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Chapter 17 The Policy-Making Process Reasons why the government adds new issues to the political agenda • Small groups demand that a new policy be introduced into the agenda – Organized labor – Black riots in the 1960s • The Courts – Make decisions that force the hand of other branches of government – Desegregation of schools – Roe v. Wade – Courts are used when there is no popular majority for an unpopular cause. Reasons why the government adds new issues to the political agenda • The Bureaucracy – So large with many experts and advocates, that the bureaucracy has become proactive in policy rather than just reactive. – The New Deal vs. The Great Society • The Senate – Used to move slowly, debate endlessly, and seemed to resist movements – Since the 1960s it has become a place where new policy is developed. Liberal in 1960s, Conservative in 1980s. Reasons why the government adds new issues to the political agenda • Media – Their coverage helps put new matters on the agenda and publicize matters already on the agenda – Can sway public opinion • Action By States – The national government can adopt ideas that states came up with originally – Lawsuits brought by state attorney general can settle in a way that binds the company throughout the country. Government Decision-Making • Cost-Benefit Analysis – Cost is the burden, monetary or nonmonetary, that people must bear if a policy is adopted. • Perception is big here too. People may perceive a cost that doesn’t exist or is much smaller than the perception. • Taxes, increased risk of war, etc. – Benefit is the satisfaction, monetary or nonmonetary, that people believe they will enjoy if a policy is adopted. • Payments, subsidies, contracts, security Perception in Cost-Benefit Analysis • Perception of costs and benefits is what affects politics – People think that the cost of auto emissions control is paid by the manufacturer, but it is actually passed on to the consumer through higher prices and lower performance. – Other examples? Legitimacy in Cost-Benefit Analysis • Is it legitimate for the group that receives the benefits of a policy to gain that benefit – Federal aid to single women with children seen in the early part of the century as going to widows and orphans – Later on seen as more controversial because it was women who had kids and never got married. – Other examples? Simple theory of politics • The costs and benefits of a policy may be widely distributed or narrowly concentrated. – Widely distributed cost is something like an income tax, a Social Security tax, high crime rates – Widely distributed benefits are clean air, national security, low crime rates – Narrowly concentrated costs- factory reducing pollution, regulations on doctors and hospitals participating in Medicare – Narrowly concentrated benefits- subsidies to farmers, protection against competition for companies Four Kinds of Policies • • • • Majoritarian Politics Interest Group Politics Client Politics Entrepreneurial Politics Majoritarian Politics • Both the perceived costs and benefits are widely distributed to a large number of people. • Goal is to make appeals to a large bloc of voters to find a majority • “Free-rider” problem- No one wants to join an interest group that will help everyone out. Interest Group Politics • Proposed policies will give costs and benefits to a small, identifiable group. • Tends to be seen among highly organized interest groups • Public is many times uninformed about these decisions. Client Politics • One small group benefits, but almost everyone pays • Ex. Price supports for farmers, airline regulations and restrictions • Pork-barrel legislation • Logrolling- A legislator supports proposals favored by other legislators in return for support of their own proposal. If you put enough pieces of “pork” into a piece of legislation, you can get a majority that will pass it. Entrepreneurial Politics • Policy where almost everyone benefits and a small group pays the cost • Ex. Brady bill, safety requirements for automobile manufacturers • Why are these the least common type of policy created? – Organized groups who fear the loss of a privilege or having some burden put on them will become determined to stop the policy. The majority that would benefit is unconvinced of the benefit or think it is too small to fight for. • Policy entrepreneurs- Activists in or out of government who pull together a political majority on behalf of unorganized interests. Economic Policymaking Chapter 18 Important Terms to Know Deficit- When the government spends more in one year than it takes in from taxes and other revenue sources National Debt- The total deficit across time Gross Domestic Product- The total of all goods and services produced in the economy during a given year Gross National Product = GDP + Foreign Trade Government, Politics, and the Economy Introduction – Capitalism: An economic system in which individuals and corporations, not the government, own the principle means of productions and seek profits. – Mixed Economy: An economic system in which the government is deeply involved in economic decisions through it role as regulator, consumer, subsidizer, taxer, employer and borrower. – Multinational Corporations: Businesses with vast holdings