Transcript Public Policy PowerPoint

PUBLIC POLICY
Five Steps in the Policy
Making Process
• agenda building – identifying a problem and getting it
on the agenda
• policy formulation – the debate that occurs between
government officials, between the public in the media,
and in campaigns
• policy adoption – the selection of a strategy for
addressing a problem
• policy implementation – the administration of the
selected policy (by bureaucrats, the courts, etc.)
• policy evaluation – when the public, officials and
groups determine if the selected policy has the desired
impact
Defining Poverty
• low income poverty threshold in 2000 was $17,500
for a family of four
• the poverty level has changed since then to
account for changes in the consumer price index,
which enables the government to adjust the
poverty level by taking into account changes in
prices of goods and services
• the official poverty level is based on pre-tax
income, but does include in-kind subsidies, like
food stamps and subsidized housing
Major Government Assistance
Programs
• Temporary Assistance to Needy Families (TANF) –replaced
AFDC in 1996, this program uses federal funds which are
administered by the states to help needy families.
• Supplemental Security Income (SSI) – provides a minimum
income to the elderly and disabled who do not qualify for
Social Security benefits.
• Food Stamps – these coupons that can be used to purchase
food are now distributed to more than 28 million Americans
with little or no income
• Earned Income Tax Credit (EITC) – a tax credit used by low
income workers who get back part or all pf the their Social
Security taxes
Economic Policy Making:
How much responsibility should the
government have for keeping the U.S.
economy healthy?
• Fiscal Policy – the use of changes in government spending
or taxation to change national economic variables, like the
unemployment rate
• Keynesian Economic Theory: using fiscal policy can alter
economic variables (increasing government spending during
economic turn downturns, for example)
• Monetary Policy – the use of changes in the money supply
to change credit markets, unemployment and the inflation
rate (inflation vs. deflation)
• Monetary policy is determined by the Federal Open Market
Committee (FOMC), part of the Federal Reserve System
Budget Deficits and the Public
Debt
• the deficit is when the government spends more
money than it receives in any given year
• the public debt is the total amount of debt
carried by the federal government, also called
the national debt
Public Policy Basics
COSTS vs. BENEFITS
• Cost = any burden that a group must
bear
• Benefit = any satisfaction that a group
will enjoy from a policy
COSTS vs. BENEFITS
• Costs and Benefits can be widely distributed
or narrowly concentrated
Widely-distributed costs: Income tax, Social
security tax
o Narrowly-concentrated costs: Factory air emission
standards
o Widely-distributed benefits: Social Security
benefits, national defense
o Narrowly-concentrated benefits: farm subsidies
o
4 types of Policies
• Majoritarian: Widely distributed costs
and widely distributed benefits
o
EX: Social Security, National Defense
• Interest Group: narrowly concentrated
costs and narrowly concentrated
benefits:
o
EX: Tariffs on imports and exports
4 types of Policies
• Client: Widely distributed costs and
narrowly concentrated benefits
o
EX: Pork barrel pet projects for Senators
states (Alaska’s Bridge to nowhere)
• Entrepreneurial: narrowly concentrated
costs and widely distributed benefits:
o
EX: Consumer product safety legislation
4 Types of Policies
Narrow Costs
Narrow
Benefits
Widespread
benefits
Interest Group
Ex. Tariffs
Entrepreneurial
Ex. Consumer Product
Safety
Widespread Costs
Client Politics
Ex. Pork Barrel Project
Majoritarian
Ex. Soc. Sec.,
Nat Defense
ECONOMIC POLICY
Taxing and Spending
• Progressive taxes: a tax where the tax
rate increases with increased wealth
• Regressive taxes: a tax that places a
higher burden on those with lower
income
Taxing and Spending
• Sources of Federal Revenue:
o
o
o
o
o
o
Individual Income taxes: 49%
Social Insurance (payroll) taxes: 33%
Corporate taxes: 10%
Excise taxes: 3%
Borrowing: varies depending upon deficit
Other: 4%
Taxing and Spending
• Discretionary Spending: Government has a
choice in how money is spent
• Nondiscretionary: Government must spend
the money for programs or commitments
previously made
• Where the money is spent
o Direct benefit payments to individuals (Social Security,
Medicare, Medicaid) 55%
o National Defense 16%
o Interest on National Debt 10%
o Nondefense discretionary Spending 19%
Taxing and Spending
• Entitlements
Automatically spent (without annual review
of other programs)
o Ex: Social Security, Medicare, Federal
Pensions, Interest on National Debt
o 2/3 of federal budget. Problem becomes
that Congress and the President cannot
control much of spending.
