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How does government
create plans to address
the needs of society?
LESSON 8
Public Policy
What is public policy?
PUBLIC POLICY: All of government’s actions
and programs that address issues and problems in
society or work toward a national goal
Five stages of creating policy
Recognizing the problem
Formulating the policy
Adopting the policy
Implementing the policy
Evaluating the policy
ELEMENTS OF
PUBLIC POLICY
Economic policy
Domestic policy
Foreign policy
How does public policy apply to
economics?
I.
CREATION OF ECONOMIC POLICY
American economy runs on premise of free
enterprise
Government’s involvement with economy in
history
A.
B.
1.
2.
3.
4.
ADAM SMITH (The Wealth of Nations): Marketplace
governed by supply and demand  existed until
1930s
Roadblock to free enterprise: GREAT DEPRESSION
POST DEPRESSION (New Deal) KEYNESIAN
ECONOMICS (government must spend and invest
when private industry can’t or won’t)
1980s: Return to supply-side economics 
“trickle-down” theory
How does public policy apply to
economics?
C.
MONETARY POLICY: Government’s
control of the money supply
TOO MUCH MONEY? Inflation sets in and
prices go up
TOO LITTLE MONEY? Deflation – the
driving up of the value of a dollar
D.
FEDERAL RESERVE SYSTEM (the
“Fed”): Regional banks that control
bank deposits and amount of money
available on market
How does public policy apply to
economics?
E.
FISCAL POLICY: How the government
raises and spends its money
1.
2.
KEYNESIAN ECONOMICS: Government
must spend to spur economic growth – even
if it has to borrow
SUPPLY-SIDE ECONOMICS: Let business
reinvest its wealth to spur economy (“trickledown” approach)
Provide tax cuts to people and companies
RISKY! Huge deficits generated by cutting taxes
How does government raise
money to pay for public policy?
II.
PAYING FOR PUBLIC
POLICY
FEDERAL INCOME
TAX: Largest source of
federal revenue
A.
1.
2.
Progressive (graduated)
tax: The more money you
make, the higher percentage
you pay
People and companies
provide 57% of national
revenue through taxes
How does government raise
money to pay for public policy?
OTHER TAX
REVENUES
B.
1.
2.
3.
4.
SOCIAL INSURANCE
TAXES (34% of revenue):
Payments for Social Security,
Medicare, and unemployment
compensation  regressive
tax that hits poor harder
EXCISE TAXES: Taxes on
manufacture, transportation,
sale, or consumption of goods
ESTATE & GIFT TAXES:
Taxes on property and gifts of
money
CUSTOMS DUTIES &
TARIFFS: Taxes on goods
imported into the U.S.
How does government raise
money to pay for public policy?
BORROWING
C.
Federal debt as of this morning:
1.
2.
PRE-DEPRESSION:
Government acted as
creditor nation; rarely
borrowed from other
countries
POST-DEPRESSION:
Regular borrowing to
finance budget
Federal Debt Clock
What does the federal government
spend money on anyway?
III. GOVERNMENT
SPENDING
Categories of largest
amounts of spending
A.
1.
2.
3.
ENTITLEMENTS: Required
government payments (SSI,
Medicare, etc.)
NATIONAL DEFENSE:
Figure now exaggerated due
to Iraq Civil War
NATIONAL DEBT:
Accumulated debt also
includes heavy interest
payments
What does the federal government
spend money on anyway?
B.
Other government
spending
Highways
Housing
Education
Foreign aid
Space exploration
(NASA)
How does the government plan
out its budget?
C.
Federal budget process
PHASE 1:
Estimating needs and
making requests
PHASE 2:
Reviewing, revising and
submitting budget
PHASE 3:
Developing and approving a
Congressional budget
PHASE 4:
Creating a final budget
No agreement on
the federal
budget?
Congress continues
to meet until a
resolution is made,
or…
President can order
shutdown of federal
government until
budget is settled
What does the federal government consider
when creating domestic policy?
IV. CREATION OF DOMESTIC
POLICY
A.
B.
DOMESTIC POLICY: Decisions,
actions, and principles that guide
government’s approach to problems
within the United States
Two types of domestic policy
Regulatory policy
Social policy
What does the federal government consider
when creating domestic policy?
C.
REGULATORY POLICY: Federal
government oversees activities of individuals,
businesses, and government institutions
1.
Regulation of business: Abuses by monopolies in
late 19th century led to government intervention
INTERSTATE COMMERCE ACT (1887): Set up
Interstate Commerce Commission, investigating
unfair practices of railroads
SHERMAN ANTITRUST ACT (1890): Made trusts
illegal  vague law
CLAYTON ACT (1914): Set up Federal Trade
Commission (FTC) to enforce illegal monopolistic
practices
What does the federal government consider
when creating domestic policy?
2.
Regulation of labor: Federal government has acted
to provide safeguards for American workers
WAGNER ACT (1935): Gave workers right to organize
and to collectively bargain with employers
FAIR LABOR STANDARDS ACT (1938): Prohibited
child labor, set maximium work week, and set minimum
wage (1938  25 cents/hour)
TAFT-HARTLEY ACT (1947): Outlawed closed shops
and forbade public employees from striking
LANDRUM-GRIFFIN ACT (1959): Designed to clean
up corrupt unions and allow workers to sue unions
3.
Regulation of environment and energy:
Preservation of natural resources has been a goal
since early 20th century
How does government create public
policy to address social problems?
D.
SOCIAL POLICY: Programs and services
where the federal government assumes full
responsibility in addressing social issues
1.
Key issues addressed by social policy
HEALTH CARE
WELFARE
EDUCATION
TERRORISM
ABORTION
GAY MARRIAGE
TECHNOLOGY
CRIME