in many countries. Government, Politics, and the Economy “It’s the Economy, Stupid”: Voters, Politicians, and Economic Policy – Economic trends affect who the voters vote for. – Economic conditions are the best predictor of voters’ evaluation of the president. – Republicans worry about inflation. – Democrats stress importance of unemployment. Government, Politics, and the Economy Two Major Worries: Unemployment and Inflation – Unemployment rate: Measured by the 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. Policies for Controlling the Economy Monetary Policy and “the Fed” – 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.” Policies for Controlling the Economy Monetary Policy and “the Fed” continued – The Feds instruments to influence the supply of money in circulation: Sets the federal funds rate Buys and sells government bonds – Through the use of these actions, the Fed can affect the economy. 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. When demand is low, the government should pump more money into the economy. When demand is too great, the government should take money out of the economy. – Government’s job is to increase demand of goods. Instruments for Controlling the Economy Fiscal Policy of Presidents and Parties, continued – 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. Reaganomics Combined monetarism (inflation occurs when too much money is chasing too few goods), supplyside tax cuts, and domestic budget cutting. Goals were to reduce the size of the federal government, stimulate economic growth, and increase American military strength. Ran up a huge deficit while lowering the unemployment rate and increasing business activity. Why it is Hard to Control the Economy Some think politicians manipulate the economy to win reelection. But there are problems with that: – Things like the budget are prepared in advance of when they go into effect. – Some benefits are indexed. – Capitalism can also affect the economy. Government is more important in setting the rules of the game. Politics, Politics, and the International Economy Protectionism: The economic policy of shielding an economy from imports. World Trade Organization (WTO): The international organization that regulates international trade. Free trade is controversial as jobs have increasingly been outsourced. 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. Arenas of Economic Policymaking Business and Public Policy, continued – Regulating and Benefiting Business Congress has taken steps to regulate accounting industry practices. The Securities and Exchange Commission regulates stock fraud Government may loan businesses money. Government collects data that business use. Arenas of Economic Policymaking Consumer Policy: The Rise of the Consumer Lobby – Consumers historically have had little government protection. – FDA: Created in 1913; approves foods and drugs sold in the U.S. – FTC: Responsible for regulating false and misleading trade practices, which now includes consumer lending practices. Arenas of Economic Policymaking Labor and Government – Government historically sided with business over labor unions. – NLRB: regulates labor-management relations – The Taft-Hartley Act (1947) continued to guarantee unions the right of collective bargaining, but prohibited various unfair practices by unions. – Government now provides unemployment compensation and a minimum wage. Understanding Economic Policymaking Democracy and Economic Policymaking – Voters expect more of politicians that they can control. – Sometimes economic theory and democratic theory may be at cross purposes. – It is difficult to make decisions that hurt groups or involve short-term pain for long-term gain. Economic Policymaking and the Scope of Government – Liberals tend to favor more government involvement in the economy. – Conservatives tend to favor less government involvement in the economy. The Budget Budget states what the government will collect in taxes and spend in revenues. – Also tells how expenditures will be allocated to various programs. Each budget covers a fiscal year (in our government from October 1st through the following September 30th. How is the federal budget created? No federal budget existed before 1921. The Congressional Budget Act of 1974 – President submits budget in February – House and Senate budget committees study the overall package and the Congressional Budget Office (CBO) provides an analysis – Each committee then submits a budget resolution to its full house that proposes a budget ceiling as well as a ceiling for each of the spending areas – Congress is supposed to adopt budget resolutions, with modifications in May. What happens once the budget is created? During the summer, Congress takes up appropriations bills, and informs its members whether the spending conforms to the May budget resolutions Almost 2/3 of what the government spends is mandatory spending. (Anybody else scared?) Entitlements- Claims for government funds that cannot be changed without violating the rights of the person claiming the funds. – Social Security, Medicare, veterans benefits, food stamps, money the government owes to people who invest in bonds. What does this mean? Reducing Spending Balanced Budget Act of 1985 (GrammRudman Act) – Required that each year