The document discusses government, politics, and the economy. It covers several topics including capitalism, mixed economies, Walmart as an example of economic policy at work, and how government regulates aspects of Walmart like minimum wage, collective bargaining, and discrimination policies. It also discusses unemployment, inflation, and different economic theories like Keynesian and supply-side economics.

2. Government, Politics, and the Economy
• Capitalism
– Individuals and corporations own the principal
means of production and seek profits.
• Mixed Economy
– Government is deeply involved in economic
decisions as regulator, consumer, subsidizer,
taxer, employer, and borrower.
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3. LO 17.1
Government, Politics, and the Economy
• Economic Policy at Work: Wal-Mart
– Wal-Mart is 3rd largest company
• Hires 1.4 million workers
• Provides cheap products through tough negotiation with distributors
• Most of the merchandise in Wal-Mart comes from other countries.
• In 2002, Wal-Mart is estimated to have imported $12 billion in goods from China,
one-tenth of China’s total 2002 U.S. exports.
• Wal-Mart’s low costs have forced many factories to move overseas.
– Securities and Exchange Commission (SEC) – Federal agency regulates
stock market.
• Buyers of Wal-Mart stock are entitled to accurate knowledge from the company
– Wal-Mart’s employees are entitled to a minimum wage of $7.25 per hour.
– Collective bargaining – How labor union representatives and
management negotiate pay and acceptable working conditions.
– Wal-Mart workers are protected by regulations governing worker safety
and hiring and other employment policies.
– Wal-Mart cannot discriminate on the basis sex, race, or age in hiring,
firing, and promotions.

4. LO 17.1
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5. LO 17.1
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6. LO 17.1
Government, Politics, and the Economy
• “It’s the Economy, Stupid”
– Economic conditions are the best single predictors
of voters’ evaluation of the president.
– Democrats stress the importance of employment,
and Republicans stress importance of inflation.
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7. LO 17.1
Government, Politics, and the Economy
• Unemployment and Inflation
– Unemployment rate – Proportion of the labor
force seeking work but unable to find jobs.
• 125,000 new monthly needed just to keep up with new
entrants into the labor force.
• 10% unemployment rate in late 2009 with economic
recession.
– Inflation – The rise in prices for goods & services
• Inflation has remained below 4% for the past 30 years
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8. LO 17.1
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9. LO 17.1
Government, Politics, and the Economy
• Unemployment and Inflation (cont.)
– Underemployment rate – Statistic that includes the
unemployed, discouraged workers, and people who
are working part-time that cannot find full-time work.
– In July 2010, the national unemployment rate was
9.5% and underemployment rate was 16.5%.
• Currently 8.4% (November 2011)
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10. Policies for Controlling the Economy
• Laissez-Faire
– Principle that government should not meddle in the economy.
– The 1929 stock market crash sent unemployment soaring, but
Hoover clung to laissez-faire.
– Roosevelt’s New Deal involved the government in the
economy during the Great Depression.
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11. LO 17.2
Policies for Controlling the Economy
• Keynesian Versus Supply-Side Economics
– Keynesian economic theory – That government
spending and deficits can help the economy deal
with its ups and downs.
• 2009 $787 billion stimulus package
– Supply-side economics – Cutting tax rates will
stimulate the supply of goods. Lower tax rates
stimulate supply of goods, as people are motivated
to work longer, increase savings and investments,
and produce more.
• Bush tax cuts
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12. LO 17.2
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13. LO 17.2
Supply-side Keynesian
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14. Politics, Policy, and the International Economy
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15. LO 17.4
Arenas of Economic Policymaking
• Business and Public Policy
– Antitrust policy – Designed to ensure competition
and prevent monopoly.
– Republicans are less likely to break monopolies
than Democrats
– Antitrust legislation permits the Justice
Department to sue in federal court to break up
companies that control too much of the market.
• AT & T
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16. LO 17.4
Arenas of Economic Policymaking
• Labor and Government
– Clayton Antitrust Act of 1914
• Exempted unions from antitrust laws.
– Wagner Act of 1935 (Wagner Act)
• Guarantees workers the right of collective bargaining, sets down
rules to protect unions and organizers.
– Taft-Hartley Act of 1947
• Prohibited unfair practices by unions, and gave the president
power to halt major strikes by seeking a court injunction for an
80-day “cooling off” period.
• also permitted states to adopt right-to-work laws, which forbid
labor contracts from requiring workers to join unions to hold
their jobs.
