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Public Policy

Public Policy. The basic policy or set of policies forming the foundation of public laws, especially such policy not yet formally enunciated. Types of politics . Majoritarian politics: Everyone benefits; everyone pays (military, SS, free rider problem?)

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Public Policy

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  1. Public Policy The basic policy or set of policies forming the foundation of public laws, especially such policy not yet formally enunciated

  2. Types of politics Majoritarian politics: Everyone benefits; everyone pays (military, SS, free rider problem?) Interest groups politics: one small group benefits, another small group pays (regulating cable companies) Client politics: everyone pays, one small group benefits (farm/dairy subsidies) Entrepreneurial politics: everyone benefits, one group pays (antipollution laws)

  3. The players in the policy game • The media: agenda setting/gatekeeper • Interest groups: squeaky wheel gets the oil • The courts: agreeing or disagreeing-decisions impact the whole country • Bureaucracy: source of proposals/discretionary power • Voters-What do “we the people” want? • Congress-responding to various groups • The President/ Executive Branch-implementing the agenda, seeking reelection, concern for intl. image

  4. Economic Policy-ch 18 • The issue: how we handle our labor, goods, services, income, etc. MONEY. • Taxes: how much, what to spend them on

  5. Economic Theory: in groups • Monetarism: inflation = too much money • Keynesianism: spend and cut, gov control- no need to balance your budget (current administration) • Economic planning: price and wage controls • Supply side: CUT THE GOV! • “Reagonomics” was largely based on supply side theories

  6. Federal Reserve Board: Monetary policy (aka, the Fed) • Established in 1913 • Chairman: 8 year terms • 7 Board members: staggered14 year terms (appointed by P, con. By Senate) • Currently: Janet Yellen(4 yr, renewable terms) • 6000 member banks-impact interest rates consumers pay • Is given independence: remove politics, Congress and pres can delegate, Fed relies on expertise

  7. Using the videos, describe how the Fed has worked recently to improve economic conditions. • http://www.youtube.com/watch?v=TvzsjOmWgKI • http://www.philly.com/philly/business/20140415_ap_5b6705f0b75140728b8331b70a3f42f1.html

  8. Monetary Federal Reserve Board Open-market operations- Regulating money supply when buying/selling govt. securities Controlling inflation/ deflation (at or below 3%) Adjusting interest rates Adjusting bank reserves Setting “cost” of money (through interest rates between banks, impacts us) Fiscal Government policy on taxing and spending President: budget, signing or vetoes White House office of Management and Budget (OMB) recommends budget Congress passes Congress acts on tax and spending Monetary vs. Fiscal policy

  9. Congress and Fiscal policy • Approve taxes and spending • Consent to wage or price controls • Committees: Ways and means, appropriations, finance, etc. • 2/3 of spending goes to Entitlement programs • Approve the budget

  10. Do packet with a partner-finish for HW

  11. Social Welfare-purpose? • “Welfare” in the US vs. a Welfare state • History-New Deal, Social Security Act (aid for elderly from forced savings program, unemployment insurance), and today: • Old-Age Survivors Disability Insurance (OASDI) (covers 93% of workforce through FICA contributions. Provides monthly payments to retired/disabled workers, spouses and children) • Social Security Disability Insurance (SSDI) (monthly checks to disabled workers between the ages of 50 and 64 • Supplemental Security Income (SSI) (Gives money to the needy, aged, blind, or disabled through a formula that equalizes benefits • Aid to Families with Dependent Children (AFDC)-establishes federal grants to state governments that will provide money to low-income families with dependent children. Largest welfare program. This program was block-granted to states in 1996 to decrease the federal implementation burden.

  12. Other New Deal ABCs? National Institute for Health-1935 Wagner-Steagall National Housing Act providing for public housing in 1937 Fair Labor Standards Act of 1938 (minimum wage, 40-hour work week, prohibition of child labor under 16) WPA/CCC-stimulate the economy and provide jobs

  13. Social Welfare post WWII? GI Bill of Rights for educational/vocational training of 1944 National School Lunch Act of 1946 Housing Act of 1949-subsidized private housing by the federal government 1950s-President Eisenhower signed the National Defense Education Act in 1958 in response to Sputnik-substantial federal aid to schools to compete in science

  14. LBJ’s Great Society Social Welfare Programs • Turning Point? Lyndon Johnson’s GS (continued through Nixon, Carter, Ford years as well and expanded) • Civil Rights Legislation/significant democratic majority in both houses • Medicare-hospital/medical costs of people 65 and over + disabled individuals receiving SS • War on Poverty-extending benefits to the poor • Food Stamp program-giving food coupons to people determined to be eligible based on income/family size • Medicaid (a shared program between the federal and local governments)-covering hospital, doctor, prescription-drug, and nursing home costs of low-income people. • *Problems? federal deficits with SS as early as 1973

  15. Response? Reagan Revolution of the 1980s Reagan assured citizens of continuing “safety net” Attempted to cut back some programs (cut rate of increase to OASDI and Medicare…however rates again increased) Difficult to cut these programs because so many are dependent-AARP lobbied hard to stop cuts… Later, Clinton vetoed efforts to cut Medicare and Medicaid Clearly, means testing/increased costs for seniors would be necessary…

  16. Universal Healthcare? • Clintons tried it in the 90s, but it wasn’t until 2010 • Affordable Care Act vs. Obamacare! • Claim it will fully insure an additional 35 million Americans, reduces the federal deficit over 10 years, and deals with preexisting conditions, increased coverage, protection • Supreme Court affirmed it as a legal “tax” in 2012.

  17. Entitlement Program: Social Security • Entitlement programs are government-sponsored programs providing mandated/guaranteed/required benefits to those who meet eligibility requirements/qualifications • Who pays for it? It comes from payroll taxes. These are wages from existing wage earners. • Threat: possibility of running out of money? Outputs exceed inputs • More older people, ratio of working to retired is changing • Possible solutions? • Will we ever eliminate poverty? • Do practice Qs

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