from 1986-1991, the budget would automatically be cut until the federal deficit had disappeared. – Required sequesters (automatic spending cuts) that would cut a percentage from all federal programs except for entitlements – Failed miserably Reducing Spending Two-fold plan in 1990 First, Congress voted for a tax increase Second, Congress passed the Budget Enforcement Act of 1990. – Set limits on discretionary spending (spending not required to pay contracts, interest on the national debt, or for entitlement programs – According to the act, if Congress were to spend more on a discretionary program, they would have to cut spending on another discretionary program or raise taxes. Taxation Congress proposed and states ratified the 16th Amendment in 1913 (Authorization of the income tax) For the next 40 years, tax rates tended to go up during wartime and down during peacetime. During World War II, incomes in the highest bracket were taxed at a rate of 94 percent. – How is this misleading? Compromise was that high marginal rates would be combined with a large number of loopholes. Taxation Tax Reform Act of 1986 – Instead of high rates with big deductions, there would now be lower tax rates with smaller deductions. – Soon after this, the old system began to come back. – Tax rates started going up again, but this time with far fewer deductions for affluent citizens – In 1990, President Bush signed a tax increase to raise the top rate to 31 percent – In 1993, President Clinton proposed a tax increase that would raise the top rate to over 39% (had been 28% in 1986). Also made Social Security benefits taxable for upper-income retirees. Passed 218-216 in the House and 51-50 in the Senate with Al Gore casting the deciding vote. First time since 1945 the majority party in Congress had passed a bill without one vote from the minority party. Social Welfare Policymaking Chapter 19 What is Social Policy and Why is it so Controversial? Social welfare policies provide benefits to individuals, either through entitlements or means-testing. – Entitlement programs: Government benefits that certain qualified individuals are entitled to by law, regardless of need. – Means-tested programs: Government programs only available to individuals below a poverty line. Income, Poverty, and Public Policy Who’s Getting What? – Income: amount of funds collected between any two points in time. – Wealth: amount of funds already owned. Income, Poverty, and Public Policy Who’s Poor in America? – Poverty Line: considers what a family must spend for an “austere” standard of living. – In 2011, the poverty rate in the United States was just over 16%. (49.7 million people in poverty) – Many people move in and out of poverty in a year’s time. – Feminization of poverty: high rates of poverty among unmarried women Income, Poverty, and Public Policy What Part Does Government Play? – Taxation. Progressive tax: people with higher incomes pay a greater share. Proportional tax: all people pay the same share of their income. Regressive tax: opposite of a progressive tax Earned Income Tax Credit: “negative income tax” that provided income to very poor people. (Essentially, a cash grant to poor parents who are working.) Income, Poverty, and Public Policy What Part Does Government Play? – Government Expenditures. Transfer payments: benefits given by the government directly to individuals. Some transfer benefits are actual money. Other transfer benefits are “in kind” benefits where recipients get a benefit without getting actual money, such as food stamps. Some are entitlement programs, others are meanstested. Income, Poverty, and Public Policy Helping the Poor? Social Policy and Poverty “Welfare” as We Knew it – Social Security Act of 1935 was the first major step by the federal government to help protect people against absolute poverty. Two major parts- insurance program for the unemployed and elderly and an assistance program for the blind, dependent children, and the elderly. – The Social Security Act set up AFDC (Aid to Families with Dependent Children), a national assistance program for poor children. – President Johnson declared a “war on poverty” and created many new social welfare programs. Helping the Poor? Social Policy and Poverty “Welfare” as We Knew it (continued) – President Reagan cut welfare benefits and removed people from benefit rolls. – Conservatives argued that welfare programs discouraged the poor from solving their problems. – Attitudes toward welfare became “race coded”, the belief that most people on welfare were African Americans. Helping the Poor? Social Policy and Poverty Ending Welfare as we Knew it: The Welfare Reforms of 1996 – Personal Responsibility and Work Opportunity Act Each state to receive a fixed amount of money to run its own welfare programs People on welfare would have to find work within two years. Lifetime limit of five years placed on welfare. AFDC changed to Temporary Assistance for Needy Families (TANF) Living on Borrowed Time: Social Security The New Deal, the Elderly, and the Growth of Social Security – Social Security has grown rapidly since 1935, adding Medicare in 1965. – Employers and employees contribute to the Social Security Trust Fund. – The Trust Fund is used to pay benefits. – The ratio of workers to beneficiaries is narrowing. The