Govt 2305-Ch_14

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GOVT 2305 - Domestic and Economic Policy (United States Government)

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Govt 2305-Ch_14

  1. 1. Domestic and EconomicPolicyChapter 14
  2. 2. The Policymaking Process1. Agenda Building  Congress has to be aware of a problem that requires action2. Policy Formulation  Policy proposals are debated between public officials and the public3. Policy Adoption  Congress chooses a specific policy among those that were discussed4. Policy Implementation  Congress passes the law and various levels of government enforce it5. Policy Evaluation  Group studies are done to determine how effective the policy is after a given time
  3. 3. Health Care Big Spending in Today’s Federal Budget  Social Security  Medicare  Medicaid Universal Health Insurance  Any of several possible programs to provide health insurance to everyone in the country  Federal government may not provide the insurance itself, but may subsidize the purchase of insurance from private insurance companies
  4. 4. Other Big Issues Immigration  Arizona immigration law Crime  Rapid incarceration since 1990  Build more jails or let more people out? Energy and the Environment  Oil Industry  56 MPG car by 2025?  Horizon Oil Spill  Global Warming
  5. 5. Immigration
  6. 6. Crime in the 21st Century
  7. 7. Environmental Policy
  8. 8. The Politics of Economic DecisionMaking Terms to Know  Unemployment – inability of those who are in the labor force to find a job  Recession – two or more successive quarters in which the economy shrinks instead of grows  Inflation – sustained rise in the general price level of goods and services  Today’s dollar is worth 1/20th of what it was worth in 1910 To control the ever-changing economy, we need a good fiscal policy
  9. 9. The Politics of Economic DecisionMaking Fiscal Policy  Federal government’s use of taxation and spending policies to affect overall business activity  Congress is the creator of fiscal policy Keynesian Economics  School of economic thought that tends to favor active federal government policymaking to stabilize economy-wide fluctuations, usually by implementing discretionary fiscal policy Basically, if the economy is down, the government should step in, spend some money, and help return the economy to a normal state
  10. 10. Monetary Policy Controlling the rate of growth of the money supply is called monetary policy and is the job of the Federal Reserve System The Fed attempts to stabilize nationwide economic activity by controlling the amount of money in circulation  Loose monetary policy – policy that makes credit inexpensive and abundant; possibly leads to inflation  Car loans and mortgage rates go down  Tight monetary policy – policy that makes credit expensive in an effort to slow inflation  Car loans and mortgage rates go up
  11. 11. The Politics of Taxes Federal taxation is a right the government extended to us through the 16th Amendment  Congress makes the tax law  The Internal Revenue Service enforces the tax law Understanding Tax Deductions 101  If you are in the 15% tax bracket, every dollar that you write off as tax deductions essentially saves you 15 cents in tax liabilities  Not worth writing off?  What if your tax bracket was 94%?  Common during World War II
  12. 12. The Politics of Taxes Tax Loopholes  Typically, the higher the tax bracket, the more individuals and corporations write to Congress to add legal means for people to reduce their tax liabilities Methods of Establishing Tax Brackets  Progressive Taxes – taxes that rise in percentage terms as income rises  Federal income taxes, estate taxes  Regressive Taxes – taxes that fall in percentage terms as incomes rise  Social Security taxes, Medicare taxes

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