Public Policy. AP Government. PUBLIC POLICY. Public Policy-Making Process. The Policymaking System. Public Policy = how to solve a “public” problem The process by which policy comes into being and evolves over time. Making Public Policy in 5 Steps. 1. The National Agenda
The Policymaking System Public Policy = how to solve a “public” problem The process by which policy comes into being and evolves over time.
Making Public Policy in 5 Steps 1. The National Agenda - getting on the radar 2. PolicyFormulation - determining the remedy 3. Policy Adoption - choosing the remedy 4. PolicyImplementation - regulating the policy 5. PolicyEvaluation - assessing policy
Setting the Political Agenda The political agenda: something that is important to lots of people Healthcare for all? Getting on the agenda: - major event occurs - Trend in statistics - interest group awareness - media awareness Should policy be made radically or incrementally?
The Influence of Institutions on Public Policy Congress makes laws; President enforces laws Both help decide policy agenda Court decisions require enforcement assistance school desegregation, abortion Often tackle issues ignored by legislature/executive The bureaucracy is a source of innovation and forms alliances with senators and staff Iron Triangles Issue Networks
Other Influences Groups may react if their issues are being ignored Organized: corporations or unions Unorganized: urban minorities Current ex’s: Tea Party, Immigration Reform States are laboratories for future national policies Federalism Block Grants
Costs, Benefits, Politics Effect on Policy * In order to make a policy decision, policymakers must assess the following items: Cost: any burden, monetary or non-monetary, that affect a group/people by a policy Benefit: any satisfaction, monetary or non-monetary, that affect a group/people by a policy Politics = who actually benefits/pays and who ought to benefit/pay getting items on the policy agenda helping one group over another group
Classifying and Explaining the Politics of Different Policy Issues
The POLITICS of Making Public Policy Majoritarian politics: benefits for all & costs for all Ex: Military spending or Social Security Public debates Interest group politics: benefits for a few & costs for a few Ex: labor unions wants vs. business wants Client politics: benefits for a few & costs for all Pork-Barrel Projects “Earmarks” Ex: “Bridge to Nowhere” in Alaska People may not be aware of costs to them Entrepreneurial politics: Benefits for all & costs for a few Ex: food safety, environment safety
Obstacles to Policy Making U.S. System = Pluralist democry = multiple centers of power for making policy Federalism = power is divided between national, state and local governments who can all make policies The framers created a policy-making nightmare to prevent tyranny and corruption – SEPARATION OF POWERS
What is a Mixed Economy? Mixed economy (Mixed free-market system): private and public (government) ownership of the means and production and distribution of goods and services Based on the idea of supply and demand *
What is a Mixed Economy? Mixed Economy: * Combination of: Market Economy &Command Economy **We have economic choices (market),with some govt. regulationand monitoring (command)
The Government’s Goals of the US Economy 1. Economic Growth = production increases 2. Price Stability = prices don’t change radically 3. Full Employment = everyone has a job
Measuring the Economy In Sports we have different statistics that tell us how well a player or team is performing. Based upon this data, we as fans are able to judge if a player or team is excelling or struggling. * In economics, we have statistics that tell us how well the country’s economy is performing. These statistics include: GDP, CPI, and the Unemployment rate. Based upon these statistics, the Congress & President are able to take actions (fiscal policy) to keep the economy stable.
Measuring the Health of our Economy 1. Gross Domestic Product (GDP) = measures value of all new goods & services produced in the USA * The LARGER the GDP = a healthier economy
Global GDP Leaders
Measuring the Health of our Economy 2. Consumer Price Index (CPI)= measures how much money people spend on consumer goods - Measures changes in inflation (increase in the price of goods) - Too much money in circulation can lead to HIGH levels of inflation look at Zimbabwe
How Inflation Works? ~* On December 15, 2002, you could purchase an A in Mrs. Tran Trieu’s class for 1 piece of candy ~* On December 15, 2012, you could purchase an A in Mrs. Tran Trieu’s class for 5pieces of candy 1. Did you have to spend more or less over time to get the same goods? 2. Did the candy gain or lose purchasing power over time?
Measuring the Health of our Economy 3. Unemployment Rate: measures the percentage of people who want a job, but can’t find one
Definition GDP Data CPI (inflation) Data Employment Data Prosperity Economy is booming! High Steady (balanced) BIG labor demand (low unemployment) Slowing Recession Economy is slowing Slowing Down Slowing labor demand Really LOW demand (high unemployment) Depression Economy is in bad shape Really LOW Really LOW
The Politics of Prosperity Many voters often look at how their own economic situations have changed when they choose candidates retrospective voting Are poor/prosperous economic conditions the result of our elected/unelected politicians? How much affect can the government have on manipulating the economy?
Politicians and the Economy Elected officials are tempted to take a short-term view of the economy and satisfy the self-regarding voter “Politics 101” How can we prevent politicians from making bad long-term economic decisions? Government can’t magically improve the economy Each economic/political ideology has their own theories on helping the economy
Ideology and the Economy Ideology plays large role in shaping policy choices Democrats tend to want the government to play an activerole to improve the economy Republicans tend to want the government to play a minimalrole to improve the economy BOTH parties desire high GDP, low unemployment, steady inflation
Fiscal Policy Fiscal policy: government action of either lowering or raising taxes, which results in more or less consumer spending or enacting of government spending programs (ie. Hospitals or building highways)
Fiscal Policy Theories… Keynesianism: When demand in the economy is too low, the government should pump money into the economy by spending more than it collects in taxes running a deficit Democrats often favor this approach Republicans often dislike this approach
Keynesian approach When economy is down, government should spend more money and not worry about the deficit (the red line) More money is spent = more taxes = fixing the deficit How much deficit spending is okay? (D.S. – spending money that is borrowed rather than taxing)
The Politics of Taxing and Spending Majoritarian politics yields conflicting recommendations: lower taxes, less debt Meaningful tax cuts are politically difficult Who should get their taxes cut? new programs tend to be more popular with politicians how will they be funded? Different Fiscal Policy philosophies exist…
Fiscal Policy Theories… Supply-Side Tax Cuts: the economy will improve with less govt. interference, therefore the govt. should lower taxes & regulations Lower taxes would create incentives for private investment and purchasing Greater economic productivity will then produce more tax revenue
Fiscal Policy Theories… Reaganomics: refers to the ideas promoted by President Reagan in the 1980s A. Deregulation remove laws/rules/regulations that restrain industries B. Increase military spending led to large deficits & the increase in national debt C. Cut tax rates (income & capital gains) D. Lower inflation (technically the Fed’s job) ** Overall Effect: Stimulated economy—unemployment decreased, business activity increased, but deficits increased