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American Government And Politics
Today—The Essentials
Chapter 15
Domestic
and
Economic
Policy
LEARNING OUTCOMES
1. Describe the five steps of the policymaking process, using the
health-care reform legislation as an example.
2. Explain why illegal immigration is seen as a problem, and cite
some of the steps that have been taken in response to it.
3. Discuss recent developments in crime rates and incarceration.
4. Evaluate the federal government’s responses to high oil prices
and the controversy over global warming.
5. Define unemployment, inflation, fiscal policy, net public debt, and
monetary policy.
6. Describe the various taxes that Americans pay, and discuss
some of the controversies surrounding taxation.
Copyright © 2018 Cengage Learning. All rights reserved. 2
INTRODUCTION
▪Domestic policy: all laws, government
planning, and government actions that concern
internal issues of national importance
▪Regulatory policy
▪Redistributive policy
▪Promotional policy
Copyright © 2018 Cengage Learning. All rights reserved. 3
THE POLICYMAKING PROCESS:
HEALTH CARE AS AN EXAMPLE 1 OF 5
▪Health Care: Agenda Building
▪Health care’s role in the American economy
✓Gross domestic product (GDP)
▪Entitlement programs
▪Medicare
▪Medicaid
▪The problem of the uninsured
▪The problem of high costs
Copyright © 2018 Cengage Learning. All rights reserved. 4
PERCENTAGE OF TOTAL NATIONAL INCOME SPENT
ON HEALTH CARE IN THE UNITED STATES
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COST OF HEALTH CARE IN
ECONOMICALLY ADVANCED NATIONS
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THE POLICYMAKING PROCESS:
HEALTH CARE AS AN EXAMPLE 2 OF 5
▪Health Care: Policy Formulation
▪Health Care: Policy Adoption
▪Passage
▪Details of the legislation
Copyright © 2018 Cengage Learning. All rights reserved. 7
THE POLICYMAKING PROCESS:
HEALTH CARE AS AN EXAMPLE 3 OF 5
A physician visits with a patient in a hospital ward.
How might this patient pay for hospitalization services?
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THE POLICYMAKING PROCESS:
HEALTH CARE AS AN EXAMPLE 4 OF 5
▪Health Care: Policy Implementation
▪Congressional opposition
▪Opposition in the courts and in the states
▪Setting up the exchanges
▪Health Care: Policy Evaluation
Copyright © 2018 Cengage Learning. All rights reserved. 9
THE POLICYMAKING PROCESS:
HEALTH CARE AS AN EXAMPLE 5 OF 5
A young girl receives a checkup from a pediatrician. The Affordable Care Act
contains special provisions to reduce the cost of preventive health care.
Why might that be so?
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IMMIGRATION 1 OF 2
▪The Issue of Unauthorized Immigration
▪The Immigration Debate
▪State immigration laws
▪ Immigration and the Obama administration
▪Current disputes
Copyright © 2018 Cengage Learning. All rights reserved. 11
IMMIGRATION 2 OF 2
A twelve-year-old unauthorized
immigrant wipes tears as she
tells her story of escaping from
violence in her home country of
Honduras. She is testifying
before the Congressional
Progressive Caucus.
Should young people fleeing
from violence be granted
asylum in the United States?
Why or why not?
Copyright © 2018 Cengage Learning. All rights reserved. 12
Alex Wong/Getty Images
CRIME IN THE TWENTY-FIRST CENTURY 1 OF 2
▪Crime in American History
▪The Prison Population Bomb
▪The incarceration rate
▪Prison construction and conditions
▪Effects of incarceration
Copyright © 2018 Cengage Learning. All rights reserved. 13
CRIME IN THE TWENTY-FIRST CENTURY2 OF 2
Prisoners at the Deuel Vocational Institution in Tracy, California. This prison is a
reception center for new prisoners of the California Department of Corrections
and Rehabilitation (CDCR). The prisoners are from northern California county
jails. The facility also houses a number of low-security inmates.
Do overcrowded prisons violate prisoners’ rights?
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HOMICIDE RATES
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VIOLENT CRIME RATES
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THEFT RATES
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INCARCERATION RATES PER 100,000 PERSONS
FOR SELECTED U.S. POPULATION GROUPS
Copyright © 2018 Cengage Learning. All rights reserved. 18
ENERGY AND THE ENVIRONMENT 1 OF 3
▪Energy Independence — A Strategic Issue
▪High prices and new production
▪The politics of expensive oil
▪Disaster in the energy industry
Copyright © 2018 Cengage Learning. All rights reserved. 19
ENERGY AND THE ENVIRONMENT 2 OF 3
A Texas worker unloads
a mixture of oil,
sediment, and water
generated during
hydraulic fracturing
(fracking). Components
of the mixture will be
separated and either
recycled or eliminated.
