Transcript File
Domestic Policy
The Policy-Making Process
• Agenda Building: identifying a problem and getting it on the
agenda.
– Congress will listen to constituents, the media and interest groups to
identify problems
• Policy Formulation: the debate that occurs among government
officials and the public in the media, in Congress, and through
campaigns.
• Policy Adoption: selection of a strategy for addressing the
problem from among the solutions discussed.
• Policy Implementation: the administration of the policy adopted
• Policy Evaluation: Congress checks to see if the implementation
was effective and beneficial to the public good
– Can do this through oversight of the bureaucracy of by listening to
constituents
Health Care Costs
• Healthcare spending has gone
up from 6 percent of our
income in 1965 to 15 percent
today.
• Compared to other advanced
industrial countries, our
spending as a percentage of
GDP is quite high, double the
rate of some countries.
Government’s Role in Healthcare
• The government funds about 45 percent of health care spending,
private insurance provides about 35 percent, and the rest is picked
up by individuals or charity
• Medicare: federal health-insurance program that covers U.S.
residents over the age of sixty-five.
– You CARE about your grandma
– The costs are met by a tax on wages and salaries.
– In 2006 it was expanded to cover doctor visits, procedures and
medicine.
– 2nd most expensive federal program next to Social Security
• Medicaid: Medicaid is a joint state/federal program that provides
medical care to the poor, including elderly persons in nursing
homes.
– funded out of general government revenues
National Health Care
• Affordable Care Act:
• Allows for states to pay for insurance for the
uninsured
• Paid for out of general tax funds
• Forces businesses to provide healthcare to
workers
– Fines if they don't
– Exemptions for small businesses
• Forces people to have health insurance
– Fines if they don’t
National Federation of Independent
Business v Sebelius
• In their 2012 SCOTUS ruling, the Roberts court upheld
the constitutionality of the Affordable Care Act - not
based on the Commerce Clause but - based on
Congress’s authority to tax.
• This upheld the individual mandate which requires
Americans to purchase insurance or pay a tax penalty.
– Individual mandate – each person is mandated to
have health insurance
Poverty and Welfare
• Entitlement spending/programs:
– Money/services given to people because they qualify
for it b/c of income
– They are “entitled” to the help
– Sometimes just called “welfare”
– Sometimes called “government assistance”
• Medicare, Medicaid, Social Security, Food
Stamps, and TANF or “welfare”
– Temporary Assistance to Needy Families
– Block grant from federal government administered by
the state
Welfare Reform Act of 1996
• Created TANF
• Devolved the administration of welfare to the
states
• Made it temporary (two year limit and five
year total limit)
• Created a ‘path to work’ for people receiving
welfare
• Cut number of people on welfare in half
Welfare Controversies
• System may be abused by ‘lazy’ people
– Curtailed by TANF
• System may encourage people to not find
work
• Is more of a ‘hand-out’ than a ‘hand-up’
• Some states are pushing drug testing of
welfare recipients
Other forms of Welfare
• SSI (Supplimental Security Income)
– Part of Social Security
– Aide to old and disabled
• Food stamps
– Nutrition for poor families
• Earned Income Tax Credit
– Extra income tax bonus if you are poor and have
children
Income, Poverty, and
Public Policy
Figure 18.1- Poverty Rates, 1999
Income, Poverty, and
Public Policy: What Part Does Government Play?
• Taxation:
• Progressive tax: people with higher incomes
pay a greater share.
• Proportional tax: all people pay the same
share of their income.
• Regressive tax: opposite of a progressive tax
• Earned Income Tax Credit: “negative income
tax” that provided income to very poor people.
Income, Poverty, and
Public Policy: What Part Does Government Play?
• Government Expenditures:
• Transfer payments: benefits given by the
government directly to individuals.
• Some transfer benefits are actual money.
• Other transfer benefits are “in kind” benefits
where recipients get a benefit without getting
actual money.
The Evolution of American Social
Welfare Programs: New Deal
• The Great Depression led many citizens to
want the government to help protect against
economic downturns and causes of poverty
beyond their control.
• Social Security Act of 1935 was the first major
step by the federal government to help
protect people against absolute poverty.
The Evolution of American Social
Welfare Programs: Great Society
• Johnson declared a “war on poverty” and
created many new programs and it was his
leadership that made the difference.
• Medicare, school-aid programs and antipoverty programs were some examples.
• Other programs were designed to provide
training and jobs, not just transfer payments.
The Evolution of American Social
Welfare Programs
• President Reagan and the Limits to the Great
Society:
• Reagan (like Johnson) played a lead role in getting
attention on benefit programs.