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17. LO 17.4
Arenas of Economic Policymaking
• Labor and Government (cont.)
– Labor Unions have had 3 notable successes:
• Unemployment Compensation - Government provides
unemployment compensation to employees during lay-
offs that is paid for by workers and employers.
• Minimum wage - Government guarantees a minimum
wage to be paid to employees.
• Lobbied for child-labor laws
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18. LO 17.5
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21. Types of Social Welfare Policies
• Social Welfare Policies
– Policies that provide benefits, cash or in-kind, to individuals,
based on either entitlement or means testing.
• Entitlement Programs
– Government programs providing benefits to qualified individuals
regardless of need.
• Means-Tested Programs
– Government programs providing benefits only to individuals
who qualify based on specific needs.
– http://www.thedailyshow.com/watch/tue-december-13-
2011/newt-gingrich-s-poverty-code?xrs=share_copy
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22. LO 18.1
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23. LO 18.2
Income, Poverty, and Public Policy
• Who’s Getting What?
– Income distribution – The way the national
income is divided into “shares” ranging from
the poor to the rich.
– In recent decades, the share of the highest fifth
has grown while those of the lowest fifths have
gotten smaller.
– Relative deprivation – A person perceives that
he or she is not doing well economically in
comparison to others.
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24. LO 18.2
Income, Poverty, and Public Policy
• Who’s Getting What? (cont.)
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25. LO 18.2
Income, Poverty, and Public Policy
• Who’s Poor in America?
– Poverty line –based on what a family must spend
for an “basic” standard of living, set at three times
the cost of a subsistence diet.
– 43.6 million people, or 14.3% of population, were
poor in 2009, according to Census Bureau.
– Poverty rate for female-headed families is almost
30%, as opposed to less than 6% for families with
two parents.
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26. LO 18.2
Income, Poverty, and Public Policy
• How Public Policy Affects Income
– Progressive tax – A tax by which the government
takes a greater share of the income of the rich
than of the poor.
– For example, when a rich family pays 50% of its
income in taxes, and a poor family pays 5%.
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27. LO 18.2
Income, Poverty, and Public Policy
• How Public Policy Affects Income (cont.)
– Transfer payments – Benefits given by the government
directly to individuals either cash transfers, such as Social
Security payments, or in-kind transfers, such as food stamps
and low-interest college loans.
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28. LO 18.3
Helping the Poor? Social Policy and the Needy
• “Welfare” As We Knew It
– Social Security Act of 1935 created the Social Security
program and the Aid to Families with Dependent Children
program.
– In 1964 President Lyndon Johnson declared a War on
Poverty, and added welfare programs to the policies that
fight poverty.
– In 1981, President Ronald Reagan declared war on
antipoverty programs, and persuaded Congress to cut
welfare benefits and lower the number of Americans on
the welfare rolls by arguing that welfare had proved to be
a failure.
– Bill Clinton created Temporary Assistance for Needy
Families
• People on welfare would have to find work within 2 years
• Lifetime maximum of five years for welfare.
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29. LO 18.3
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30. LO 18.3
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31. LO 18.4
Social Security: Living on Borrowed Time
• The Growth of Social Security
– In 2010, average monthly check for retired
workers was $1,100.
– Current payroll taxes are 12.4%.
• Workers contribute 6.2% of their wages up to $102,000,
and their employers match it.
– Trust Fund must invest money in U.S. Treasury
bonds, which has been earning about 6% a year.
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32. LO 18.4
Social Security: Living on Borrowed Time
• The Growth of Social Security
– What’s the problem?
• Fewer workers per retiree
• People are living longer/collecting more Social Security
• Recession has hurt the amount paid in
– U.S. Treasury Bonds have done poorly in the recession
– Fewer people working / receiving smaller checks
• Social Security increases to adjust to inflation but the
payroll tax does not
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33. LO 18.5
Social Welfare Policy Elsewhere
• 71% of Americans believe that the poor could
escape poverty if they worked hard enough,
compared to 40% of Europeans.
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36. Health Care Policy
• The Costs and Benefits of Health Care
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37. LO 19.1
Health Care Policy
• The Cost of Health Care (cont.)
– Americans now spend over $2.5 trillion a year on
health care.
– In 2009, health expenditures were over one-sixth
(17%) of the gross domestic product (GDP).
– Nearly one-fourth of all federal expenditures go to
health care.