o
Taxing and Spending
• Budget Process
o Agencies prepare their budget needs and submit to
President’s Office of Management and Budget (OMB)
o OMB makes recommendations to President
o President submits budget to Congress
o Congressional Budget Office (CBO) checks President’s
budget
o Ways and Means committee in house review taxes and
revenues. Appropriations committees review spending
o Agencies lobby for money
o Majority vote in both houses passes budget
o President signs or vetoes bill (no line-item veto)
Managing the Economy
• 2 types of Economic Policies
o
Fiscal Policy: taxing and spending (budget).
Handled by Congress and the President
o
Monetary policy: regulation of the money supply
by the Federal Reserve Board (the Fed).
Adjustments of Interest rates
Managing the Economy
• Economic Theories:
1. Keynesian economics: Government
can manipulate the health of an economy
through spending.
Managing the Economy
• Economic Theories:
2. Supply-side economics: Cuts in taxes
will produce business investment that will
offset loss of $ due to lower taxes.
3. Monetarism: Money supply is the most
important factor for determining the health
of the economy
Managing the Economy
• Trade Policy
o
Trade deficits (US imports more goods from
other nations than it exports) have led to
calls for protectionism
o
Recent push for Free trade
 GATT
 NAFTA
Government Regulation
• Rules imposed by government on
business to achieve a desired goal
• Antitrust policies 1890s-1910s to
counter ill effects of capitalism
• Creation of regulatory agencies like
FTC, FCC and SEC
Environmental Policy
Environmental Policy
• Key issue is the extent to which the
environment should be protected and
the costs of doing so.
• Key legislation:
o
o
Clean Air acts and Clean water Acts
EPA created in 1970
Social Welfare
Government Subsidies
• Government Financial Support
Cash (ie TANF- Temporary Assistance for Needy
Families)
o Tax Incentives (Home mortgage interest payments
are tax deductible)
o Credit subsidies- Veterans Administration provides
Home loans
o Benefit in kind subsidies: Non cash benefits (foods
stamps, Medicare, Medicaid)
o
Government Subsidies
• Purpose: to encourage a particular type
of private sector action.
• EX - Homeownership is encouraged by
the government, so Mortgage interest is
tax deductible.
Government Subsidies
• Business Subsidies:
o
o
o
Oil companies receive tax breaks to encourage oil
production to make us less dependent upon
foreign oil
Airlines received government aid post 9/11 to help
offset lost revenue.
Government pays farmers to not plant certain
crops to keep production down and stabilize prices
Government Subsidies
• Social Welfare Subsidies:
o
o
o
o
o
o
o
Social Security (no means test, i.e. one does not have to
prove that one lacks the means in order to qualify for the
benefit.) Financed by FICA payroll tax
Medicare (no means test)
Unemployment Insurance (no means test)
Temporary Assistance to Needy Families (TANF = means
test)
Supplemental Security Income (means test)
Food Stamps (means test)
Medicare federal medical coverage for people on TANF or
SSI (means test)
Foreign Policy
Foreign Policy
• President and Congress Share powers
o
o
o
President is commander in chief and can deploy
troops, while Congress controls the money
funding the military and can declare war.
President makes appointment for ambassadors,
but Senate approves
President makes treaties, but Senate ratifies
(some presidents use Executive Agreements,
which do not need to be ratified to get around this)
Foreign Policy
• President and Congress Share powers
o
WAR POWERS ACT
 Response to Vietnam
 President must notify Congress within 48 hours of
deploying troops
 President must bring troops home after 60 days unless
further authorized by Congress to keep troops in hostile
situation
 Act has had little impact on the execution of our military
policy
Foreign Policy
• Presidential Support for Foreign policy:
o
o
o
o
o
o
Secretary of State
Secretary of Defense
Director of National Intelligence
CIA
NSA
National Security Council-”NSC” (coordinates
efforts that effect National Security)
 President, VP, Sec of State, Sec of Defense, CIA head,
National Security Advisor