• Many programs had benefits reduced, and
people were removed from benefit rolls.
• Big move of major programs to the states
(devolution).
• Democrats worked to lessen the cut of the
benefits to try and protect the truly poor.
Social Security
• Created by FDR as a part of the New Deal
• Workers must give part (6.5%) of their
paychecks to the federal government
– Their employers have to match that 6.5% too
– The government then invests that money in the
stock market on “safe stocks”
• When the workers retire, they get what they
paid in and part of what their money earned
on the stock market
Problems with Social Security
• Social Security/Medicare are the most expensive programs in the
federal budget
– 44% of all federal spending
• Less workers today for each person receiving benefits
– 1935 – 25 workers/1 beneficiary
– Today – 3.3 workers/1 beneficiary
• This leads to the government having to borrow money to pay for
Social Security
– What happens when the money runs out?
• Why less workers?
– Baby boomers (ppl born right after WWII) life expectancies are
growing
• Improved healthcare, drugs
– Had less children and grandchildren b/c of birth control, women
working more
A comparison
of
the number of
active workers
per
the number of
retirees.
Immigration
• The Continued Influx of Immigrants
– More than a million people a year immigrate to this
country.
• Racial Minority Groups will constitute the
“majority” of America by 2060.
• Some point out the positives of immigration—
offsetting the low birthrate and aging population.
– Latin Americans are usually Catholic, leading to less
use of birth control
• Immigrants expand the workforce and bring in
more income taxes to fund entitlement programs
Immigration Reform
• Self-deportation
– Ask illegal immigrants to leave themselves
• Illegal immigrant roundups and deportations
• Amnesty for those already here illegally
– They can become citizens
– After them, enforce harsh immigration restrictions
• Make it easier to become a citizen legally
• A wall
Declining Crime Rates
Increasing Incarceration Rates
The United States
has the highest
incarceration rate
among major
world nations
measured
by the number
of prisoners
per 100,000 residents.
Incarceration Rates
• The number of people held in jail or prison for
every 100,000 people
• US is 1309 men, 113 women
• Majority of arrests come from drug crimes
• Prison system is a booming business
– 1923 there were 63 in the US
– Today there are 4,500
Federal Drug Policy
• Money spent on federal drug interdiction
programs has not met with much success, as
illegal drug consumption in the U.S. has
remained steady.
• Between 20 and 40 million Americans violate
drug laws every year
– That’s out of a total of 300 million Americans
• Push for rehab programs instead of prison for
drug offenses
Environmental Policy
• Environmentalism
– Started in the 1960s
– Led to the creation of the EPA in the 1970s
• More regulation regarding how individuals and
businesses interact with the environment
• Clean Air Act (1963)
– Monitor factory air emissions
– Car makers must reduce car emissions
• Carbon monoxide
• Clean Water Act (1972)
The EPA
• The Environmental Protection Act, 1970
requires states to set air quality standards,
reduce damage done by automobiles, measure
city smog, and set environmental guidelines.
• The EPA also manages the Superfund, which is
paid into by industry to cover costs of cleanup if
necessary, and toxic waste cleanup.
Labor Policy, Historical Background
• The Fair Labor Standards Act, 1938, established the
minimum wage, the 40 hour work week, and
required that employees be paid for overtime.
• The Taft-Hartley Act, 1947 allowed states to outlaw
“closed shops” where union membership is
required.
– States could then pass “right to work laws” where
factories couldn’t deny you a job if you refused to join a
union.
Global Warming
• “political football” kicked back and fourth
between liberals and conservatives
• Some liberals say man’s pollution is causing
increased “climate change” and it will eventually
be our demise if we don’t do something
• Some conservatives say that it is a natural
fluctuation and the liberals are just using it to
increase government regulations of businesses
– And increased regulation leads to less profits for
owners who pass the cost on to employees and
customers
Economic Policy
Introduction
• A major economic policy issue is how to
maintain stable economic growth without
falling into either excessive unemployment or
inflation (rising prices).
• Inflation, a sustained rise in the general price
level of goods and services.
Good Times, Bad Times
• The U.S. economy experiences booms and
busts. The busts are called recessions.
– Recession, two or more successive quarters
in which the economy shrinks instead of
grows.
