1. Public Policy Concepts
Why do the poorest people in the U.S. have the least political power?
What role does federalism play in the implementation of social welfare policy?
Why is it so difficult to pass social welfare policy?
Why are entitlement programs always a threat to the budge making process?

2. Why can it be said that the president is a secondary player when it comes to the economy?
Why is it so difficult to write a budget for the United States?
How can the president use the budget-making process to control his/her policy initiatives?

3. Public Policy Making
Deciding what the problem is and deciding how to solve it.
Solving a social problem
Countering threats
Pursuing an objective

4. Prohibiting certain activities Protecting certain activities
Can be achieved by
Prohibiting certain activities
Protecting certain activities
Policy can promote some social activity
Policy can give direct benefits
Benefits can take form of individual
Individual
Government subsidies
Student loans
Pension for elderly

5. Policy making requires trade offs between competing goals
Legislators often use incrementalism

6. Making Policy
1. Defining the role of government in solving social and economic problems
Agenda setting
Policy can try to address the concerns of opposing sides.

7. Policy formulation and adoption
Legislative process
Executive Order
Regulatory Agencies
Precedent-setting decisions by Supreme Court

8. Policy implementation
Enforcement through a government agency

9. Policy evaluation
Does the policy work?
Have unforeseen consequences cause other policy problems

10. Obstacles to Policy Making
The U.S. is a pluralist democracy.
Getting things done is cumbersome
Policy fragmentation
Oversight

11. Economic Policy Raising Revenue Government Spending Discretionary
Non discretionary (mandatory)
National debt
Social Welfare
Entitlement programs

12. The Federal Budget
Amount of money the federal government expects to receives and authorizes government spending for a fiscal year.
October 1 to September 30
Proposals- Each federal agency submits to OMB
Executive branch- OMB work with president’s staff
Submits to Congress in Jan or Feb

13. Congress- President Debates and modifies the president proposal.
CBO provides economic date
CBO Hold hearing, analyze
Offer budget resolutions must be passed by Sept 15th.
The Appropriations Committee for each house submits bills to authorize spending.
President
Congress send appropriations bills to president for approval.
If it is not approved, Congress must pass temporary emergency funding

14. Government, Politics, and the Economy
Capitalism
Mixed Economy
Laissez-faire
Multinational Corporations

15. Fiscal Policy
Government action of either lowering or raising taxes, which results in more or less consumer spending or enacting government spending programs.
Keynesian
Supply Side

16. Economic Policy at Work: An Illustration
Wal-Mart is the world’s largest company.
Current Facts
Revenue
Employees

17. Government Regulation and Business Practices
Securities and Exchange Commission regulates stock fraud.
Minimum wage: Federal Rate
Labor union:
Collective bargaining:

18. The proportion of U.S. GDP accounted for by international trade is 32%.
Wal-Mart takes full advantage of “comparative advantage.”
Offshore outsourcing is a key concern of the new global economy.

19. “It’s the Economy, Stupid”
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 unemployment.

20. Unemployment rate: Measured by the BLS
Two Major Worries: Unemployment and Inflation
Unemployment rate: Measured by the BLS
Inflation: The rise in prices for consumer goods.
Consumer Price Index: The key measure of inflation that relates the rise in prices over time.

21. Unemployment: Joblessness in America, 1960-2002 (Figure 17.1)

22. Monetary Policy
Process by which the government controls the supply of money in circulation and the supply of credit through the actions of the Federal Reserve Board (FED)
Fed Chairman Janet Yellen

23. 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.

24. 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.

25. Policies for Controlling the Economy
Keynesian: accomplished through fiscal and monetary policy
Supply Side

26. Supply side 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.

27. Why it is Hard to Control the Economy
Some think politicians manipulate the economy to win reelection.
Government is more important in setting the rules of the game.

28. Politics, Politics, and the International Economy
Protectionism.
World Trade Organization (WTO)
Free trade

29. Arenas of Economic Policymaking
“ Nobody lobbies like business lobbies”
Government Regulation
Anti trust policy

30. 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.

31. 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.

32. Labor and Government
Government historically sided with business over labor unions.
NLRB: (Wagner Act) regulates labor-management relations
Guaranteed right of collective bargaining

33. 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. ( 7.25)

34. Democracy and 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.

35. 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.