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Transcript of Shea chapter 14
14
The Policy Process and Economic Policy
Video: The Big Picture 14
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Shea_Ch11_The_Politics_of_the_Media_Seg1_v2.html
Video: The Basics 14
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg2_Media_v2.html
Making Public Policy
The Steps of Policymaking
Identifying the Problem
Setting an Agenda
Formulating and Legitimizing Policy
Implementing Policy
14.1
FIGURE 14.1: Public Policy Equation 14.1
The Steps of Policymaking
Policy Process Model Problem identification Policy formation Policy evaluation
The struggle over ideas Ideas are at the center of all political conflict How people interpret ideas and values How people use values to identify problems and
propose solutions
14.1
FIGURE 14.2: Uninsured Americans Under Age 65
14.1
FIGURE 14.3: The Policymaking Process
14.1
Identifying the Problem
Example: Global Warming Proponents of immediate government action point to
retreating glaciers, record temperatures Opponents of immediate government action suggest too
little evidence of human impact
Types of events Focusing event Trigger mechanism
14.1
14.1
Setting an Agenda
Getting an issue on the agenda People and groups with access to policymakers are
more successful
Keeping an issue on the agenda Issue-attention cycle – some issues will stay on agenda,
others will fade away Example: water quality following contamination in
Milwaukee, Wis.
14.1
Driving while texting 14.1
Formulating and Legitimizing Policy
Formulating Policy Crafting solutions to identified problems How a problem is identified affects its solutions
Legitimizing Policy Involves fairness, formal rules and transparency Absence of legitimacy may lead to coercion
14.1
Implementing Policy
Executive Branch Responsible for the bulk of the implementation Exercises reasonable discretion
Legislative Branch Provides legislative oversight Reauthorization and investigation
14.1
Evaluating Policy
Did the policy work? Establish criteria for evaluation Evaluation of policy effectiveness more complex and
less conclusive than in business
Medicare example Voucher program could have reduced deficit and been
declared a policy success Voucher program could have reduced quality of
healthcare for seniors and been declared a policy failure
14.1
14.1 Which of the following terms describes a situation which launches an issue into the consciousness of the public and policymakers?
14.1
a. Trigger mechanism
b. Issue-attention cycle
c. Focusing event
d. Coercion
14.1 Which of the following terms describes a situation which launches an issue into the consciousness of the public and policymakers?
14.1
a. Trigger mechanism
b. Issue-attention cycle
c. Focusing event
d. Coercion
Types of Public Policy
Categorizing Policies by Basic Functions of Government
Categorizing Policies by Tangible or Symbolic Benefits
Economic Policy
14.2
Categorizing Policies by Basic Functions of Government Distribution
Government distributes society’s resources by giving benefits to specific groups
Regulation Government uses legislative, military or judicial power
to either stop or compel certain actions
Redistribution Larger segment of society benefits from distribution
14.2
Categorizing Policies by Tangible or Symbolic Benefits Tangible Benefit Experienced in a material way Federal assistance for hurricane victims Health care insurance (Medicare)
Symbolic Benefit Does not offer concrete, material benefits Provides theoretical solution to a problem Feeling of security from investigation of intelligence
failures leading up to 9/11
14.2
Economic Policy
All policies have economic ramifications For the government that creates policies, or For the citizens affected by the policies
Some policies more directly connected to economics
Fiscal policy Monetary policy
14.2
14.2 Which of the following is not an example of a tangible benefit?
14.2
a. A city’s July 4th celebration
b. A tax deduction for student loan interest
c. A check from FEMA following a flood
d. Insurance that lowers the cost for
prescription drugs
14.2 Which of the following is not an example of a tangible benefit:
14.2
a. A city’s July 4th celebration
b. A tax deduction for student loan interest
c. A check from FEMA following a flood
d. Insurance that lowers the cost for
prescription drugs
Measuring Economic Performance
Inflation
Unemployment
Gross Domestic Product
Balance of Trade
The Budget Deficit
14.3
Inflation and Unemployment
Inflation The rate at which prices increase Consumer Price Index Deflation
Unemployment Percentage of Americans who are out of work Doesn’t include those not looking for work “Good” unemployment rate is 5% During recent recession unemployment rose to 10
percent before dropping to 8 percent now
14.3
FIGURE 14.4: Unemployment Rate 14.3
Gross Domestic Product and Balance of Trade
Gross Domestic Product (GDP) The value of all goods and services produced in a nation Measures size of American economy 3 or 4 percent growth rate is good
Balance of Trade Difference between imports and exports Trade surplus versus trade deficit United States has a trade deficit
14.3
The Budget Deficit
Budget deficit The amount, in a given year, by which government
spending exceeds government revenue
Budget surplus When revenue outstrips expenditures
National debt The net sum of the budget deficit minus the surplus is the
national debt What the government owes
14.3
FIGURE 14.5: Federal Deficits and Surpluses
14.3
14.3 What is a “good” rate of unemployment ?
14.3
a. 0 percent
b. 5 percent
c. 8 percent
d. 10 percent
14.3 What is a “good” rate of unemployment ?
14.3
a. 0 percent
b. 5 percent
c. 8 percent
d. 10 percent
Explore Economic Policy: Who Broke the Economy?