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38. LO 19.1
Health Care Policy
• The Cost of Health Care (cont.)
– Americans now spend over $2.5 trillion a year on
health care.
– Factors behind costs
• Too many medical care facilities; new technologies,
drugs, and procedures; no one has primary
responsibility for paying or controlling health care
costs; defensive medicine; and higher insurance
premiums.
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39. LO 19.1
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40. LO 19.1
Health Care Policy
• Access to Health Care
– ⅔ of Americans – Private health insurance
obtained individually or from employers (58%
insured).
– Health Maintenance Organizations (HMOs)
provide health care for yearly fee, and limit choice
of doctors and treatments.
– Enrolled in HMOs – More than 50% of Americans
and ¾ of doctors.
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41. LO 19.1
Health Care Policy
• Access to Health Care (cont.)
– Medicare – Covers nearly everyone age 65 and
older.
– Medicaid – 43 million people with low incomes
are covered.
– Children’s Health Insurance Program covers
many children.
– More than 46 million people (15%) have no
health insurance.
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42. LO 19.1
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43. LO 19.1
Health Care Policy
• Reform Efforts
– Harry Truman
• National Health Insurance
– A compulsory insurance program for all Americans that would have the
government finance citizens’ medical care.
– Bill Clinton
• Health Security Act - provide health care coverage for all
• Required employers to provide health insurance for their employees
or pay a premium into a public fund; raised taxes on cigarettes; and
imposed a small tax on other large companies.
– Barack Obama
• Insure people with preexisting conditions; no dropping coverage
when people became sick; cap out-of-pocket expenses; no extra
charges for preventive care; close the gap in Medicare’s coverage
for prescription drugs; and increase the number of people with
health insurance.
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44. LO 19.2
Environmental Policy
• Economic Growth and the Environment
– Environmental interest groups exploded in both size
and number during the 1960s and 1970s.
– Today, conflicts are apparent between economic
growth and environmental goals.
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45. LO 19.2
Environmental Policy
• Environmental Policies in America
– Environmental Protection Agency (EPA) is the largest
federal independent regulatory agency, created in 1970
to administer much of U.S. environmental protection
policy.
– National Environmental Policy Act (1969) – Agencies
must file environmental impact statements with EPA,
which detail proposed policy’s environmental effects.
– Clean Air Act of 1970 – Combats air pollution, by
charging the EPA with protecting and improving the
quality of air.
– Clean Water Pollution Control Act of 1972 – A law
intended to clean up the nation’s rivers and lakes, by
enabling regulation of point sources of pollution.
• ⅔ of U.S. lakes and rivers are safe for fishing and drinking.
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46. LO 19.2
Environmental Policy
• Environmental Policies in America (cont.)
– Wilderness Preservation – New in 1916 with
National Park System.
– There are now 378 national parks and 155 national
forests.
– About 4% of the land in the U.S. is designated as
wilderness and half of that is in Alaska.
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47. LO 19.2
Environmental Policy
• Environmental Policies in America (cont.)
– Endangered Species Act of 1973 is a law requiring
the federal government (U.S. Fish and Wildlife
Service) to protect all species listed as endangered.
– As of 2009, the endangered species list included
1,215 animal and 752 plant species.
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48. LO 19.2
Environmental Policy
• Environmental Policies in America (cont.)
– Nuclear Waste – In 1987 Congress designated the
NV Yucca Mountain as the site to consolidate and
permanently bury nuclear fuel.
– NV congressional delegation have delayed
implementation of plan due to safety and cost
issues.
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49. LO 19.2
Environmental Policy
• Global Warming
– The increase in the earth’s temperatures that,
according to most scientists, is occurring as a result of
the carbon dioxide that is produced when fossil fuels
are burned collecting in the atmosphere and trapping
energy from the sun.
– Scientists – Earth is warming at a rapid rate; by 2100
will be between 2 and 6 degrees warmer; seas will rise;
severe droughts, rainstorms, heat waves, and floods will
be common; and major climatic and agricultural zones
will shift causing pestilence, famine, and disease.
– 4% of world’s population live in the U.S., but the U.S.
produces more than 20% of the gases that cause global
warming.
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50. LO 19.2
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51. Energy Policy
• America’s Energy Usage
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52. LO 19.3
Energy Policy
• Coal
– 90% of the country’s energy resources are in
coal deposits.
– Coal accounts for 22% of the energy Americans
use, and it produces 48% of its electricity.
– Coal contributes to global warming, smog, and
acid rain.
