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Chapter 13

Chapter 13. Domestic & Economic Policy. Domestic Policy. Domestic policy = all the laws, government planning, and government actions that affect the lives of American citizens Policies = created in response to public problems or public demand for government action

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Chapter 13

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  1. Chapter 13 Domestic & Economic Policy

  2. Domestic Policy • Domestic policy = all the laws, government planning, and government actions that affect the lives of American citizens • Policies = created in response to public problems or public demand for government action • Major policy problems = poverty, welfare, crime, environment, social security • Government response entails policy trade-offs; spending priorities; “you can’t have your cake and eat it too.”

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

  4. Defining Poverty • Low-income poverty threshold in 2003 was $18,300 for a family of four • Poverty level has changed since then to account for changes in the consumer price index, enabling government to adjust the poverty level by taking into account changes in prices of goods and services • Official poverty level based on pre-tax income, but does not include in-kind subsidies, like food stamps and subsidized housing

  5. Major Government Assistance Programs • Temporary Assistance to Needy Families (TANF) – replaced AFDC in 1996; uses federal funds which are administered by the states to help needy families; product of Welfare Reform Act of 1996; limited most welfare recipients to two years of assistance; lifetime assistance to five years • Supplemental Security Income (SSI) – provides minimum income to the elderly and disabled who do not qualify for Social Security benefits

  6. Major Government Assistance Programs (cont.) • Food Stamps – 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) – tax credit used by low income workers who get back part or all of the their Social Security taxes

  7. Crime • Common throughout American history • Murder rate nearly doubled between 1964 and 1994 • Crime has dropped since the mid-1990s • increased money to fight crime • strong economy • Federal drug policy and crime • Rising percentage of arrests are drug-related • Terrorism

  8. Environmental Policy Making, 314 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

  9. Taxes and Subsidies • Action-reaction syndrome = for every action on the part of government, there is a reaction on the part of the affected public • Tax rates = progressive, for now…the more you earn, the more you pay • Tax loopholes = legal method by which individuals and corporations reduce tax liabilities • 2001 tax cuts • 2003 tax cuts

  10. Social Security • Federal Insurance Contribution Act (FICA) taxes • Trust Fund problems • Future: fewer workers per retiree • Saving Social Security • raise taxes • decrease benefits • reform immigration policies • increase rate of return on Social Security contributions

  11. Economic Policy Making • Fiscal policy = 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 downturns, for example)

  12. Economic Policy Making (cont.) • Monetary policy – the use of changes in the money supply to change credit markets, unemployment, and the inflation rate • Monetary policy determined by the Federal Open Market Committee (FOMC), part of the Federal Reserve System

  13. Budget Deficits and the Public Debt • Deficit = when government spends more money than it receives in any given year • Public debt = the total amount of debt carried by the federal government, also called the national debt

  14. Discussion questions • Should we be concerned about our high level of poverty? • Should changes be made in federal drug policies? • Are there trade-offs between environmental protection and economic growth? • Are Bush’s tax cuts bad for America in the long run? • What should be done to ensure the long-term viability of Social Security? • Should we be concerned about increasing national debt?

  15. Hot Links to Selected Internet Resources: • Book’s Companion Site: http://politicalscience.wadsworth.com/schmidtbrief2004 • Wadsworth’s Political Science Site: http://politicalscience.wadsworth.com • Project Vote Smart: http://www.vote-smart.org/ • U.S. Census Bureau: http://www.census.gov • Social Security Online: http://www.ssa.gov • Office of Management and Budget: http://www.access.gpo.gov/usbudget

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