• Unemployment
– Usually linked to the health of the economy
– Today, its around 8%
How to get out of a recession:
Keynesian Economics
• John Maynard Keynes said:
• If we are in a recession, all we need to do is
have the government spend lots of money to
jumpstart the economy
• Major part of the New Deal
– Highways, schools, TVA built
• Used by Bush 43 and Obama in “stimulus
checks” mailed out to citizens after 2008
recession
Keynesian Economics and Debt
• We have to borrow the money to jumpstart
the economy, not just raise taxes
– If we raise taxes, we’re just moving money around,
not putting new money in
• This is why we are in such amazing debt
• Called “discretionary spending”
– At the discretion of the government
– Optional
– Used to boost the economy
Deficit Spending and the Public Debt
• The government funds its deficit primarily by
selling U.S. Treasury bonds.
• Sell $100 bond today, pay back $110 in 10
years
– Like a loan, but not from a bank.
• Twenty years ago, only 15 percent of these
bonds were held abroad.
– Today the figure is 40 percent.
– Mainly in China
Why are we debt?
• We spend more than we make
– Spending on military and programs like Medicare
and Medicaid (make up the majority of spending)
– Making $ from taxes and selling bonds
• Just like a family household, we are living
outside our means
How can we get out of debt?
• Spend less on everything, especially on
entitlement programs
– Liberals don’t want to do that
– Say that those people are already living in poverty
• Raise taxes
– Conservatives don’t want to do that
– Say that it will hurt businesses
• Compromise is needed, but probably won’t
happen.
Deficit Spending and the Public Debt
• Net public debt, the accumulation of all past
federal government deficits; the total
amount owed by the federal government
to individuals, businesses, and foreigners.
• Gross domestic product (GDP), the dollar
value of all final goods and services
produced in a one-year period.
1980 – 800 Billion
1990 – 3 Trillion
2000 – 5 Trillion
2008 – 9 Trillion
2016 – 19 Trillion
2020 – 21 Trillion
Net Public
Debt AKA
National Debt
Monetary Policy
• Monetary policy, the utilization of
changes in the amount of money in
circulation to alter credit markets,
employment, and the rate of
inflation.
• Determined by the Federal Reserve
System
The Balance of Trade and the Current Account
Balance
• The balance of trade, or the difference
between the value of a nation’s exports of
goods and its imports of goods. The U.S.
balance of trade has been significantly
negative for many years.
• If a country exports more than it imports,
businesses will be more prosperous, right
down to the workers. If it doesn't’t, everyone
“pays”(see what I did there?)
Sources of Federal Revenue
• Article 1 Section 8 gives Congress the power to lay
and collect taxes and to borrow money.
• The US has borrowed money throughout its history,
and has been out of debt only once in its history.
• The 16th Amendment (1913) allows for the federal
government to collect income tax from “whatever
source derived.” Congress created the Internal
Revenue Service (IRS) to oversee collection of these
taxes.
Progressive Income Tax
• Progressive taxation means that the tax rate one
pays increases, or progresses, as one’s income
increases. The highest tax rates have gradually
lowered since the 1940s.
• 1940s - 94% top rate
• 1970s - 70% top rate
• 1980s - 30% top rate
• 2010s - 35% - 40% top rate
Individual Federal Income Tax Rates - 2010
Taxable Income
Federal Income Tax
Percent
25,000
3,331
13%
50,000
8,681
17%
100,000
21,709
28%
500,000
152,644
31%
1,000,000
327,644
33%
Source: Senate Committee on Finance, JCX-51-10, 2010
The Tax Code
• Congress has created a very complicated tax code,
by using the power to tax it create incentives and
punishments.
• Special interest groups push for loopholes in the tax
code to favor certain people or groups.
• Congress has used the tax code as a way to draft
social policy by encouraging certain behaviors and
discouraging others.
• The corporate tax rate has varied between 10% 35%. About 10% of all federal revenue comes from
corporate taxes.
Other Revenue Sources
• Excise taxes are levied on particular goods or
services, such as alcohol, tobacco, airline travel,
and gasoline.
– About 3% of federal revenue comes from excise taxes.
• States also can have their own income taxes, as
well as sales taxes, additional taxes on hotels,
alcohol, cigarettes, and other items.
• The overall tax burden in the US is lower than most
industrialized nations.
– US citizens pay 25.4% of their incomes in a combination
of income, sales, and other taxes.
Percent of average
income spent on
taxes
Federal Budget Process
• The Constitution states “no money shall be drawn
from the Treasury but in consequences of
appropriations made by law.”
• Congress has the “power of the purse,” which
means federal dollars cannot be spent unless
Congress says so.
• The Congressional Budget and Impoundment
Control Act, 1974, established the budgeting
process which is used today.
– It set budgeting guidelines, and created the
•
• Office of Management and Budget (Executive)
• and the Congressional Budget Office (Legislative).
