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Governmental Policy

Governmental Policy. Mrs. Floyd GoPo (Unit 6). Policymaking Defined. Governmental plan of action designed to address a problem Status quo is easiest outcome because of complexity of interests & processes Usually initiated by the media or individuals, not by government officials.

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Governmental Policy

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  1. Governmental Policy Mrs. Floyd GoPo (Unit 6)

  2. Policymaking Defined • Governmental plan of action designed to address a problem • Status quo is easiest outcome because of complexity of interests & processes • Usually initiated by the media or individuals, not by government officials

  3. Factors that influence outcome… • Power of the participants/actors involved • Economic conditions and public opinion And now… different types of policy…

  4. Economic Policy Overview • US = mixed economy • Govt is involved in economic decisions, but doesn’t command the economy • Active gov’t involvement since Great Depression & New Deal • Liberals focus on imperfections in the economy & what the gov’t can do • Conservatives focus on imperfections in the gov’t • Voters often vote based on the state of the economy – both their personal situation & that of the entire nation

  5. Unemployment Proportion of the labor force actively seeking work but unable to find it Leads to increase in social problems (suicide, homicide, alcoholism, mental health problems) Democrats’ major concern Inflation Increase in the price of goods Most affects those on fixed incomes Republicans’ big concerned Two Major Factors

  6. Instruments for Controlling the Economy • Monetary Policy • Manipulation of supply of $ & credit • Policy made by “the Fed” i.e., Federal Reserve Board • Created in 1913 by Cong to regulate lending practices of banks (& thus, $ supply) • 7-member board of governors apptd by Pres/Sen for 14-year terms (insulated from public pressure) • Board of Governors of the Federal Reserve System

  7. Tools Available to The Fed • 1. Discount Rates: raise/lower the rate that banks pay to borrow from Fed Res banks • 2. Sets reserve requirements: amount of $ banks must keep in reserve at all times (therefore, banks have more or less $ to lend) • 3. can buy or sell gov’t securities in the market: expand or contract $ supply

  8. Fiscal Policy • Impact of federal budget (taxing, spending & borrowing) on economy • Shaped by Congress & Pres. (elected officials!)

  9. Keynesian Stimulate demand Federal jobs programs Democrats Larger gov’t Supply-side Smaller gov’t (tax cuts) to stimulate spending Increase incentives to produce goods Republicans Keynesian v. Supply-side Economics

  10. Problems in Controlling the Economy • 1. politicians and economists don’t understand the economy!!! • 2. most policies are decided on years before their impact is felt • 3. world economy/activities of other nations can interfere w/US economy • 4. “uncontrollable” expenditures

  11. Three Major Areas of Economic Policy • Regulating Business • Antitrust: ensure competition & prevent monopoly • Sherman Anti-Trust Act 1890 • Regulation can benefit business • Ex. corporation bailouts • WHY? protect workers & industries

  12. Consumer Policy • Activist Nader in 1960s, 70s, said gov’t job is to be watchdog for consumers • Ex. Consumer Product Safety Commission and hazardous products • FTC “truth in lending” laws • FirstGov for Consumers: Product Safety

  13. Labor • Gov’t applied antitrust laws to labor unions as well • Clayton Antitrust Act 1914 exempted unions • New Deal = turning point • 1935 National Labor Relations Act gave workers right to collective bargaining (right to have labor union representatives negotiate w/ management over working conditions & set rules to protect union organizers)

  14. Labor con’td • 1947 Taft Hartley Act prohibited unfair practices of unions • President given power to halt major strikes by getting court to declare 80-day cooling off period • States could adopt “right-to-work” laws forbidding labor contracts from requiring workers to join unions to hold jobs Two Union Successes: gov’t provides unemployment compensation & guaranteed minimum wage

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