Why is fracking
controversial?
Copyright © 2018 Cengage Learning. All rights reserved. 20
Bloomberg/Getty Images
ENERGY AND THE ENVIRONMENT 3 OF 3
▪Climate Change
▪The climate change debate
▪Addressing the issue
▪Obama and the Environmental Protection Agency
Copyright © 2018 Cengage Learning. All rights reserved. 21
THE POLITICS OF ECONOMIC
DECISION MAKING 1 OF 7
▪Good Times, Bad Times
▪Unemployment
▪Measuring unemployment
▪ Inflation
▪The business cycle
Copyright © 2018 Cengage Learning. All rights reserved. 22
THE POLITICS OF ECONOMIC
DECISION MAKING 2 OF 7
A job seeker, center,
shakes hands with a
recruiter during an
aerospace, maritime, and
manufacturing job fair in
Seattle.
Is unemployment still a
major problem? Why or
why not?
Copyright © 2018 Cengage Learning. All rights reserved. 23
Bloomberg/Getty Images
THE POLITICS OF ECONOMIC
DECISION MAKING 3 OF 7
▪Fiscal Policy
▪Keynesian economics
▪Government spending and borrowing
▪Discretionary fiscal policy
▪The timing problem
▪Criticisms of Keynes
▪The eclipse of fiscal policy
Copyright © 2018 Cengage Learning. All rights reserved. 24
THE POLITICS OF ECONOMIC
DECISION MAKING 4 OF 7
English economist John
Maynard Keynes
(1883–1946)
What inspired Keynes’
theories?
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THE POLITICS OF ECONOMIC
DECISION MAKING 5 OF 7
▪Deficit Spending and the Public Debt
▪The public debt
✓Gross public debt
✓Net public debt
▪The public debt in perspective
▪Back to deficit spending
▪The future of deficit spending
Copyright © 2018 Cengage Learning. All rights reserved. 26
NET PUBLIC DEBT AS A PERCENTAGE OF
GROSS DOMESTIC PRODUCT
Copyright © 2018 Cengage Learning. All rights reserved. 27
THE POLITICS OF ECONOMIC
DECISION MAKING 6 OF 7
▪Monetary Policy
▪Organization of the Federal Reserve System
✓Federal Open Market Committee
▪Loose and tight monetary policies
▪Time lags for monetary policy
▪Monetary policy during recessions
▪Quantitative easing and forward guidance
Copyright © 2018 Cengage Learning. All rights reserved. 28
THE POLITICS OF ECONOMIC
DECISION MAKING 7 OF 7
Federal Reserve chair Janet Yellen testifies at a congressional Joint Economic Committee
hearing in December 2015. Shortly thereafter, the Fed raised its key interest rate by 0.25
percent. Why did the Fed back off from further rate increases in 2016?
Copyright © 2018 Cengage Learning. All rights reserved. 29
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THE POLITICS OF TAXES 1 OF 2
▪Federal Income Tax Rates
▪Loopholes and Lowered Taxes
▪Progressive and regressive taxation
▪Who pays?
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TOTAL AMOUNT OF TAXES COLLECTED AS A
PERCENTAGE OF GROSS DOMESTIC PRODUCT (GDP)
IN MAJOR INDUSTRIALIZED NATIONS
Copyright © 2018 Cengage Learning. All rights reserved. 31
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THE POLITICS OF TAXES 2 OF 2
Residents stand in line to file their federal income tax returns on the last legal day.
What kinds of taxpayers may find it difficult to finish their tax returns?
Copyright © 2018 Cengage Learning. All rights reserved. 32
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PROGRESSIVE VERSUS
REGRESSIVE TAXES
Progressive Taxes Regressive Taxes
Federal income tax Social Security tax
State income taxes State sales taxes
Federal corporate income tax Local real estate taxes
Estate tax
Medicare tax
Copyright © 2018 Cengage Learning. All rights reserved. 33
COMPILED BY
PROFESSOR
CHOUNLAMOUNTRY
34Professor Chounlamountry
CHAPTER SUPPLEMENT
Professor
Chounlamountry35
MEDICAID
SOCIAL SECURITY
MEDICARE
FOOD STAMPSSUPPLEMENTAL SECURITY
INCOME
VETERANS’ PROGRAMS
TEMPORARY ANF
More Than 80 Million Receive
Direct Federal Aid From US Gov’t
▪ http://www.rolandsmartin.com/blog/wp-content/uploads/2010/02/whos-getting-food-
stamps.jpg
Professor Chounlamountry 36
SOME ELIGIBLE INDIVIDUALS
ARE NOT RECEIVING FOOD STAMPS
US NATIONAL DEBT KEEPS
GROWING
Professor Chounlamountry
37
$23,000,000,000,000 AND STILL COUNTING!http://www.usdebtclock.org/
▪What are the major federal safety net programs in the U.S.? ▪A summary of efforts to reduce poverty in the
U.S.▪ Some of these programs are entitlements. Everyone
can expect to receive an Earned Income Tax Credit if they qualify. Other programs, like the nutrition assistance programs SNAP and WIC, only benefit those who claim them before the budgeted funds
▪ https://poverty.ucdavis.edu/article/war-poverty-and-todays-safety-net-0
Copyright © 2018 Cengage Learning. All rights reserved. 38
MAJOR FEDERAL SAFETY NET
PROGRAMS IN THE U.S.?
