Government Policy-making

1. Government Policy-making and the impact of globalization

2. Overview of How Government Policy is Made Three branches of government (judicial, legislative, and executive). Executive = President, Vice-President, Cabinet members, Federal departments and agencies. Constitution specifies a balance of power so that one branch does not have more power than others. View has been challenged by the Bush administration. For example, the President can set an agenda (yearly State of the Union address) and state how much money he wants for various programs. However, only Congress can allocate funds and pass legislation. President does determine how those funds are used when programs are implemented. The president and the various departments can issue executive orders (President) and regulations (various departments) about how programs will be operated and how money will be used. The President can also veto legislation he doesn’t like. House and Senate can over ride vetoes but must have a 2/3 majority in both houses. Federal departments are required to develop draft procedures for how programs should be operated. Once the drafts are produced, they are published in the Federal Register. The public may send written comments about these regulations in order to have them retracted or modified. President does have latitude in determining who in the various departments (Cabinet officers, senior administrators) will oversee the development of regulations. However, cabinet officers and senior officials must be confirmed by the Senate. The courts may block implementation of a policy or law if they find that they are unconstitutional or violate individual rights. Supreme Court and Federal judges must be confirmed by the Senate. House of Representatives and the Senate develop some of their own rules for decision-making. In the Senate, for some legislation, 60 votes is required to bring these bills to the floor – making control of the Senate by small majority of members of one party problematic unless they have support from members of more than one party. If House and Senate pass slightly different bills for a piece of legislation, representatives of both houses are appointed to a committee to work on the differences. Also problematic are budget bills; individual members may include budget allocations (earmarks) that will benefit their districts in a particular budget bill without much notice.

3. Interest Groups and Vested Interests Interest Groups are formed to lobby Congress and the Executive branch for legislation that will favor them (vested interests). Lobbying is regulated to some extent – lobbyists who spend a certain amount of time or money on lobbying must register with the government. However, lobbyists often find ways to do favors for individual politicians or parties – such as holding fundraising events or holding receptions at political conventions. (They used to fund travel and meals for elected officials – to some extent new legislation has limited the ability of lobbyists to do this). Corporations and other interest groups often encourage employees or members to support certain candidates who have policy agendas similar to the group’s or who can be influenced to support the group’s agenda. You can find a politicians or an interest group’s agenda on their web page. Political commercials are also good sources of information about the candidate’s interest and his or her likely supporters.

4. Where Does Legislation Start Legislation originates in committees. House and Senate divided into numerous committees – primarily in terms of budget areas/issues i.e. defense, transportation, environment, etc. Representatives and Senators are appointed to committees on basis of seniority/interest. Chairs are members of the majority party. Chairs have power to choose issues, solicit/subpoena testimony, and launch inquiries or investigations. Chairs will negotiate with ranking (senior) minority members around some issues and procedures. Congressional committees have the responsibility for oversight of government activities. Legally, the White House and government agencies must provide some types of information to Congressional Committee. The Bush administration has argued that national security issues and “Executive Privilege “ should limit the information that they provide to Congress.

5. California Legislative Process Structure resembles the Federal government. Two houses: State Assembly & State Senate pass legislation and must agree on the final bills (conference committee process). Governor may veto legislation. Assembly and Senate can override with a 2/3 vote of both houses. Governor sets the agenda, runs the executive branch and state agencies, and makes a budget request. House and Senate must pass budget bills. Legislation originates in committees. Legislation is “shaped” through the power and influence of lobbying groups.

6. Implications of Globalization • Everything (policy, economic behavior, poverty, immigration etc) is inter-connected. • Economic activity and control of international organizations contribute to migration and poverty in others. • Industrialized countries purchase raw materials (lumber, minerals, agricultural products from others) and products from others. Workers can be exploited by large corporations and growers. Have few economic opportunities in home country. • U.S. and other industrialized nations need immigrant labor in order to produce products at low costs. • Often trade agreements such as NAFTA permit industrialized countries to operate unregulated (wages and safety) industries in countries such as Mexico. This allows U.S. corporations to make the products they need because they can pay people less in these countries. In addition, there are fewer jobs for U.S. manufacturing and service industry workers because these jobs have been relocated. • U.S. corporations may purchase products made in countries such as China and El Salvador and then look the other way when workers are mistreated. • Large corporations may flood foreign market with products or agricultural goods that drive prices in those countries down and limit economic opportunities.

7. Interest Rates • The Federal Reserve bank sets the amount it costs individuals and corporations to borrow money. • When interest rates are low, more people can borrow and corporations are more likely to borrow money to expand their businesses. When some businesses expand, they hire more people. However, business can choose to use this money for more technology or to relocate overseas. • When interest rates are higher, people who save rather than spend money are better off. Some economists think that saving is better for the country than spending because it creates a pool of money that the government can borrow to cover deficits. • Rationale for the economic stimulus package is that people will use the money to purchase products and therefore businesses will be able to expand and hire more people. Some economists argue that instead of an economic stimulus package should focus on infrastructure development (such as building roads and bridges). This would contribute to more people being hired for good paying jobs in the U.S. • Mortgage crisis is happening because large lenders such as banks and mortgage brokerage forms sold home mortgages to people who might not have qualified for large loans or offered loans with no down payments in which the interest rates for adjustable. This means that the interest rates were set higher the longer the person had the loan. As house values decreased, many people owed more money than the value of their house.

8. U.S. Economic Policies: Internal & External Implications • U.S. Government typically runs at a deficit, they don’t take in enough income to cover all yearly expenses. • The Federal government “borrows” funds from the Social Security System and also borrows money at low interest rates from countries such as China and Germany unless there is enough money at low interest rates for them to borrow in the U.S. • The accumulated deficit from year to year is called the debt. The U.S. must repay the debt and pay interest on it. The money comes from the yearly income of the Federal government. Consequently, payment on the deficit takes money away from other social programs. • Because of relationships among U.S. and foreign businesses and debt re-payments, financial instability in the U.S. contributes to financial instability in counties that owe the U.S. money such as China and some of the European countries.

9. Impact on Impoverished Nations • U.S. and other western industrialized nations control large funds that provide development assistance to 3rd World Nations – International Monetary Fund and the World Bank. • In order to qualify for loans from these counties, they must reduce government expenditures. However, many of these nations are so impoverished that what they really need to do is spend money on roads, education, and other improvements that will aid economic development.

10. Immigration Policies • Industrialized countries hire immigrants to work in jobs that require skills or for low wage work. • Therefore the economy is dependent on a supply of labor for this source. • However, industrialized countries differ in terms of policies on legal immigration and access to benefits such as welfare and health care. Legal immigrants (such as skilled workers and refugees) are treated differently that people with few job skills or undocumented immigrants. • Often immigration controls are implemented when people become fearful of people who are different from them.