Chapter Fourteen: Domestic and Economic Policy
Chapter Fourteen Learning Objectives • Describe the policymaking process, including: -- Agenda building -- Policy formulation -- Policy adoption -- Policy implementation -- Policy evaluation
Chapter Fourteen Learning Objectives • Explain the meaning of a personal health insurance mandate. • Describe increases of unauthorized immigrants and the effects of this increased population. • Explain the attempts of the U.S. House and Senate to pass bills controlling the flow of unauthorized immigrants and the companies who hire them.
Chapter Fourteen Contents • The Policymaking Process • Health Care • Immigration • Crime in the Twenty-first Century
Chapter Fourteen Contents • Energy and the Environment • The Politics of Economic Decision Making • The Politics of Taxation
The Policymaking Process • The Policymaking Process • Domestic Policy
The Policymaking Process • Five Steps of Policymaking • Agenda Building • An issue must get on the agenda
The Policymaking Process • Congress must be aware that a problem exists and requires congressional action AP Photo/Charles Dharapak
Timeline of Economic Crisis • Late 90s – early 2000s, people were able to obtain mortgages at a low interest rate, but many were obtained “subprime mortgages” • Around 2004 – Banks began to stop issues subprime are adjustable rate mortgages • 2004 – 2008 – Banks lost billions from people who were not able to pay pack loans, foreclosures skyrocketed, and the credit of both banks and individuals suffered • 2008 – POLICY Decision - $700 Bank Bailout Bill
The Policymaking Process • In late 2008, as banks were no longer taking excessive risks, it was feared that this could lead to a potential freeze on credit and lending by the nation’s firms; thus leading to a possible shut down of the economy. Financers pleaded to the government for assistance.
The Policymaking Process • Policy Formulation • Various policy proposals are discussed among government officials and the public
The Policymaking Process • Bush-appointed Secretary of Treasury Henry Paulson proposed via three-page memo a $700 billion bill to buy toxic mortgage-related assets. Congress created a 110-page bill filled with pork and oversight provisions.
The Policymaking Process • Policy Adoption • This step involves choosing a specific policy from among the proposals that have been discussed. AP Photo/Richard Drew
The Policymaking Process • After the House refused to pass the bank bailout bill, Senate leaders decided to amend an existing bill already passed by the House • The Troubled Assets Relief Program (TARP) was 451 pages filled with earmarks to attract votes.
The Policymaking Process • Policy Implementation • This step involves the implementation of the policy alternative chosen by Congress.
The Policymaking Process • Officials soon realized that TARP could be spent on preferred stock in banks, rather than buy toxic banks, which would not resolve the financial crisis, eventually returning TARP funds to the government.
The Policymaking Process • Policy Evaluation • After a policy has been implemented, it is evaluated. • Groups inside and outside government conduct studies to determine what actually happens after a policy has been in place for a given period of time.
The Policymaking Process • Initially, the public didn’t mind the switch to preferred stock, rather they were concerned with employee compensation and future lending practices. • Soon the TARP program was viewed as a Wall Street bailout for special interests.
Health Care • Health Care • America spends almost twice as much as Britain or Japan. • Spending is measured by the percentage of the gross domestic product (GDP).
Health Care • The Government’s Role in Financing Health Care Through 2009 • Medicare—a state-federal program, specifically designed to support U.S. residents over 65 • This program is funded by tax on wages and salaries.
Health Care • Created in 1965, pays hospital and physician’s bills for those residents over 65 • Second-largest domestic spending program after Social Security • Government has cut reimbursement funds and have capped specific procedures
Health Care • The Government’s Role in Financing Health Care Through 2009 • Medicaid—a state-federal program, specifically designed to subsidize health care for the poor
Health Care • This program is funded out of general government revenues. • In 2007, 34 million people were enrolled in the program. AP Photo/J. Scott Applewhite
Health Care • Today, there are about 60 million, exceeding over $300 billion • The Federal government pays 55 percent of total costs.
Health Care • Universal Health Insurance • President Obama signed into law on March 23, 2010, the Patient Protection and Affordable Care Act. VERY CONTROVERSIAL Obamacare explained Obamacare Rebutal
Health Care • On March 30, the President signed the Health Care and Education Reconciliation Act of 2010. AP Photo/Stephen Chemin
Health Care • Largest expansion of government services since Lyndon B. Johnson • An opt-out provision if an individual rejects the coverage • Illegal immigrants will not be covered.