▪Part of President Franklin Roosevelt’s New Deal legislation, the original act included grants to states for unemployment compensation, aid to dependent children and public health. Today, Social Security is the largest safety net program in the U.S. In 2013 it will reach an estimated 58 million Americans with $816 billion in benefits.
▪ For more information visit the Social Security Administration online.
Copyright © 2018 Cengage Learning. All rights reserved. 39
1935: THE SOCIAL SECURITY ACT
▪ Unemployment insurance was a part of President Franklin Roosevelt’s 1935 Social Security Act. Today’s U.S. Department of Labor Unemployment Insurance (UI) programs provide benefits to eligible workers who become unemployed through no fault of their own and who meet certain requirements.
▪ The program is a unique federal-state partnership, based on Federal law, but administered by individual states. The Congressional Budget Office estimates that UI benefits totaled $94 billion in fiscal year 2012 when the unemployment rate averaged 8.3 percent. New research by a recent Center Visiting Scholar found that UI is associated with 25 percent fewer children with an unemployed parent living in poverty since 2009.
▪ For more information about Unemployment Insurance, visit the Department of Labor online.
Copyright © 2018 Cengage Learning. All rights reserved. 40
1935: UNEMPLOYMENT INSURANCE
▪ This pre-school education program was a part of the 1964 Economic Opportunity Act that was designed to reduce disparities among young children. The 1994 Head Start Act Amendments established the Early Head Start program, which expanded the benefits of early childhood development to low income families with children under three years old.
▪ Right now, the program serves up to 900,000 mostly low-income children per year with total federal spending of over $7 billion. The program’s effectiveness has been criticized by prominent researchers. In new research, Center Research Affiliate Douglas Miller evaluated a recent impact study and found its conclusions premature.
▪ For more information on Head Start, visit the Office of Head Start online.
Copyright © 2018 Cengage Learning. All rights reserved. 41
1964: HEAD START
▪ The first Food Stamp program ran from 1939-43, but the program we know today was established with the 1964 Food Stamp Act. The program is now known as the Supplemental Nutrition Assistance Program, and served 46.6 million people with $74.6 billion in benefits.
▪Recent studies co-authored by Research Affiliate Hilary Hoynes found that SNAP contributed to increases in birth weights, but also found that the benefit is associated with fewer hours worked.
▪ For more information on the program, visit the Food and Nutrition Service website for SNAP.
Copyright © 2018 Cengage Learning. All rights reserved. 42
1964: SUPPLEMENTAL NUTRITION
ASSISTANCE PROGRAM (SNAP)
▪ These health programs were established with amendments to the Social Security Act in 1965. Today, Medicare provides health insurance for people over 65 years of age and some younger than that but who have certain disabilities or diseases. Medicaid is a Federal and state partnership that provides health coverage for people with low income.
▪ During 2012, enrollment in Medicare averaged about 50 million people who received $466 billion in benefits. In fiscal year 2012, total Medcaid spending was $451 billion of which federal spending for Medicaid was $251 billion ($223 billion covered benefits for enrollees). States funded the additional $200 billion. The Congressional Budget Office estimates that about 72 million people will be enrolled in Medicaid at some point during 2013.
▪ For more information about Medicare and Medicaid, visit the Centers for Medicare and Medicaid Services online.
Copyright © 2018 Cengage Learning. All rights reserved. 43
1965: MEDICARE/MEDICAID
▪ SSI is a Federal program that provides income people 65 or older as well as to blind or disabled adults and children. The 2012 benefit amount for individuals on SSI was $698, and for couples it was $1,048.At a cost of $50 billion, SSI was the second-largest means-tested cash assistance program in 2012, behind the Earned Income Tax Credit.
▪ For more information about SSI, visit the Social Security SSI pages online.
Copyright © 2018 Cengage Learning. All rights reserved. 44
1972: SUPPLEMENTAL SECURITY INCOME PROGRAM (SSI)
▪ WIC is a nutrition program that benefits pregnant women, new mothers and young children who live near poverty and who are at nutritional risk. WIC is not an entitlement program, so the number of people who receive the benefits depends on the amount Congress allots for the program from year to year.
