Transcript Making Economic and Regulatory Policy

Making Economic and
Regulatory Policy
Balanced Budget
• Balanced Federal Budget for first time
1999.
• Defense spending fell due to end of cold
war.
• Spending on domestic programs did not
raise quickly
• Economy grew/tax revenues increased
Public Policy
• When a government acts usually
happens through this.
• Public policy is a specific course fo
action taken by government to achieve
a goal.
Policy Agenda
• The informal list of issues that Congress
and the president consider most
important for action.
6 steps: not an exact science
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Making assumptions about the world
Picking the problem
Deciding whether to act at all
Deciding how much to do
Choosing a tool
Making rules for implementation
Rule
• A precise legal statement of how
government will implement a law
Constitutional promotion of
capitalism
• The Framers protected property and
excessive regulation which allows for
capitalism to thrive, even though
capitalism is not mentioned in the
Constitution
Fiscal policy
• Uses federal spending and taxation to
stimulate or slow the economy
Monetary policy
• Manipulates the supply of money that
individuals and businesses have in their
hands to keep the economy from
swinging wildly from boom to bust
inflation
• A rise in general price level (and
decrease in dollar value) owing to an
increase in the volume of money and
credit in relation to available goods.
Tariffs
• Taxeslevied on imports to help protect a
nations industries, labor, or farmers
from foreign competition. It can also be
used to raise additional revenue.
Excise Tax
• Consumer tax on specific kind of
merchandise, such as tobacco.
Progressive Tax
• A tax graduated so that people with
higher incomes pay larger fraction fo
their inome than people with lower
inomes
Regressive Tax
• A tax that makes people of lower
incomes pay a higher amount of their
wages
Flat Tax
• Everyone pays the government same
proportion of their taxes
Deficit
• The difference between the revenues
raised annually from sources of income
other than borriwn gnad the
expenditures of govenrment, including
paying the interest on past borrowing
National Debt
• The total amount of money the federal
government has borrowed to finance
deficit spending voer the years.
GDP
• Gross Domestic Product--The total
output of all economic activity in the
nation, including goods and services.
Entitlements
• Government programs, such as
unemployment insurance, disaster
relief, and disability payments, that
provide benefits to all eligible citizens.
• Welfare, Medicare, Medicaid, SS most
expensive (uncontrollable spending)
Sales Tax
• General tax on sales transaction,
sometimes exempting food and drugs
VAT
• Value-added tax--a tax on increased
value of a product at each stage of
production and distribution rather than
just at the point of sale.
Tax expenditure
• Loss of tax revenue due to federal laws
that provide special tax incentives or
benefits to individuals or businesses.
Monetarism
• A theory of that government should
control money supply to encourage
economic growth and restrain inflation.
Federal Reserve System
• The system created by Congress in
1913 to establish banking practices and
regulate currency in circulation and the
amount of credit avialble. It consissts of
12 regional banks supervised by the
Board of Governors. Often called
simply the “Fed.”
Laissez-Faire economics
• Theory that opposes governmental
interference in economic affairs beyond
what is necessary to protect life and
property.
Keynesian economics
• Economic theory based on the
principles of John Maynard Keynes
stating that government spending
should increase during business slumps
and be curbed during booms.
Trade deficit
• An imbalance in international trade in
which the value of imports exceeds the
value of exports.
WTO
• World Trade Organization--International
organization derived from the General
Agreement on Tariffs and Trade that
promotes free trade around the world.
GATT
• General Agreement on Tariffs and
Trade--international trade organization
with more than 130 members (US and
China) that seeks to encourage free
trade by lowering tariffs and other trade
restrictions.
NAFTA
• North American Free Trade Agreement-Agreement signed by the US., Canada,
and Mexico in 1992 to form the largest
free trade zone in the world..
Protectionism
• Policy of erecting trade barriers to
protect domestic industry.
Regulation
• Efforts by government to alter the free
operation of the market to achieve
social goals such as protecting workers
and the environment.
Monopoly
• A board game that I always win.
• Domination of an industry by a single
company; also the company that
dominates the industry
Antitrust legislation
• Federal laws (starting with Sherman
antitrust legislation in 1890) that tried to
prevents a monopoly from dominating
an industry and restraining trade.
trust
• A monopoly that controls goods and
services, often in combination that
reduce competition.
Labor Injunction
• A court order forbidding specific
individuals or groups from performing
certain acts (such as striking) that the
court considers harmful to the rights and
property of an employer or a
community.
• (Eugene Debs--Pullman strike)
Collective bargaining
• Method whereby representatives fo the
union and employer determine wages,
hours and other conditions of
employment through direct negotiation.
Environmental impact
statement
• A statement required by federal law
from all agencies for any project using
federal funds to assess the potential
effect of the new construction or
development on the environment.
Chapter 18
• Who is in charge?
• Depends, federal, state, local, private.
Medicaid
• Federal program that provides medical
benefits for low-income persons.
Medicare
• National health insurance program for
the elderly and disabled.
Welfare pg. 498-500
• Clinton changed welfare
• Point is to promote jobs, not money.
• Gave block grants to states, states are
now in charge of welfare.
Chapter 19
• Defense Spending
• Military Aid
• Military Intervention
• Sanctions
Economic Sanctions
• Denial of export, import, or financial
relations with a target coutnry in an
effort to change the nation’s policies.
Politics of Defense Spending
• A major American industry
• “Military Industrial Complex”
Military Industrial Complex
• Eisenhower’s speech (535).
• Iron triangles with congressional
committees, interest groups and
government agencies that share
common policy concerns.