Health Care • Health-care Reform Building an Agenda • The Problem of the Uninsured • Over 45 million Americans are uninsured • The uninsured are young, entry-level workers without health benefits
Health Care • Health-care Reform Building an Agenda • The Problem of High Costs • New technology and lifesaving measures are a costly burden on the system. • The Medicare trust fund was projected to run out of funds in 2017.
Health Care • Health-care Reform: Adopting a Policy • Universal Health Insurance • Personal Mandate • Public Option David McNew/Getty Images
Health Care • Health-care Reform: Implementing Policy • Most of the provisions do not go into effect until 2014 and the last provision is not scheduled until 2018. • Voters will not receive benefits for at least two election cycles.
Americans have spent many billions of dollars on health care over the last half-century. What kind of return have they received for that spending? One way to answer the question is to observe that since 1950, the life expectancy of the average American has increased about one year with the passage of each span of six years. Much of that increase in life expectancy is doubtless due to health-care spending. In today’s dollars, since 1950 the average American spent $11,400 on health care in every span of six years. Therefore, we could say that on average, Americans spent $11,400 to buy one year of additional life.If someone asked you how much your life is worth in dollar terms, you probably would be hard-pressed to provide a figure. You might reject the question entirely. Insurance companies and government agencies, however, routinely need to estimate the economic value of a person’s life. A typical estimate by economists would be about $75,000 a year. This is about six times what it cost to buy those additional years of life. By these calculations, health-care spending appears to be a bargain. That does not mean, however, that we are spending too little on health care. To ask if we are spending too little, the correct question is as follows: If we spend one additional dollar on health care, will we get one additional dollar’s worth of benefit? This is a hard question to answer.
We stated in this chapter that Americans spend more on health care than the people of almost any other country. It is not an accident that the United States is also the only truly rich country that does not have a national health insurance system. Insurance provision by the government tends to hold down total costs for several reasons. One is that the government is in an excellent bargaining position to demand lower prices from medical care providers and from pharmaceutical companies. But is such bargaining a good idea? The pharmaceutical industry, for example, makes more profits selling drugs in America than in Germany, where the government has negotiated lower prices. One effect of the high profits that the industry earns in the United States is that it is able to fund a vast research effort aimed at finding new drugs. Some experts believe that the industry would be unable to mount such an effort if Americans paid German prices for drugs. (Such thoughts may have been on the minds of the Republicans who barred the government from negotiating lower drug prices as part of the Medicare drug benefit.) American spending, in other words, may be providing the rest of the world with a “free ride” in terms of pharmaceutical research. What applies to pharmaceuticals may also apply to other branches of medicine. It is possible that America’s lavish medical spending is one of the main engines driving worldwide progress in medical science.
Immigration • Immigration • The Issue of Unauthorized Immigration • Approx. 12 million undocumented aliens • Hispanic populations have grown dramatically in the southwestern states. AP Photo/Ralph Fresco
Immigration • Characteristics of the Undocumented Population • Studies show unauthorized immigrants return home to retire. • A great deal send money home to relatives . • Many live in mixed households; some have lawful family members.
Immigration • Concerns about Unauthorized Immigration • Laws and customs • Coyotes may exploit or abuse clients • Contributes to the illegal drug trade
Immigration • Attempts at Immigration Reform • Public opinion is contradictory. • 1/5 favor immediate deportation. • Though a serious problem, most don’t believe it should be a priority issue.
Immigration • Immigration and the Obama Administration • Administration instituted harsh crackdowns on employers of undocumented workers. • Immigration reform was tabled for Health Care.
Immigration • The Arizona Immigration Controversy • In April 2010, Arizona’s governor signed legislation that would make it a crime to not carry immigration documentation. • The 2010 election and health care legislation forced immigration to take a seat behind top issues.
Crime in the Twenty-first Century • Crime in American History • Crime has been an issue of concern throughout America’s history. • Industrialization and bureaucratic institutions like factories and schools socialized citizens into patterns of conformity and rules.
Crime in the Twenty-first Century • In the 20s and 30s, organized crime flourished during prohibition. • Crime rates began to rise in the 50s and grew substantially in the 1960s. • Since 1995, violent crime rates have declined.
Crime in the Twenty-first Century • The Prison Population • Many Americans believe the best solution to curbing crime is to impose stiff prison sentences. • In 2008, 2.3 million people were imprisoned in jails.
Crime in the Twenty-first Century • The Incarceration Rate • Men are ten times more likely to be incarcerated than women. • Prisoners are also disproportionately African America.
Crime in the Twenty-first Century • Prison Construction and Conditions • Prisons are releasing criminals early due to overcrowding. • Several states are building more prisons to house the growing inmate population.