▪ About 8.9 million people participated in WIC in 2012, at a total food cost of $4.8 billion. A recent study by Center for Poverty Research Director Ann Huff Stevens, Deputy Director Marianne Page and Research Affiliate Hilary Hoynes found that WIC leads to a ten percent increase in the birthweight of infants born to participating mothers.
▪ For more information on the WIC program, visit the USDA online.
Copyright © 2018 Cengage Learning. All rights reserved. 45
1972: WOMEN, INFANTS AND CHILDREN (WIC)
▪ Pell Grants help pay for tuition and other expenses for low-income college students. In 2010, three-fourths of recipients had a family income of $30,000 or less.
▪ The grant amount is based on family income and education costs, and also varies from year to year. The 2011-12 maximum grant amount was $5,550. Federal spending on Pell Grants in 2012 was about $34 billion.
▪ With recent increases in tuition, Pell Grants fund a smaller percentage of a higher education. According to the Congressional Budget Office, the average Pell Grant today pays for a smaller percentage of tuition than it did in the 1980s.
▪ For more information on Pell Grants, visiting the U.S. Department of Education online.
Copyright © 2018 Cengage Learning. All rights reserved. 46
1972: FEDERAL PELL GRANT PROGRAM
▪ The EITC is a tax credit that benefits working people who have low to moderate income, especially families. In 2010, the EITC reached 27.8 million tax filers at a total cost of $60.9 billion. Since EITC benefits are not considered income for other Federal benefit programs, they do not jeopardize recipients who qualify for other assistance like SNAP or Medicaid.
▪ Research has shown that the impacts of the EITC are wider than raising families out of poverty. A recent study by Center Research Affiliates Hilary Hoynes and Douglas Miller found that it also increased birth weights and reduced low birth-weight births.
▪ For more information on the EITC, visit the Internal Revenue Service online.
Copyright © 2018 Cengage Learning. All rights reserved. 47
1975: THE EARNED INCOME TAX CREDIT (EITC)
▪ TANF issues federal grants to states for programs that provide temporary benefits to families with children when the income does not provide for the family’s basic needs. Programs include job preparation, family planning and other benefits as well as cash assistance.
▪ The program replaced the Aid to Families with Dependent Children program (AFDC), which was established by the 1935 Social Security Act. In 1996 it was replaced by TANF as part of the Personal Responsibility and Work Opportunity Act welfare reform that would change the face of the safety net in the U.S. While AFDC allowed families to receive assistance for as long as they were eligible, TANF imposes a five-year limit on benefits.
▪ While the federal government funds a share of state TANF programs, it leaves it to states to determine the shape those programs take. In 2012, the total Federal cost for TANF was about $18 billion, but that does not include state funds. That year, the program provided cash assistance to about 4 million people.
▪ For more information about TANF, visit the Office of Family Assistance online.
Copyright © 2018 Cengage Learning. All rights reserved. 48
1996: TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
▪ CHIP provides health coverage to nearly eight million children in families who cannot afford private health insurance but who have incomes that are too high to qualify for Medicaid.
▪ The Children’s Health Insurance Program Reauthorization Act of 2009 strengthened CHIP with additional funding and improvements, including tens of millions of dollars for a national outreach campaign, grants to Indian Tribes and to promote enrollment and retention in both CHIP and Medicaid.
▪ In FY 2012, over 8.4 million enrolled in CHIP at a total cost of $15 billion in Federal funds. Like Medicaid, CHIP is administered by the states that receive matching funds from the Federal government. In a recent study, Center for Poverty Research Faculty Affiliate Erin Hamilton and Graduate Student Fellow Ethan Evans find that state-level CHIP policies impact whether the children of immigrants get access to healthcare.
▪ For more information about CHIP, visit Medicaid’s page for the program online.
Copyright © 2018 Cengage Learning. All rights reserved. 49
1997: CHILDREN’S HEALTH INSURANCE PROGRAM (CHIP)
▪ The ACA is the largest recent expansion to the U.S. safety net, the full impact of which remains on the horizon. Among other provisions, the bill includes subsidies to help pay for individual health insurance. It also allows states to cover additional low-income families under Medicaid by providing Federal matching funds. In May, the Congressional Budget Office projected that the ACA’s health insurance provisions will cost $710 billion from 2014-19.
▪ The Center for Poverty Research recently hosted a conference that brought together a unique mix of researchers, policy professionals and industry leaders to discuss what the new law means for health care in this country, as well as its possible impacts on domestic poverty. Audio recordings of selected presentations and other health care-related materials are available on our website.
▪ For key features of the ACA, visit the U.S. Department of Health and Human Services online.
Copyright © 2018 Cengage Learning. All rights reserved. 50
2010: THE AFFORDABLE CARE ACT (ACA)