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53. LO 19.3
Energy Policy
• Petroleum and Natural Gas
– Oil supplies 37% of our energy.
– Natural gas – 24% of energy and produces 21%
of our electricity.
– Natural gas and oil contribute to global warming,
transporting oil can result in spills, and refining
oil pollutes the air.
– 57% of oil we use is imported.
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54. LO 19.3
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55. LO 19.3
Energy Policy
• Nuclear Energy
– Nuclear electric power accounts for 9% of our total
energy.
– 21% of our electricity is produced by nuclear energy.
– Concerns – Radiation leaks; use of atomic fuel; and
disposal.
– Since 1978, no new nuclear power plants and many
are abandoned.
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56. LO 19.3
Energy Policy
• Renewable Sources of Energy
– Renewable sources (7% of energy) are water (6%
of electricity), wind (1% of electricity), sun,
geothermal sources, hydrogen, and biomass (3%
of energy).
– Biomass power – Plants and plant derived
materials used to produce electricity (biopower)
and liquid fuels (biofuels).
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59. LO 20.1
American Foreign Policy: Instruments, Actors,
and Policymakers
• Foreign Policy
– Policy that involves choice taking about
relations with the rest of the world.
– President is the chief initiator of U.S. foreign
policy.
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60. LO 20.1
American Foreign Policy: Instruments, Actors, and
Policymakers
• Instruments of Foreign Policy
– Military – War, threat of war, and military force.
– Economic – Control of oil, trade regulations, tariff
policies, and monetary policies.
– Diplomacy – Summit talks and treaties provide
relationships.
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61. LO 20.1
American Foreign Policy: Instruments, Actors, and
Policymakers
• Actors on the World Stage
– United Nations – Created in 1945 and today has 192 member
nations with peacekeeping missions and programs in areas
such as economic development, health, education, and
welfare.
• Security Council has real power.
– International Monetary Fund regulates international finance.
– World Bank finances development projects in new nations.
– World Trade Organization regulates international trade.
– Universal Postal Union helps get mail from country to country.
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62. LO 20.1
American Foreign Policy: Instruments, Actors, and
Policymakers
• Actors on the World Stage (cont.)
– North Atlantic Treaty Organization
• A regional organization created in 1949 by nations including
the United States, Canada, and most Western European
nations for mutual defense and has been expanded.
– European Union
• A transnational government composed of most European
nations to coordinate monetary, trade, immigration, and labor
policies, making its members one economic unit.
– Multinational corporations
– Non-Governmental Groups
– Terrorist
– Tourist
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63. LO 20.1
American Foreign Policy: Instruments, Actors, and
Policymakers
• The Policymakers
– The President is the main force behind foreign policy.
– Secretary of State – The head of the State Department
and key foreign policy adviser to the president.
– Secretary of Defense – The head of the Department of
Defense and the president’s key adviser on military policy
– Joint Chiefs of Staff – A group that consists of the
commanding officers of each of the armed services
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64. LO 20.1
American Foreign Policy: Instruments, Actors, and
Policymakers
• The Policymakers (cont.)
– Central Intelligence Agency – An agency created
after World War II to coordinate American
intelligence activities abroad and to collect, analyze,
and evaluate intelligence.
– National Reconnaissance Office uses imagery
satellites to view missile sites and military activities
around the world.
– The National Security Agency has electronic
eavesdropping capabilities and protects our national
security information.
– Congress has sole authority to declare war, raise and
organize armed forces, and fund national security
activities.
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65. LO 20.2
American Foreign Policy Through the Cold War
• Isolationism
– We tried to remain isolated up to World War II
• Containment Doctrine
– George Kennan called for United States to contain
communism and not allow it to spread.
• Truman Doctrine
– United States declared it would help other nations
oppose communism.
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66. LO 20.2
American Foreign Policy Through the Cold War
• The Cold War (cont.)
– Cold War – Hostility between the United States and
Soviet Union from the end of World War II until the
collapse of the Soviet Union and Eastern European
communist regimes in 1989 and 1991.
– Arms Race – Relationship started in the 1950s between
the Soviet Union and United States whereby one side’s
weaponry caused the other side to get more weaponry.
– Mutual Assured Destruction – The result of arms race
by mid-1960s in which each side had ability to
annihilate the other after absorbing a surprise attack.
– Korean War (1950-1953) & Vietnam War– Put
containment into practice involving China and North
Korea.
