandatory (also called entitlement) programs.  Congress approves the budget by passing appropriations bills.

11. Major Expenses in 2004 U.S. Budget (in billions) © EMC Publishing, LLC

12. Sources of Federal Income © EMC Publishing, LLC Taxes are the major source of income. A progressive tax is one whose rate increases as the ability to pay increases. Example: U.S. federal income tax A regressive tax requires everyone to pay the same rate. Examples:  Sales taxes: Taxes on purchases  Excise taxes: Taxes on specific items such as cigarettes

13. Major Sources of Income in 2004 U.S. Budget (in billions) © EMC Publishing, LLC

14. Economic Regulatory Policy © EMC Publishing, LLC Government regulates business to help companies prosper and to foster competition so that prices remain low. The government uses antitrust policies to keep companies from banding together to form monopolies, single producers that dominate a market and eliminate competition. The government protects workers but also limits the power of labor unions.

15. SOCIAL AND ENVIRONMENTAL POLICY Social and Economic Policy

16. Social Welfare Policies © EMC Publishing, LLC Social welfare policies provide for those who cannot, or sometimes will not, provide for themselves. Most are means-tested programs: Beneficiaries must meet the government’s criteria for eligibility. Most are also redistributive: They transfer resources from those who can pay to those who cannot. They help people with food, shelter, education, medical assistance, and other needs.

17. Social Security © EMC Publishing, LLC Social security is a social insurance program—a government program in which people make payments in exchange for future benefits. President Franklin D. Roosevelt established Social Security with the Social Security Act of 1935 as part of his New Deal.

18. Health Care Policy © EMC Publishing, LLC Two federal health care programs are in place:  Medicaid is a social welfare program.  Medicare is a social insurance program. Medicaid helps poor people with medical costs. Medicare provides health care coverage to Americans who are at least age 65 or are disabled. Total U.S. health care spending is rising dramatically. In 2003–2004, the United States spent about twice as much on health care as did Canada, France, Germany, Sweden, and Japan.

19. Per Capita Health Expenditures, 2003–2004 © EMC Publishing, LLC

20. Welfare Policy © EMC Publishing, LLC Temporary Assistance for Needy Families (TANF)  Requires work in exchange for benefits  Provides money to states and relies on states to set guidelines Food stamps  Based on family income Head Start  Focuses on getting children ready for elementary school

21. Percentage of the Population Receiving Welfare, 1960–2004 © EMC Publishing, LLC

22. Environmental Policy © EMC Publishing, LLC Environmental policies lead to regulations designed to improve the quality of the physical world in which we live. Environmental policies are usually regulatory. In 1970, President Richard Nixon established the Environmental Protection Agency (EPA). Since then, Congress has addressed issues such as air and water pollution, toxic waste, and the rights of land owners. Issues surrounding fossil fuels are a major focus.