How does government create plans to address the needs of society?

LESSON 8Public 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 policyRecognizing the problemFormulating the policyAdopting the policyImplementing the policyEvaluating the policy

ELEMENTS OF ELEMENTS OF PUBLIC POLICYPUBLIC POLICY

Economic policyDomestic policyForeign policy

How does public policy apply to economics?I. CREATION OF ECONOMIC POLICY

A. American economy runs on premise of free enterprise

B. Government’s involvement with economy in history

1. ADAM SMITH (The Wealth of Nations): Marketplace governed by supply and demand existed until 1930s

2. Roadblock to free enterprise: GREAT DEPRESSION

3. POST DEPRESSION (New Deal) KEYNESIAN ECONOMICS (government must spend and invest when private industry can’t or won’t)

4. 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 upTOO 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 money1. KEYNESIAN ECONOMICS: Government

must spend to spur economic growth – even if it has to borrow

2. SUPPLY-SIDE ECONOMICS: Let business reinvest its wealth to spur economy (“trickle-down” approach)

Provide tax cuts to people and companiesRISKY! Huge deficits generated by cutting taxes

How does government raise money to pay for public policy?

II. PAYING FOR PUBLIC POLICY

A. FEDERAL INCOME TAX: Largest source of federal revenue

1. Progressive (graduated) tax: The more money you make, the higher percentage you pay

2. People and companies provide 57% of national revenue through taxes

How does government raise money to pay for public policy?

B. OTHER TAX REVENUES1. SOCIAL INSURANCE

TAXES (34% of revenue): Payments for Social Security, Medicare, and unemployment compensation regressive tax that hits poor harder

2. EXCISE TAXES: Taxes on manufacture, transportation, sale, or consumption of goods

3. ESTATE & GIFT TAXES: Taxes on property and gifts of money

4. CUSTOMS DUTIES & TARIFFS: Taxes on goods imported into the U.S.

How does government raise money to pay for public policy?

C. BORROWING1. PRE-DEPRESSION:

Government acted as creditor nation; rarely borrowed from other countries

2. POST-DEPRESSION: Regular borrowing to finance budget

Federal debt as of this morning:

Federal Debt Clock

What does the federal government spend money on anyway?

III. GOVERNMENT SPENDING

A. Categories of largest amounts of spending

1. ENTITLEMENTS: Required government payments (SSI, Medicare, etc.)

2. NATIONAL DEFENSE: Figure now exaggerated due to Iraq Civil War

3. NATIONAL DEBT: Accumulated debt also includes heavy interest payments

What does the federal government spend money on anyway?

B. Other government spending

HighwaysHousingEducationForeign aidSpace exploration (NASA)

How does the government plan out its budget?

C. Federal budget processPHASE 1: Estimating needs and making requestsPHASE 2: Reviewing, revising and submitting budgetPHASE 3: Developing and approving a Congressional budgetPHASE 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. DOMESTIC POLICY: Decisions, actions, and principles that guide government’s approach to problems within the United States

B. Two types of domestic policyRegulatory policySocial 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 railroadsSHERMAN ANTITRUST ACT (1890): Made trusts illegal vague lawCLAYTON 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 employersFAIR 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 strikingLANDRUM-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 policyHEALTH CAREWELFAREEDUCATIONTERRORISMABORTIONGAY MARRIAGETECHNOLOGYCRIME