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    Chapter18 Chapter18 Presentation Transcript

    • Chapter Eighteen Economic Policy American Government and Politics: Deliberation, Democracy, and Citizenship
    • Chapter Eighteen: Learning Objectives
      • Sketch the history of economic policy and its relationship to citizenship
      • Describe the elements of fiscal policy
      • Explain why the tax system is so complex
    • Chapter Eighteen: Learning Objectives
      • Analyze the mechanics of monetary policy
      • Summarize the elements of regulatory policy, especially in matters of finance
      • Understand the politics of trade policy
    • Chapter Eighteen: Learning Objectives
      • Discuss how policymakers and citizens deliberate on economic policy
      MARK RALSTON/AFP/Getty Images
    • Introduction
      • Most agree on certain economic goals
      • Economic growth (change in GDP)
      • Low unemployment
      • Low inflation (general rise in prices)
    • Introduction
      • Economic policy includes
      • Fiscal policy
      • Monetary policy
      • Regulatory and trade policy
    • A Brief History of Economic Policy
      • Founding an economy
      • Laissez-faire approach
      • Government fostered economic growth through communication and transportation
      • Creation of Banks of the United States
    • A Brief History of Economic Policy
      • Civil War and Progressivism
      • Economic policy caused rift between North and South
      • Laws passed to create uniform national currency
      • Progressive movement influenced economic policy
    • A Brief History of Economic Policy
      • World Wars and their aftermaths
      • Government finances difficult to track
      • New Deal programs created annual deficit
      • Tax withholding authorized in 1943
    • A Brief History of Economic Policy
      • An age of uncertainty
      • 1970s saw high inflation, economic stagnation, and unemployment
      • Supply-side economics became more prevalent economic theory and Ronald Reagan was a strong supporter of this idea
    • Fiscal Policy: Taxes
      • What are the costs and benefits of the federal government’s complex system of income taxes?
      National archives
    • Fiscal Policy: Taxes
      • Types of taxes
      • Individual income taxes
      • Corporate payroll taxes
      • Payroll taxes
      • Excise and sales taxes
      Harley Schwadron/Reprinted by permission of www.CartoonStock.com
    • Myths and Misinformation
      • Income tax tales
      • A quick search of the Internet will reveal many myths about how much citizens owe on their taxes.
      • The IRS warns against using such misinformation.
    • Fiscal Policy: Spending and the Budget
      • How do the executive and legislative branches deliberate about fiscal policy?
      • Two considerations
      • Economic impact of fiscal policy
      • Must consider the components of the budget
    • Fiscal Policy: Spending and the Budget: The Budget Process
    • Pledges and Promises
      • Full faith and credit of the United States
      • The “full faith and credit” of the federal government backs the payments on public debt.
      • What would happen if the government failed to pay its debts?
    • Fiscal Policy: Limits of Fiscal Policy
      • Limits of fiscal policy include
      • Proposals take months to become law, so there may be a policy lag
      • Much of federal spending is outside the appropriations process
      • Uncertainty about future economic conditions
    • Fiscal Policy: Deficits, Surpluses, and the Debt
      • Why do deficits happen?
      • Deficits may grow because policy goals often override fiscal goals.
      • A president may be insistent on a policy without regard to the long-term economic impact of that policy.
    • Monetary Policy: Organization and Policy
      • It is the responsibility of the Federal Reserve Board (the Fed) to assist in managing the supply of money and credit.
      • The goal of the Federal Reserve Board is economic stability.
    • Monetary Policy: Organization and Policy
      • The Fed does not directly dictate interest rates, rather it has power over the federal funds rate .
      • The Fed does not have unlimited power as it is limited by global economic conditions and federal government deficits.
    • Monetary Policy: Organization and Policy Source: “The Federal Reserve System,” www.federalreserveeducation.org/FED101%5FHTML/ structure/, accessed May 7, 2009.
    • Monetary Policy: Deliberation and the Fed
      • A member of the Federal Open Market Committee explained that his research is not only based on hard data, but also personal accounts and anecdotal evidence.
      • How does that approach contribute to deliberation?
    • Regulatory and Trade Policy
      • What is the appropriate role for the government in policing economic activity?
      • Do international trade agreements infringe on American sovereignty?
    • Regulatory and Trade Policy: Regulating the Marketplace
      • Four goals of financial regulation
      • Protect consumers from fraud, deception, or unfair practices
      • Ensure the integrity and fairness of markets to prevent fraud and manipulation
    • Regulatory and Trade Policy: Regulating the Marketplace
      • Four goals of financial regulation
      • Monitor the safety and soundness of institutions
      • Ensure the stability of the overall financial system
    • Regulatory and Trade Policy: Trade
      • International trade is a source of conflict.
      • Those that profit from exports typically support free trade and those who are concerned about foreign competition typically support protectionism .
    • International Perspectives
      • Economic and political freedom
      • According to the data presented, does there appear to be a relationship between economic and political freedom?
      • Where does the United States rank?
    • Economic Debate and Deliberative Democracy
      • Deliberation depends on knowledge of basic information and shared goals but, when it comes to economic policy, Americans often disagree about how to achieve goals.
      • Disagreements underlie deliberations about economic policy.
    • Deliberation, Citizenship, and You
      • Catching waste and abuse
      • The federal government is encouraging citizens to report waste and abuse with government money through the Internet, toll-free phone hotlines and fax.
    • Summary
      • Federal budget large part of economy, but private sector is larger
      • United States part of global economy
      • No one government economic policy
      • Many ways to appraise economic policy