Trust Fund will soon be in the red. Living on Borrowed Time: Social Security The Future of Social Security – The number of Social Security contributors (workers) is growing slowly, the number of recipients (retired) is growing rapidly. – By 2020, fewer than 4 workers for every retiree, so payroll taxes on those workers would have to double to pay a retiree’s Social Security. – Solutions of cutting benefits or raising taxes are hard choices. – Republicans tend to favor privatizing Social Security. National Security Policymaking Chapter 20 American Foreign Policy: Instruments, Actors, and Policymakers Instruments of Foreign Policy – Three types of tools: Military Economic Diplomatic – Military is the oldest and still used – Economic is becoming more powerful – Diplomatic is the quietest of the tools American Foreign Policy: Instruments, Actors, and Policymakers Actors on the World Stage – International Organizations (UN) – Regional Organizations (NATO, EU) – Multinational Corporations – Nongovernmental Organizations – Individuals American Foreign Policy: Instruments, Actors, and Policymakers The Policymakers – The President – The Diplomats (secretary of state) – The National Security Establishment (secretary of defense, Joint Chiefs of Staff, NSC, CIA) – Congress American Foreign Policy: An Overview Isolationism: – Foreign policy where the U.S. tries to stay out of other nation’s conflicts, particularly in Europe. Monroe Doctrine: – U.S. official statement of isolationism World War I: – Basically ended the policy of isolationism American Foreign Policy: An Overview The Cold War – Containment Abroad and Anti-Communism at Home – The Swelling of the Pentagon (arms race) – The Vietnam War American Foreign Policy: An Overview The Era of Détente – Détente: a slow transformation from conflict to cooperation – Strategic Arms Limitations Talks: effort to limit the growth of nuclear arms – Originally applied to the Soviet Union, and then to China – Not favored by everyone American Foreign Policy: An Overview The Reagan Rearmament – Defense budget had been declining since the mid-1950’s. – Reagan added some $32 billion to the defense budget in his first term in office to oppose the Soviet buildup. – Strategic Defense Initiative: using computers and other equipment to defend against Soviet missiles from space (“Star Wars”). American Foreign Policy: An Overview The Final Thaw in the Cold War. – George H.W. Bush proposed to move beyond containment to integrate the Soviet Union into the community of nations. – Leadership of the Soviet Union supported the ending of communism and split into separate nations. – East and West Germany united. American Foreign Policy: An Overview The War on Terrorism – War on terrorism became highest priority of George W. Bush administration after 9/11. – Bush supported preemptive strikes against terrorists and hostile states. – International relations has entered an era of improvisation. The Politics of Defense Policy Defense Spending – Currently takes up about one-fifth of the federal budget. – Conservatives argue against budget cuts that would leave the military unprepared. – Liberals argue for budget cuts to provide more money for programs here in the U.S. – Military spending is hard to cut since it means a loss of jobs in congressional districts. The Politics of Defense Policy Personnel – 2.2 million active and reserve troops – More reliance on National Guard and reserve troops. Weapons – Reliance on nuclear triad (ICBMs, SLBMs, and strategic bombers) is expensive. – Treaties (START) were signed to reduce some nuclear missiles. – High-tech non-nuclear weapons are becoming more important. The Politics of Defense Policy The New Global Agenda The Decreasing Role of Military Power – Military power is losing much of its utility in resolving many international issues. – Economic Sanctions Nonmilitary penalties imposed on foreign countries as an attempt to modify their behavior. Generally the first “shot” in a crisis. Can be effective, but critics argue they only hurt U.S. businesses and provoke a nationalist backlash. The New Global Agenda Nuclear Proliferation – Only a few countries have known nuclear weapon capabilities. – Fear is that other “rogue” countries will have nuclear weapons capabilities and use them against their neighbors or the U.S. – U.S. will focus on discouraging the deployment of developed nuclear weapons. The New Global Agenda The Spread of Nuclear Weapons (Figure 20.3) The New Global Agenda The International Economy – Interdependency: Mutual dependency, in which the actions of nations reverberate and affect one another’s economic lifelines. – International Trade Tariffs (a tax on imported goods) are used to protect American business. NAFTA and GATT are ways to lower tariffs and increase trade. – Balance of Trade: The ratio of what is paid for imports to what is earned for exports. The New Global Agenda The International Economy (continued) – Energy America depends on imported oil, but not as much as other nations. Much of the recoverable oil is in the Middle East which is often the site of military & economic conflicts. OPEC controls the price of oil and amount its members produce and sell. The New Global Agenda The International Economy (continued) – Foreign Aid Foreign aid is used to stabilize