Public Policymaking

AP Mini-Unit 6

The U.S. Economy

Economy has a profound impact on public policy and public opinion

Free enterprise system - economic system where consumers have buying choices and compete in the market to make profits

U.S. has a mixed economy = free enterprise + federal gov’t regulation of economy

Economic Troubles

Unemployment rate - portion of the U.S. population that is actively seeking but cannot find work Put together by Bureau of Labor

Statistics (BLS) Unemployment rate in March 2015:

5.5% (8.6 million people) 6.7 million part-time and 738,000

discouraged/not looking for work (underemployed workforce)

Inflation - the rise in price of goods and services in response to economic situations

Calculated by consumer price index - measured trends in the cost of a basket of consumer goods and services Cost of what an average person would

spend on various goods

March 2015: rise of 0.2%

Gov’t Involvement in the Economy

Laissez-faire - “allow to do”; economic attitude of letting the economy take care of itself without gov’t interference

How much gov’t is too much gov’t in the economy? As a mixed economy, we have a least

SOME gov’t involvement…

Economic Policymaking

1.) Monetary policy - gov’t manipulation of the supply of money to influence the direction of the economy

Executed by the Federal Reserve System (“the Fed”) regulates bank lending, interest rates, and

money supply 7 member Board of Governors each with

14 year terms, appointed by President, approved by Senate

2.) Fiscal policy - using the federal budget (taxing, spending, and borrowing) to influence the economy

2 views: more gov’t involvement vs. more consumer involvement

Keynesian Economic Theory

the gov’t must stimulate the economy when it falters by spending money to create programs, jobs, bailouts, etc.

More jobs = more money for consumers = more demand for goods = better economy

Generally advocated by Democrats/liberal ideologies

Supply-Side Economic Theory

Focuses on the supply of goods, rather than the demand

Advocates for lowering taxes to encourage people to invest in businesses and produce more goods

Less restrictions = More work = more goods = better economy

Generally advocated by Republicans/conservative ideologies

The U.S. and Capitalism

Capitalism - economic-political system where the economy is controlled by private businesses rather than the gov’t

U.S. gov’t doesn’t have complete control or influence over the economy because consumers and businesses own the means of production, not the gov’t Can make it difficult for the gov’t to guide

economic policy effectively

Social Welfare Policymaking

Entitlement programs - gov’t benefits that must be given to individuals who qualify for them regardless of need (ex: social security, Medicare)

Means-tested programs - gov’t benefits given to individuals who qualify based on specific needs (ex: food stamps, Medicaid)

Poverty in America

Income is how much money is made during a specific time period; wealth is how much a person’s assets/belongings are worth

Poverty generally defined by annual income thresholds (make a certain amount of money a year or below) --> AKA the “poverty line”

2015 - over 44 million Americans living in poverty

Trends: higher poverty rates for minority groups (African Americans, Hispanics, etc.), single women with children, residents of inner city areas, and some elderly

Wealth and Taxes

Progressive tax - the higher the income, the higher the taxes that are paid (ex: income tax) The wealthy carry more of the tax burden

Proportional (flat) tax - individuals pay the same tax rate, rich or poor (ex: sales tax in theory)

Regressive tax - taxes that place more of a burden on lower income individuals than high income individuals (ex: sales tax in practice)

Relieving the Poverty Burden

Earned Income Tax Credit (EITC) - tax benefits for low-income working individuals

Gov’t gives benefits to these individuals, either through direct payments of money (transfer payments; ex: EBT cards) or “in-kind” benefits (non-money benefits; ex: Food Stamps)

Legislating Social Welfare and Welfare Reform

Social Security Act of 1935 - established the Social Security system for aged/retired persons to alleviate poverty in old age

Part of FDR’s New Deal programs

Means-tested welfare programs are controversial: are they solving poverty or enabling it?

Personal Responsibility and Work Opportunity Reconciliation Act (1996) Each state gets fixed amount of welfare funds Welfare recipients must find work within 2

years or lose all benefits Lifetime limit on welfare: 5 years Welfare now known as Temporary Aid for

Needy Families (TANF)

Social Security

Is currently the U.S.’s most expensive entitlement program (currently costs about $866 billion a year)

Payroll taxes are taken out of working individuals’ paychecks and put in Social Security Trust Fund

These funds are then paid to eligible retired persons on a monthly basis (who have been paying into the system during their working years) Basically, work force funds individuals in

retirement

PROBLEMS:

More people are retiring and drawing on Social Security, but there are not enough in workforce to fund them

Without reform, the system will eventually go bankrupt/need forced funding from Congress

Environmental Policymaking

Concern for environment has grown from conservation to active prevention of environmental harm

Environmental Protection Agency (EPA) - regulatory agency in charge of implementing clean air, water, wilderness and wildlife protection policies

National Environmental Policy Act (NEPA) (1969):

requires gov’t agencies to file environmental impact statements (detailed reports on a policy’s environmental effects) before implementing policies that can harm the environment

Clean Air Act of 1970 - enforced by EPA to improve air quality and reduce the U.S. population’s exposure to air pollutants

Has led to many states implementing emissions standards/rules for vehicles, factories, etc.

