Chapter 16

1. Chapter 16 Domestic & Economic Policy

2. Five Steps in the Policy Making Process • Agenda building – identifying a problem and getting it on the agenda • Policy formulation – the debate that occurs between government officials, between the public in the media, and in campaigns • Policy adoption – the selection of a strategy for addressing a problem • Policy implementation – the administration of the selected policy (by bureaucrats, the courts, etc.) • Policy evaluation – when the public, officials and groups determine if the selected policy has the desired impact

3. Defining Poverty • Low income poverty threshold in 2000 was $17,500 for a family of four, today it is $23,050. • The poverty level has changed since then to account for changes in the consumer price index, which enables the government to adjust the poverty level by taking into account changes in prices of goods and services. • The official poverty level is based on pre-tax income, but does include in-kind subsidies, like food stamps and subsidized housing

5. Major Government Assistance Programs • Social Security-provides monthly payment to people who are retired or unable to work. • Temporary Assistance to Needy Families (TANF) –replaced AFDC in 1996, this program uses federal funds which are administered by the states to help needy families. • Supplemental Security Income (SSI) – provides a minimum income to the elderly and disabled who do not qualify for Social Security benefits. • Food Stamps – these coupons that can be used to purchase food are now distributed to more than 28 million Americans with little or no income • Earned Income Tax Credit (EITC) – a tax credit used by low income workers who get back part or all pf the their Social Security taxes

6. Major Government Assistance Programs • The Welfare Reform Act of 1996 provided for the devolution of the welfare system. • The major change was that most welfare recipients were now limited to two years of assistance at one time, with a lifetime limit of five years. Also allowed states to deny benefits to unmarried-teenage mothers. • Homelessness continues to be a hot topic issue. Some people believe that the Welfare Reform Act exacerbated the problem.

7. Crime • America has been no stranger to crime. • The public demands protection from criminals, but also they want fair treatment from law enforcement officials. • When violent crime increases, the public calls for more police action. • When police use unpopular tactics to crack down on crime, the public often accuses the police of violating their rights.

8. Crime • The criminal justice system is a very costly one for taxpayers. • Estimates in most states show that 5 times more in spent on incarcerating an inmate than is spent on the education of a child for one year. • The “War on Drugs” has put a strain on the criminal justice system.

9. Crime • Illegal drug use can often result in “turf wars” between rival drug gangs. • Drug addicts often result to crime in order to satisfy their drug addiction. • Recreational drug use has remained steady despite the failed efforts of government sponsored drug prevention programs. • Drug arrests have led to an overcrowding problem in U.S. prisons. • Possible solutions: Rehabilitation programs instead of incarceration or legalize certain types or amounts of drugs for personal use.

10. Crime • Another major devastating crime that our government has had to deal with has been terrorism. • This includes foreign terrorism (9/11), and domestic terrorism (Mass shootings). • The government must walk a delicate tight-rope when their actions potentially take away rights not only from citizens but from suspected foreign terrorists.

11. Environmental Policy Making • Growing public awareness about the environment since the 1970s and 1980s. • Major environmental problems like oil spills and toxic waste sites have forced the government to formulate long-term policy aimed at protecting the environment. • Environmental policy restrictions on companies are often blamed for job loss and for hurting the economy.

12. 1899 – Refuse Act 1948 – Federal Water Pollution Control Act 1955 – Air Pollution Control Act 1963 – Clean Air Act 1965 – Clean Air Act Amendments 1965 – Solid Waste Disposal 1965 – Water Quality Act 1967 – Air Quality Act 1969 – National Environmental Policy Act 1970 – Clean Air Act Amendments 1972 – Clean Water Act (Federal Water Pollution Control Act Amendments) 1972 – Federal Environmental Pesticide Control Act 1974 – Clean Water Act 1976 – Resource Conservation and Recovery Act 1977 – Clean Air Act Amendments 1980 – Comprehensive Environmental Response, Compensation, and Liability Act 1990 – Clean Air Act Amendments 1990 – Oil Pollution Act 1996 – Food Quality and Protection Act 1999 – Chemical Safety Information, Site Security, and Fuels Regulatory Relief Act Environmental Policy Making

13. Economic Policy Making • Typically, in dealing with economic decisions, policy makers are asked to make policy trade-offs. • Taxes are a method used to raise revenue for the government. • Subsidies are a method used by the government to assist producers of a certain commodity. • The questions in dealing with taxes and subsidies is who shall pay and who shall receive?

14. Social Security • Social Security was established in 1935 to provide benefits to retired persons or others who qualify. Benefits were provided through taxing current workers. • Two problems facing Social Security: • The ratio of recipients of Social Security to workers have decreased dramatically. • The life expectancy of Americans has increased and will continue to increase.

15. Social Security • Proposals to fix Social Security: • Raise taxes • Reduce benefit payouts • Increase age requirements • Privatize Social Security

16. Politics of Fiscal and Monetary Policy • Fiscal Policy – the use of changes in government spending or taxation to change national economic variables, like the unemployment rate • Keynesian Economic Theory posits that using fiscal policy can alter economic variables (increasing government spending during economic turn downturns, for example) • Monetary Policy – the use of changes in the money supply to change credit markets, unemployment and the inflation rate • Monetary policy is determined by the Federal Open Market Committee (FOMC), part of the Federal Reserve System

17. Budget Deficits and the Public Debt • The deficit is when the government spends more money than it receives in any given year • The government finances its deficits by selling U.S. Treasury bonds to private individuals and companies who want to invest in the government. • Decreased tax revenue followed by an increases in government expenditures leads to a deficit. • The public debt is the total amount of debt carried by the federal government, also called the national debt

18. America and the Global Economy • How powerful a country is depends on several factors, one of the most important being the economic strength of the country. • The USA has had its ups and downs, but has remained a major player in the global economy. • China and Japan have pushed the USA to change its workforce and adapt to the ever changing parts of the economy. • Educational levels have to increase for American workers as well as the willingness to use technology and to continuously research and develop new products. • If this does not happen, then there could be a possible reduction in the standard of living for most Americans in the years to come.