Jaymie TicknorPolitical Science 1050 Sect. 0028, 10, 15, 17, 22, 24, and 29 April 2014Lecture #9Chapter #17 : Economic and Social Policy : Types of Public Policies: Public Policy is a term applied to all government programs andregulationsDomestic Policy: consists of all government programs and regulations that directly affect those living within a countryForeign Policy: involves relations with other nationsStages of Policy Making: Agenda-setting : making an issue so visible that important political leaders take it seriouslySystemic Agenda: public outcry, but no government responseInstitutional Agenda: elected officials take it seriously and take legislative actionPolicy Deliberation: debate and discussion by groups and political leaders about issues placed on the policy agenda; stakeholders: may not agreeFinal policy is intended to balance the interests of different groupsPolicy Enactment: passage of laws by public officials; requires negotiation, bargaining, and compromisePolicy Implementation: translation of legislation into set of government programs or regulations; techniques: Authoritative techniques: people’s actions are restrained by government (three felonies sent to permanent sentence)Incentive technique: offers financial incentive for compliance (disincentive would be syntax on cigarettes to decrease behavior; more effective)Capacity techniques: provide people with appropriate resources (e.g., education, training)Hortatory techniques: appealing to people’s better instincts (“Just Say No” campaign; less effective)Policy Outcomes: effect of policy outputs on individuals and businesses (or policy evaluation, which is the determination of the effectiveness of a policy)Evaluated by: Congressional Committees, Presidential Commissions, Interest groups, and AcademicsJudging the State of the Economy: Gross Domestic Product (GDP): measure of total economic activity in a nation over the course of a year (strongest impact on approval rates in presidential elections; exporting more than importing can increase this; debt in relation to GDP, if low, less concern)Business Cycle: alternating periods of economic growth and economic slowdowns; expansion, recession, and then recoveryRecession: reduction in GDP growth for two quarters (6 months)Governments try to implement policies that will not disrupt economy:Unemployment: typically 4-6%; currently approx. 6.7%Inflation: price increases over time on same product; measured through Consumer Price Index, which tracks the costs of essentials over a period of timeHow is Unemployment Calculated? total number of citizens currently seeking employment but are without a job / total number of people in the workforceGovernment conducts a monthly national survey to calculate unemploymentFiscal Policy: the sum total of government taxing and spending, which determine whether government revenues exceed expendituresBudget: government’s annual plan for taxing and spendingDeficit: amount by which annual spending exceeds revenueSurplus: amount by which annual revenue exceeds spendingTwo Philosophies Over Fiscal Policy:Fiscal Policy and Economic Growth: Keynesianism: economic policy based on the belief that government spending can be used to jump-start the economyF.D.R broke with traditional belief in a balanced budget and ran large deficits during the 1930s to get the economy moving againThree types of spending: Government, consumer, and business spending(downward spiral; only government left)Using Tax Rates: Supply-side economics: reduction in tax rate will generate overwhelming economic growth that will produce the same level of government revenue (more money, more spending)Applied during Reagan administration (reduced tax rates); led to significant budget deficits during the 1980s; Reagan eventually increased taxes to balance budgetMonetary Policy: efforts taken by government to vary the supply of money in the economy to stabilize the business cycle; if money supply increases too quickly, then you will have inflation; if money supply decreases too much, there is less money to spend and invest (economy slows down)Federal Reserve is responsible for controlling money supply; control interest ratesand bank reservesThe Dreaded “T” Word: Taxes: taxes are a much debated topic in the United StatesThree important dimensions of tax policy:Tax Burden: the total level at which Americans are taxed; large tax cuts over last ten years: one reason for increased federal deficit and recent increase in top tax bracket; how much people typically pay for taxesTax Base: the income (39.6%), property, wealth, or economic activity thatis taxed; some support more broad-based taxes (sales and sin taxes)Tax Preferences: special tax treatment received by certain activities, property, or investmentsTax Structure: structure in which tax rate depends on amount of taxable incomeProgression Tax: tax structure so that higher-income people pay a larger proportion of their income in taxes than do lower-income people (Buffett Rule - raise taxes on rich)Regressive Tax: tax structure so that low-income people pay a larger proportion of their income (sales tax)Tax Reform: Flat Tax: tax that everyone pays at the same ratePros: simple structure; easy to generate more government revenueCons: rich will pay less and poor more than they currently do; may increase economic inequalityTaxes: International Comparison: tax burden in U.S. is much lower than in the world’s other developed countries (among the lowest of the 13 major industrialized countries)Other countries pay more but provide more services; U.S. relies more on income and payroll taxes; other countries rely more heavily on consumption taxesNational Debt: currently, the national debt is at almost 17 trillion dollars (approx. 73% ofGDP); accumulated deficits over several years whereas deficit is only one yearOur debt considered moderate compared to other advanced nations (Japan and Italy have proportional debts that are more than twice as large)Economic slowdown or spending (stimulus package) at around 2008Social Insurance for Senior Citizens: 1935 Congress enacted the landmark Social Security ActSocial security is a social insurance program for seniors and the disabled; if born before 1937, get full benefits at 65; 1960 or later, full benefits at 67; can receive benefits at 62, but will be reducedPaid for by payroll taxes, 6.2% of every paycheck, employer matches percentage; maximum taxable earnings are $117,000