Water Pollution Control Act of 1972 - enforced by the EPA to improve cleanliness of lakes, rivers, and other waterways and prevent to water pollution

Wilderness preservation policies largely guarded by the National Park Service

Endangered Species Act of 1973 - list of protected endangered animals enforced by the Fish and Wildlife Service (to be protected by the gov’t at all costs)

Toxic and Nuclear Waste

Superfund - fund created by Congress to clean up hazardous waste sites (funded by taxing chemical products) For when polluters could not be found

to clean up waste sites Enforced by the EPA

Nuclear waste controversial: where to dispose of it?

Global Warming

The gaseous waste of fossil fuels (coal, oil, natural gas) produce carbon dioxide

This builds up in the atmosphere and traps heat against the Earth (“greenhouse effect”)

Solution: reduce emissions and look for cleaner energy sources

Energy Policymaking

Tied closely to environmental policymaking, esp. concerning environmental impacts

COAL: most used, abundant (and dirtiest) fuel source; 21% of U.S. energy use, about 50% electricity source Mines constantly targeted for emissions

levels and health issues for workers

OIL AND NATURAL GAS: 36% of U.S. energy and fuel for most transportation

Controversy over dependence on foreign oil vs. using natural U.S. deposits (often involves offshore drilling/large environmental impacts)

NUCLEAR ENERGY: 20% of U.S. electricity; controversial and dangerous: expensive to produce, hazardous to dispose of

RENEWABLE ENERGY: wind, solar, water, biomass (plant materials); 6% of electricity; grow fast as alternative forms of energy

Healthcare Policymaking

Healthcare is inherently expensive, esp. in U.S. economy (1/5 of GDP)

Largely paid for by the federal gov’t (Medicaid and Medicare programs) and insurance companies

Healthcare benefits are largely accessed through employment insurance (pay a yearly premium, insurance co. pays for part of medical services) Businesses decide qualifications for

benefits (ex: full-time vs. part-time) Health maintenance organization

(HMO) - a collection of healthcare providers who offer a range of services for set fee

MUCH cheaper to access healthcare through employer or gov’t than on your own

Uninsured forced to pay full price for medical coverage (often will go without until emergency situations)

The Gov’t and Healthcare

Medicare - healthcare benefits for the elderly who qualify (entitlement program)

Medicaid - healthcare benefits for the poor who qualify (means-tested program)

Both are the gov’t’s most expensive programs behind Social Security

Healthcare Reform

Many presidents have supported healthcare reform (T. Roosevelt, Truman, Clinton, etc.)

Problems to Solve: How can we give everyone equal

access to affordable healthcare? How can we make sure insurance

companies provide coverage for those who need it?

The Patient Protection and Affordable Care Act (2010)

Landmark healthcare legislation (aka “Obamacare” or “ACA”)

COMPONENTS: Establish affordable gov’t provided

healthcare plans for those who sign up Create a marketplace of competitive

health insurance options between gov’t plan and other insurance plans

Prohibit exclusion of people with pre-existing conditions from health coverage

Make sure insurance companies don’t drop coverage for the sick

Require large businesses to provide healthcare for their employees

Require that every citizen (regardless of need) have health insurance to pay into the system for those who really need it (or pay penalty tax)

Expand eligibility for Medicaid tax credits/gov’t subsidies (funds) for

poor and small businesses

National Security Policymaking

Foreign policy - gov’t decisions/policies concerning the U.S.’s relationship with the rest of the world

Largely controlled by the president, the Department of Defense, other exec. agencies, and Congress

Who Carries Out Foreign Policy?

1.) Military U.S. has often used force to deal with

global threats (to keep peace, to take down regimes, to aid other countries, etc.)

2.) The Economy Economic interests play a huge role in

country relations (esp. commerce); can be used as “bargaining chips”

3.) Diplomacy

The most peaceful method: countries forging relationships and agreements by “talking it out” (includes Secretary of State, ambassadors, etc.)

The World Stage

United Nations (UN) - (est. 1945) - a multinational organization committed to a mission of international peacekeeping Includes the General Assembly (193

countries) and the Security Council (15 members, U.S. a permanent member)

North Atlantic Trade Organization (NATO) - (est. 1949) Members: U.S., Canada, many Western

European countries, Turkey Have agreed to join military forces if any

member is attacked in war

European Union (EU) - transnational gov’t including most European nations Have common currency (euro), trade,

labor, and immigration policies

Who Makes Foreign Policy?