The President and the Budget
• President initiates the budget by submitting it to
Congress
– Does it with the help of the OMB
• Sends it specifically to the Senate and House
Appropriations Committees
– Appropriations means spending
Congress and the Budget
• 1974 – Congressional Budget and Impoundment Control
Act:
– Made to take control of the budget back from the president
– Made a set budget calendar (must pass the budget by
October 1st)
– Created a budget committee in each house
– Created the CBO (Congressional Budget Office) to advise
Congress on the budget
• Goes from the president to the House and Senate
Appropriations Committees
– Then goes to the House Ways and Means Committee and the
Senate Finance Committee
• Ways and means to pay our bills
Foreign Policy
Facing the World: Foreign and Defense
Policy
• Foreign policy includes the techniques and strategies
used to achieve external goals, as well as the goals
themselves.
• Foreign policy includes:
– diplomacy—the total process by which states carry on
political relations
– economic aid—assistance to other nations in the form of
grants, loans, or credits to purchase goods
– technical assistance—sending experts with technical skills
in agriculture, engineering, or business to aid other nations
National Security and Diplomacy
• National security: the protection of the independence and
political and economic integrity of the United States.
• Defense policy includes the directing of the scale and size
of the American armed forces and considers the types of
armed forces we need, how many wars we need to be
prepared to fight simultaneously, and the type of weaponry
that will be required.
• Diplomacy is the total process by which states carry on
political relations with each other.
– How we ‘stay friends’
Rise of Terrorism
• 9/11 causes the creation of the newest cabinet
department
– Department of Homeland Security
• Security and border agencies working together
• 2001: Patriot Act
– Increased the power of the federal government to
seize information and people if they are suspected of
terrorist activities
– Email, phone records, library records
– Both citizens and non-citizens
– Information gathered by the NSA
Nuclear Weapons
• America gained nuclear weapons in 1945, the Soviet Union
in 1949, Britain in 1952, France in 1960, and China in 1964.
• These powers remained the only ones with open nuclear
weapons programs until 1998, when Pakistan and India
tested nuclear weapons.
• 2015: North Korea may have them
• The U.S. and the Soviet Union (USSR)
– Are the two superpowers during the Cold War
– 1950s-1990s
• Nuclear Proliferation
– The spread of nuclear weapons around the world
– They are “prolific”
The New Power: China
• Weak during the Cold War because it was communist and
self-contained
• After the Cold War, they began to trade
– Large population is a huge market for foreign goods
– Low standard of living and huge working class makes it an ideal place
to manufacture cheap goods
• US becomes a major trade partner
• Chinese-American Tensions
– China’s huge economy and military concern the US
– Threat of Chinese government hacking and web-surveillance
– Also, their history of human rights violations
Regional Conflicts
• Cuba – communist and therefore an enemy in the
Cold War
– Trade embargo going away
– Obama visits to “open it up” in 2016
• Israel (Jews) and the Palestinians (Muslims)
– Both claim country as their holy land
– Both terrorizing the other
– Obama called for a “two state” solution
• AIDS in Africa
• African, Syrian civil wars
Who Makes Foreign Policy?
• Constitutional Powers of the President
– War Powers Act
– Treaties and Executive Agreements
– The president appoints ambassadors and decides
whether to recognize other governments as
legitimate.
• We recognize 195 countries
– Not Taiwan, they stink!
• Senate confirms treaties and appointments of
ambassadors
Other Sources of Foreign Policymaking
• The Department of State
• The National Security Council
• The Department of Defense
The Military-Industrial Complex
• The military-industrial complex is the term
that describes the mutually beneficial
relationship between the armed forces and
defense contractors.
• Many say that this leads to our military
growing out of control
Isolationism
•Before WWI, we wanted to stay out of
international conflicts
•This changed after a ship with US citizens was
blown up by Germans in WWI
The Era of Internationalism
•League of Nations – after WWI, we joined an alliance of
countries to stop war by all attacking the aggressor
•Brought into WWII after Pearl Harbor
•End of WWII brought United Nations (stronger version
of League of Nations)
•The Cold War – Cap countries led by US v. Com countries
led by USSR
– 1950s to 1990s
– Containment Policy – job of the cap counties to keep
communism contained
– NATO (North Atlantic Treaty Organization) created as a
pact among capitalist countries in Europe and US
• Still the major pact today
Europe During the Cold War
Europe After the Fall of the Soviet Union
Frickin’ Russia
• USSR dissolved at the end of the Cold War
• Russia was “cool” for a while
• Under President Vladimir Putin, they have
began to rebuild their military
– Took a part of Ukraine back
– Support the president of Syria against rebels
– We support the rebels
• Tons of human rights violations there too