CHAPTER 15 American Domestic Policy. Learning Objectives Copyright © 2014 Cengage Learning 2 Describe the various stages in which the public policymaking

CHAPTER 15CHAPTER 15American Domestic PolicyAmerican Domestic Policy

Learning ObjectivesLearning Objectives

Copyright © 2014 Cengage Learning2

Describe the various stages in which the public policymaking process unfolds, as well as the various players involved

Recognize the different theories that justify decisions to craft fiscal policy

Trace the budget-making process, how it unfolds, and the roles played by Congress and the president in the process



Define the different categories of tax policy and assess the differences between mandatory and discretionary spending by government

Trace the development of the Federal Reserve System in the United States

Compare and contrast the prevailing models of criminal justice policymaking



Contrast the U.S. welfare state model to that found in other Western democracies

Assess the state of the Social Security system, its prospects, and reforms

Contrast the various tax-favored investment vehicles that supplement retirement savings

Compare America’s health care system to European systems with universal care

An Overview of the An Overview of the Policymaking ProcessPolicymaking Process


Most policies go through five stages Recognition/definition Formulation Adoption (or legitimation) Implementation Evaluation

An Overview of the An Overview of the Policymaking ProcessPolicymaking Process


Public Policy Laws, regulations, and rules that affect the whole

of society Social Policy

Rules, regulations, and policymaking pertaining to the quality of life, welfare, and relations of human beings in the United States

Influential Policy Think TanksInfluential Policy Think Tanks


Theory and Practice in Fiscal PolicyTheory and Practice in Fiscal Policy


Fiscal policy How to raise revenue through taxation How to spend the revenue generated

Inflation General upward price movement of goods and

services, measured by CPI Federal Budget

Federal government uses to manage fiscal policy Specifies estimated expenditures and revenues



Laissez-faire theory Less economic intervention and minimal

governmental regulations Keynesian economic theory

Influenced FDR’s New Deal policies Increase spending in bad economic times Raise total demand for goods and services



Recession Economic slowdown High unemployment Reduced productivity Government spending

May forestall or end a recession May cause inflation and high deficits

Supply-side economics Favors cutting taxes Regan implemented this theory



Assessing the Economy’s Performance Gross domestic product (GDP)

Estimate of the total money value of all goods/services produced in a one-year period

Consumer price index (CPI) Index of prices for goods and services regularly traded

Unemployment rate Percent of people unemployed and actively looking for work



Assessing the Economy’s Performance Budget deficit and budget surplus National debt Dow Jones Industrial Average Other stock market indexes



Assessing the Economy’s Performance Housing starts

Number of residential construction projects begun in a specific period

Consumer confidence index Measures public’s evaluation of economy

Balance of trade figures Net exports

Consumer Confidence in Consumer Confidence in the United States: 2000-2012the United States: 2000-2012




Federal Budget-Making Process Agencies submit budget requests to the

Office of Management and Budget (OMB) OMB prepares a budget proposal Sets guidelines for estimating revenue and

allotting spending



Appropriations bills originate in the House Senate revises the House version House and Senate reconcile their versions

Secure enough votes for approval of the final bill Sent to the president for approval



Congress may pass “continuing resolutions” Occurs when president and Congress don’t agree Allows government to keep running

Federal government has been forced to close Proposed balanced budget amendment

Spending kept at or below revenue collected Has been defeated on five separate occasions

Total U.S. Debt by Fiscal YearTotal U.S. Debt by Fiscal Year




Taxation Policy Redistributive tax Distributive tax

Sixteenth Amendment Tax an individual’s increase in wealth



Progressive tax Tax increases as income increases

Regressive tax Charges all individuals the same amount

Flat tax Tax all individuals at the same rate, regardless

of income



Social Security taxes Payroll taxes taken directly out of paycheck Held until retirement

Corporate income taxes Other taxes

Gasoline Communication services Estates



Spending Policies - Dividing the Pie Mandatory spending

Not controlled by annual budget decisions Obligated by previously enacted laws Medicare, Social Security

Discretionary spending May be modified or eliminated in a given year Education, environment, and national defense

Where do Federal Tax Dollars Come Where do Federal Tax Dollars Come From and Where Do They Go?From and Where Do They Go?


Theories and PracticeTheories and Practicein Monetary Policyin Monetary Policy


Monetary policy How government controls the supply/price of money

Federal Reserve System Acts as nation’s central bank Sets discount rate Engages in open market operations Sets reserve requirements

The Nature and Practice The Nature and Practice of Crime Policy of Crime Policy


Crime control model Most important function to control criminal behavior “Assembly line justice” Move cases quickly through the system Plea bargains

Due process model Principal goal is justice Decisions based on reliable information Guilt “beyond a reasonable doubt”

The Welfare State The Welfare State and Programs for the Poorand Programs for the Poor


Welfare state Between capitalism and socialism Aimed to help the poor Viewed by some Americans as giving a “free ride” New Deal and Great Society programs Medicare and Medicaid


The Welfare State The Welfare State and Programs for the Poorand Programs for the Poor

The Social Security SystemThe Social Security System


Third rail of American politics Established following the Great Depression Meant to be a “pay-as-you-go” system Economic strains are leading to its demise Serious solvency issues seen for the future Americans turn to 401(k)s and IRAs

Health Care Policy Health Care Policy


Privately-operated activity in U.S. Individuals secure own health care

Universal health care Full access to healthcare provided at

government expense Patient Protection and Affordable Care Act

Penalizes those without health insurance No public-sponsored health care plans

Health maintenance organizations Limit costs by charging flat monthly rates

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CHAPTER 15 American Domestic Policy. Learning Objectives Copyright © 2014 Cengage Learning 2 Describe the various stages in which the public policymaking