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67. LO 20.2
American Foreign Policy Through the Cold War
• The Cold War (cont.)
– Strategic Arms Limitation Talks (SALT)
• Effort by the United States and Soviet Union to limit the growth
of their nuclear capabilities
– Reagan Rearmament – Proposed a five-year defense
buildup costing $1.5 trillion and defense officials were
ordered to find places to spend money.
– Final Thaw in Cold War – Soviet leader Gorbachev’s
changes helped end communist regimes and postwar
barriers between Eastern and Western Europe in 1989.
– In 1991, the Soviet Union split into 15 separate nations,
and noncommunist governments formed in most of
them.
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68. LO 20.3
American Foreign Policy and the War on
Terrorism
• The Spread of Terrorism
– Terrorism – Use of violence to demoralize and
frighten populations or governments.
– Forms of Terrorism – Bombing of buildings and
ships; kidnapping of diplomats and civilians; and
assassinating political leaders.
– Terrorism is difficult to defend against because
terrorists have the advantage of stealth and surprise
and of a willingness to die for their cause.
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69. LO 20.3
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70. LO 20.3
American Foreign Policy and the War on
Terrorism
• Afghanistan and Iraq
– U.S. declared war on terrorism after the 9-11-2001
attacks.
– Bush attacked bin Laden and al Qaeda and the Taliban
regime that had been harboring them.
– The Taliban fell in short order although many
suspected members of al Qaeda escaped.

71. LO 20.3
American Foreign Policy and the War on
Terrorism
• Afghanistan and Iraq (cont.)
– Axis of Evil – Iran, Iraq, and North Korea as declared by
Bush.
– In 2003, a U.S. led coalition removed Hussein from power.
– Win war on terror – End support of ideology and strategy
used by terrorists out to destroy the United States and its
allies.
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72. LO 20.3
American Foreign Policy and the War on
Terrorism
• Afghanistan and Iraq (cont.)
– In 2007, Bush ordered a troop surge in Iraq to slow
violence and let Iraqis develop a democratic
government, train police and defense forces,
– Obama removes all combat troops as of December
2011
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73. LO 20.4
Defense Policy
• Defense Spending
– Defense spending makes up about one-fifth of the federal
budget, which is $600 billion per year.
– This is more than the next 15 or 20 biggest spenders combined.
– Results – Nuclear superiority, dominant air force, navy with
worldwide operations, and power around the globe.
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74. LO 20.4
Defense Policy
• Personnel
– The United States has about 1.4 million men and
women on active duty and about 845,000 in the
National Guard and reserves.
– About 300,000 active duty troops are deployed
abroad and many of them serve in Iraq,
Afghanistan, Europe, Japan, and South Korea.
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75. LO 20.4
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76. LO 20.5
The New National Security Agenda
• The Changing Role of Military Power
– Force is often not appropriate for achieving all goals.
– Soft power – Nation persuades others to do what it
wants without force or coercion.
– National security hinges as much on winning hearts
and minds as it does on winning wars.
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77. LO 20.5
The New National Security Agenda
• The Changing Role of Military Power (cont.)
– United States and its allies have used military
force to accomplish humanitarian ends.
– 1999 – Protect ethnic Albanians in Kosovo by
bombing Serbs.
– 2010 – Provide food, housing, and medical care in
Haiti after a severe earthquake.
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78. LO 20.5
The New National Security Agenda
• The Changing Role of Military Power (cont.)
– Economic Sanctions – Nonmilitary penalties
imposed on nation.
– Penalties – No aid; ban military sales; restrict
imports; or a total trade embargo.
– Goals – Stop terrorism, unfair trading, human
rights abuse, and drug trafficking; and promote
environmental initiatives.
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79. LO 20.5
The New National Security Agenda
• Nuclear Proliferation
– Nuclear Non-Proliferation Treaty (1968) – Nations
agreed to not acquire or test nuclear weapons.
– United States, Russia, Britain, France, China, India,
Pakistan, and North Korea have declared that they
have nuclear weapons.
– North Korea and Iran are now developing nuclear
weapons and U.S. policymakers are concerned.
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80. LO 20.5
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81. LO 20.5
The New National Security Agenda
• Foreign Aid
– Congress appropriates less than 1% of budget for
foreign aid in areas of economic development and
military assistance.
– U.S. donates more total aid than any other
country, it devotes a smaller share of its GDP to
foreign economic development than any other
developed nation.
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82. LO 20.5
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