nations friendly to the United States. A substantial percentage of foreign aid is military. Foreign aid has never been very popular with Americans Understanding National Security Policymaking National Security Policymaking and Democracy – Americans are more interested in domestic than foreign policy. – The opinions of the people are rarely ignored. – Pluralism is pervasive in foreign policymaking. Foreign and Defense Policymaking and the Scope of Government Policymaking for Health Care and the Environment Chapter 21 Health Care Policy The Health of Americans – Americans generally lag behind in some key health statistics – Specifically a lower life expectancy and higher infant mortality rate. The Cost of Health Care – Americans spend more than any other country. – Reasons for high costs: private insurance pays much of the cost, emphasis on new and expensive technology, increase in malpractice suits results in “defensive medicine.” Health Care Policy Uneven Coverage, Uneven Care – Health Insurance About 43 million Americans have no health insurance. Often linked to having a job - lose the job, lose the health insurance. Health insurance is closely tied to race and income. Health Care Policy Uneven Coverage, Uneven Care – Managed Care HMO: provide health care for a yearly fee through contracts or insurance companies. Covers about 60 percent of Americans. Designed to reduce costs through oversight and limiting patient choices. Patients’ bill of rights would give patients rights against medical providers, including right to sue. Health Care Policy The Role of Government in Health Care – Government in the United States has the smallest role. – Medicare: provides hospitalization insurance for elderly and optional coverage for other medical expenses. – Medicaid: public assistance program to provide health care for the poor. Paid for by national and state governments. Health Care Policy Policymaking for Health Care – The Politics of Health Care Equality of care and cost containment take a back seat to technological advance. Interest groups (medical profession, elderly, business, insurance companies) play a major role in health care policy making. Health Care Policy Policymaking for Health Care – The Clinton Heath Care Reform Plan. Main concern guaranteeing health care coverage for all Paid for by requirement for employer insurance and tax increases Health alliances would collect premiums, bargain with health plans, and handle payments. Interest groups lobbied hard against this bureaucratic and complicated plan. Eventually died in Congress. Health Care Policy Policymaking for Health Care – The Health Policy Issues ahead Polls show Americans are fairly satisfied but want reform. Main concerns are access and cost. Remains complex, confusing and expensive with all the providers and governments involved. Environmental Policy Environmental Policies in America – Environmental Impacts. Environmental Impact Statements: report that specifies likely environmental impact of a proposed action - filed with the EPA. Used by environmental groups to challenge and delay projects they object to. – Clean Air. Clean Air Act of 1970: reduce auto pollution. 1990 amendments allowed emissions trading. Environmental Policy Environmental Policies in America – Clean Water. Water Pollution Control Act of 1972: intended to clean up the nation’s rivers and lakes requiring the use of pollution control technology. Has helped reclaim numerous rivers and lakes since its passage. But it misses “runoff” pollution from city streets and other areas. Environmental Policy Environmental Policies in America – Wilderness Preservation The U.S. is a world leader in wilderness preservation. The national parks and national forests may be restricted to keep them for future generations. – Endangered Species Government protects those species listed as endangered - regardless of costs (Endangered Species Act). Exceptions may be made in some instances. Environmental Policy Environmental Policies in America – Toxic Wastes Superfund was created by Congress in 1980 to clean up hazardous waste sites. Has virtually eliminated haphazard dumping of toxic waste, but less successful in cleaning up existing waste. Nuclear waste presents a serious challenge. Energy Policy Sources of America’s Energy (Figure 19.2) Figure 19.3 Energy Policy Energy Sources and Energy Politics – 87% of the nation’s energy comes from coal, oil and natural gas. – Coal is the most abundant fuel, but also the dirtiest. – Oil accounts for 40% of our energy, but creates a dependence on foreign (especially Middle East) sources. – Most controversial energy source is nuclear. Energy Policy Energy Policy The Global Warming Debate Heats Up – Scientists argue about the effects of accumulations of carbon dioxide in the atmosphere. – The only way to reduce the problem is to reduce the amount produced. – The costs to do this are immediate, but the effects won’t be visible for decades, if ever. Understanding Health Care and Environmental Policy The Scope of Government and Health Care and Environmental Policy – As citizens want more health care reform, the size of government will increase. – Increased environmental protection will also cause the size of government to go up. – With party divisions, incremental change is most likely.