Making Economic and Social Policy

2. Making Economic and Social Policy 13

3. Video: The Big Picture 13 http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/MaglebyBrief_Ch13_Making_Social_Policy_Seg1_v2.html

4. 13 Learning Objectives Describe the federal government’s role in making economic policy and how the economy’s performance is measured 13.1 Outline the tools and impact of fiscal and monetary policy on the economy 13.2

5. 13 Learning Objectives Categorize the ways in which the federal government promotes, regulates, and deregulates the economy 13.3 Outline the goals of the federal government’s social policy and the forms of protection it provides 13.4

6. 13 Learning Objectives Outline the expansion of social policy since Franklin Roosevelt’s First 100 Days in office 13.5

7. Video: The Basics 13 http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg2_EconomicPolicy_v2.html

8. 13.1 An Introduction to Economic Policy • Separation of economic policy-making powers • Congress can: collect taxes, borrow and print money, and regulate commerce • President can: appoint economic policy officials, negotiate foreign treaties, act as administrator-in-chief • Economic cycle: expansion, contraction, recession, and recovery

9. 13.1 Great Depression

10. 13.1 FIGURE 13.1: The U.S. Unemployment Rate, 1970–2012

11. 13.1Which powers regarding economic policy belong to Congress? 13.1 • Collecting taxes • Borrowing money • Regulating commerce • All of the above

12. 13.1 13.1Which powers regarding economic policy belong to Congress? • Collecting taxes • Borrowing money • Regulating commerce • All of the above

13. 13.2 Fiscal and Monetary Policy • Fiscal Policy • Monetary Policy • Government and Economic Policy

14. Video: In Context 13.2 http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg3_EconomicPolicy_v2.html

15. Where the Money Comes From Taxes Individual income tax Payroll tax Other taxes and tariffs, etc. Borrowing Budget deficit/national debt Where the Money Goes Majority of expenditures goes to national defense and social benefits programs 2/3 of spending mandatory/ 1/3 discretionary 13.2 Fiscal Policy: The Federal Budget

16. 13.2 FIGURE 13.2: Where the Money Came From, 2012

17. 13.2 FIGURE 13.3: Where the Money Went, 2012

18. The Executive Branch Annual Budget proposal Office of Management and Budget (OMB) The Legislative Branch Budget resolution Budget hearings Congressional Budget Office (CBO) 13.2 The Budget Process

19. 13.2 TABLE 13.1: Steps in Building the 2015 Fiscal Year Budget

20. 13.2 Dropping off tax returns

21. 13.2 Monetary Policy: The Federal Reserve System • The “Fed” is an independent regulatory commission • Board of Directors appointed by President, confirmed by Senate • Federal funds rate • Establishes the amount of interest federal banks charge to borrow money

22. 13.2 Chairman of the Fed

23. 13.2 FIGURE 13.4: Effective Federal Funds Rate, 1998–2012

24. “Laissez-faire” economics Favored by Republicans For: Limited govt. involvement; free-market dominance Keynesian economics Favored by Democrats For: Active govt. spending during economic downturns 13.2 Government and Economic Policy

25. 13.2 13.2Which of the following assembles the necessary information for the president’s budget proposal? • Congressional Budget Office • Office of Management and Budget • Department of the Treasury • Internal Revenue Service

26. 13.2 13.2Which of the following assembles the necessary information for the president’s budget proposal? • Congressional Budget Office • Office of Management and Budget • Department of the Treasury • Internal Revenue Service

27. Explore Economic Policy: Who Broke the Economy? 13.2 http://media.pearsoncmg.com/long/long_magleby_mpslgbp_brief10/pex/pex13.html

28. 13.3 Promoting, Regulating, and Deregulating the Economy • Promoting the Economy • Regulating the Economy • Deregulating the Economy

29. Constitution gives authority over interstate commerce to Congress Development of national infrastructure Roads, highways, bridges, etc. Federal bureaucracy and subsidies Department of Agriculture Department of Energy Various agencies and bureaus 13.3 Promoting the Economy: Supporting Industry

30. 13.3 Foxconn - China

31. Protectionism The World Trade Organization (WTO) Succeeded the General Agreement on Tariffs and Trade (GATT) Attempts to stabilize and level international commerce The North American Free Trade Agreement Eliminates most trade barriers among US, Mexico, and Canada 13.3 Encouraging International Free Trade

32. 13.3 Regulating the Economy • Level the playing field • Interstate Commerce Commission and other regulatory agencies created by Congress • U.S has fewer regulations than most developed nations

33. 13.3 Food and Drug Administration

34. 1882 Sherman Antitrust Act First major legislation against monopolies Clayton Act (1914) Expands prohibitions on unfair practices Federal Trade Commission 13.3 Regulating Competition

35. Government regulates treatment of labor Standards: Wages, hours, safety Prohibitions: Child labor, etc. Pro-Union legislation National Labor Relations (Wagner) Act (1935) 13.3 Regulating the Use of Labor

36. Federal response to causes of Great Depression Securities and Exchange Commission (1934) Monitors market (and actor) behavior Ensures compliance to full disclosure laws Came under criticism for role in 2008 economic collapse 13.3 Regulating the Stock Markets

37. 13.3 Bernie Madoff

38. Federal environmental legislation in the 1970s Clean Water Act Clean Air Act Environmental Protection Agency Environmental impact statements Often criticized for impeding economic growth 13.3 Protecting the Environment

39. 13.3 Deregulating the Economy • Criticisms of government regulation • Heavy paperwork and reporting burdens • Compliance costs • Deregulation: Reduce or abolish federal regulation • Embraced by all presidents since late 70s.

40. Trends in Deregulation: Trucking Airlines Railroads Airlines Major deregulation in 1970s Instigated competition, price wars Contraction eventually reduces customer’s options, benefits 13.3 Deregulating Transportation

41. 13.3 Deregulation

42. Banking deregulation began in 1990s Expansion and the “housing bubble” Role in 2008 Economic Crisis Industry fights regulation 13.3 Deregulating Banking

43. 13.3Which industry’s deregulation was largely responsible for the 2008 economic crisis? Airline Trucking Railroad Banking 13.3

44. 13.3 13.3Which industry’s deregulation was largely responsible for the 2008 economic crisis? • Airline • Trucking • Railroad • Banking

45. Role of the FederalGovernment in Social Policy 13.4 • Unique American attitude towards poverty • It’s your fault if you don’t succeed • Veterans’ programs • Set precedent for entitlements • Means-tested entitlements

46. Goals of Social Policy 13.4 • The “Social Safety Net” • Supports those affected by economic or social factors • Unemployment insurance • Medicare

47. Goals of Social Policy 13.4 • Quality of life • Education • Environment • Infrastructure

48. 13.4 ACORN

49. Types of Protection Public Assistance “Welfare” Job training, subsidies, food aid, tax credits, etc. “Corporate welfare” 13.4

50. Types of Protection Social Insurance Based on prior contributions to the government, i.e. payroll taxes, service Social Security and Medicare Federal and state govt. partnerships 13.4