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

1. Domestic and Economic
Policy
Chapter 14

2. The Policymaking Process
1. Agenda Building
 Congress has to be aware of a problem that requires action
2. Policy Formulation
 Policy proposals are debated between public officials and the public
3. Policy Adoption
 Congress chooses a specific policy among those that were
discussed
4. Policy Implementation
 Congress passes the law and various levels of government enforce it
5. Policy Evaluation
 Group studies are done to determine how effective the policy is after
a given time

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. 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. Immigration

6. Crime in the 21st Century

7. Environmental Policy

8. The Politics of Economic Decision
Making
 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. The Politics of Economic Decision
Making
 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. 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. 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. 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