1.) THE PRESIDENT chief of state (rep. of U.S. to world) chief diplomat (negotiates treaties

and executive agreements), commander-in-chief (in charge of

military) In charge of setting the course and

direction of the U.S. at home and abroad

2.) The Department of State

In charge of implementing foreign policy and maintaining embassies

Secretary of State a key foreign policy advisor to President

Secretary and ambassadors largely take on the work of international diplomacy

3.) Department of Defense Housed in the Pentagon Includes Army, Navy, and Air Force Secretary of Defense + Joint Chiefs of

Staff (highest military branch officials) serve as top advisors to President

Pres. +VP + SOS + SOD = National Security Council (NSC)

4.) Intelligence Agencies

Central Intelligence Agency (CIA) - in charge of gathering international information for the purpose of monitoring national security (can also include espionage of enemy nations)

Not allowed to operate within the U.S., only outside of it

National Security Agency (NSA) - agency of the Dept. of Defense in charge of breaking foreign encryptions and monitoring flow of electronic information for security purposes

5.) Congress

Has the sole power to declare war

Senate approves treaties

Appropriates funding for foreign policy actions (military esp.)

Oversight of the actions of the executive branch

U.S. Foreign Policy History

isolationism - long-term foreign policy in which U.S. stayed out of other nations’ conflicts, esp. wars in Europe

Bent during WWI, broken after WWII

The Cold War

A non-combative period of hostility between U.S. and the communist Soviet Union following WWII until 1989.

Containment doctrine - method in which the U.S. was to isolate the Soviet Union and its spread of communism

Arms race - U.S. and Soviets each compete to come up with higher standards of weapons

Spread of communism in South Asia gets U.S. involved militarily (ex: Korean War and Vietnam War)

Détente - gradual move in foreign policy to relax tensions between U.S. and Soviet Union with promises of security for both

Cold War continues: even though foreign relations have eased, U.S. still keeps up military strength for protection (ex: Reagan rearmament)

Upheaval causes fall and break up of the of Soviet Union in 1989

Defense Policies

Strategic Arms Limitation Talks (SALT) - détente era agreement in which U.S. and Soviets agree to limit nuclear weapon production, keeping enough to protect against surprise attacks

Strategic Defense Initiative (SDI) - Reagan-era strategy that would use ground and space-based nuclear lasers to take down missiles shot at U.S. from other countries

The War on Terrorism

Sparked by the events of Sept. 11, 2001, the U.S. goes to war in Afghanistan and Iraq to seek out Al Qaeda terrorists

Also to take out dangerous regimes (Saddam Hussein) and search for weapons of mass destruction (WMDs)

Today’s Defense Policies

The U.S. is the world’s most powerful military power, but force cannot be used for everything

U.S. has also passed sanctions - non-military penalties against a foreign gov’t to try and influence their behavior

Trend: growth of diplomacy as first option, scaling back of military action

U.S. a massive force of world economy through trade and humanitarian aid

Interdependency - mutual economic reliance of nations on one another; if one economy falters, all feel the consequences

The U.S. and International Trade

U.S. movement away from reliance on tariffs - taxes on foreign imports (to protect U.S. businesses)

Balance of trade - ratio between what is earned from exports vs. what is paid on imports U.S. has been in deficit (more import

expenditure than export revenue)

Continued dependence on products like oil from the Organization of Petroleum Exporting Countries (OPEC) strikes an uneasy balance between foreign and economic policies

Baker v. Carr (1962)

Charles Baker sued Secretary of State of TN Joe Carr because TN had not reapportioned/redrawn its districts since 1901, despite TN law. Baker said changes in population to cities made elections unfair under such old districting.

Importance of the Case: SC ruled they had power to rule over

legislative apportionment and could intervene when states violated constitutional principles.

U.S. v. Nixon (1974)

In the course of the Watergate investigation, it was discovered President Nixon recorded all White House conversations. He was ordered to release the tapes, but refused, claiming executive privilege.

Importance of the Case: SC ruled that in certain circumstances, the

president may use executive privilege for national security, military, etc. reasons, but not in criminal investigations (was the court’s call when it was appropriate)

U.S. v. Lopez (1995)

Alfonso Lopez was charged under TX law for possessing a firearm on school premises. He was also charged under a federal law, the Gun-Free School Zones Act.

Importance of the Case: SC ruled that the federal law was

unconstitutional, as Congress did not have the commerce powers to regulate gun possession in school zones.

THE END.