14.3
http://media.pearsoncmg.com/long/long_shea_mpslld_4/pex/pex8.html
The Key Players in the Development of Economic Policy
Major Actors
Key Congressional Players
14.4
Major Actors and Key Congressional Players
Major Actors Congressional Budget Office Office of Management and Budget Council of Economic Advisors
Key Congressional Players Committees
14.4
OMB Director Jeffrey Zients
14.4
14.4 The politics of taxing and spending is better known as:
14.4
a. Economic policy
b. Monetary policy
c. Fiscal policy
d. Budgetary policy
14.4 The politics of taxing and spending is better known as:
14.4
a. Economic policy
b. Monetary policy
c. Fiscal policy
d. Budgetary policy
Revenue
Income Taxes
Payroll Taxes
The Tax Burden
Corporate Taxes
Other Taxes
Tax Analysis
14.5
FIGURE 14.6: The Federal Revenue Budget
14.5
Video: In Context 14.5
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg3_Media_v2.html
Income Taxes, Payroll Taxes, and the Tax Burden
Income Taxes Marginal tax bracket Taxable income
Payroll Taxes Employees pay half; employers pay half Tax split obscures full impact of its burden
The Tax Burden Top 10 percent of earners pay 50 percent of taxes; bottom
20 percent pay only 1 percent CBO analysis measures income, not wealth
14.5
TABLE 14.1: Tax Brackets, 2012 14.5
Video: In the Real World 14.5
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg5_Media_v2.html
Corporate Taxes and Other Taxes
Corporate Taxes Generate about 15 percent of the federal
government’s revenue Tops out at 35 percent, but many deductions and
credits reduce revenue Opportunities for numerous write-offs
Other Taxes Excise taxes, customs duties, inheritance taxes and
other miscellaneous
14.5
New York Stock Exchange14.5
Tax Analysis
Laffer curve There exists a tax rate above which government
revenue drops
Supply side economics Theory states cutting taxes will grow the economy
14.5
FIGURE 14.7: The Laffer Curve 14.5
Tax Analysis
Current reform proposals Flat tax versus national sales tax “Buffet Rule”
14.5
Video: Thinking Like a Political Scientist
14.5
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg4_Media_v2.html
14.5 All Americans pay this percentage of individual income tax on their first dollar of taxable income:
14.5
a. 6.2 percent
b. 10 percent
c. 15 percent
d. 25 percent
14.5 All Americans pay this percentage of individual income tax on their first dollar of taxable income:
14.5
a. 6.2 percent
b. 10 percent
c. 15 percent
d. 25 percent
Expenditures
Social Security
Defense
Income Security
Government Medical Care
Interest and Other Spending
14.6
Social Security
Independent, off-budget program Intended to be self-financing Started running a deficit in the 1970s
Social Security Trust Fund Raised the retirement age Increased payroll taxes Treasury has borrowed from the Social Security Trust Fund
14.6
Defense
Personnel Salaries and health care Housing, family support and base operations
Weapons systems F-22 fighters or Joint Strike Fighters
War on Terror Defense spending at record levels, but still smaller percentage
of budget than during final stages of Cold War
14.6
Income Security and Government Medical Care
Income Security Earned-income credit, child tax credit, supplemental
security income, unemployment compensation and food stamps
Government Medical Care Medicare – health insurance program for retirees Medicaid – health insurance program for qualified low
income Americans
14.6
Medicare recipient 14.6
FIGURE 14.8: Social Security, Medicare, and Medicaid as a Percentage of GDP
14.6
Interest and Other Spending
Interest Interest on the debt for 2012 is $242 billion Almost 7 percent of the budget goes to interest Financing costs can change with interest rate changes
Entitlements Account for three out of every five dollars spent Social Security, Medicare, Medicaid
14.6
FIGURE 14.9: President Obama’s 2013 Proposed Budget (in Billions)
14.6
14.6 Spending on these programs accounts for about 60 percent of federal expenditures:
14.6
a. Entitlements
b. Defense
c. Entitlements and defense together
d. Transportation
14.6 Spending on these programs accounts for about 60 percent of federal expenditures:
14.6
a. Entitlements
b. Defense
c. Entitlements and defense together
d. Transportation
Monetary Policy
The Federal Reserve Board
The Fed in Action
Monetary Policies versus Fiscal Policies
14.7
The Federal Reserve Board
Federal Open Market Committee (FOMC) The Fed’s policy making arm – uses five key tools as part of
monetary policy: Reserve ratios – cash on hand requirements Federal funds rate – market-driven interest rate Open-market operations – money manipulator Discount rate – interest Fed charges member banks Buy and sell foreign currencies
14.7
The Fed in Action
The Reign of Paul Volcker Appointed chairman in 1979, when the economy was
teetering on the edge of disaster Time of “stagnation” – combined stagnant GDP, rising
unemployment and rapid inflation Volcker cut the money supply, which cut inflation but
increased unemployment
The Reigns of Alan Greenspan and Ben Bernanke Focused more on inflationary risk and interest rates
14.7
Secretary of the Treasury Timothy Geithner and Federal Reserve Chairman Ben Bernanke
14.7
Monetary Policies Versus Fiscal Policies
Do not always work together Fed chairman frets about deficits Congress complains about too-tight money supply Fed could make federal government borrowing – and
thus deficits – more expensive
14.7
14.7 Which of these Fed chairman risked – and received – higher unemployment when he tightened the money supply?
14.7
a. Ben Bernanke
b. Timothy Geithner
c. Alan Greenspan
d. Paul Volcker
14.7 Which Fed chairman risked – and received – higher unemployment when he tightened the money supply?
a. Ben Bernanke
b. Timothy Geithner
c. Alan Greenspan
d. Paul Volcker
14.7
Explore the Simulation: You Are the Federal Reserve Chair
14.7
http://media.pearsoncmg.com/long/long_longman_media_1/2013_mpsl_sim/simulation.html?simulaURL=18
Video: So What? 14
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Shea_Ch11_The_Politics_of_the_Media_Seg6_v2.html
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