Domestic and Foreign Policy

Chapter 14

Difficulties in solving public problems

Competing ideas about what constitutes a problem
Solutions are expensive Solutions generate new problems

Solutions are complex

Types of public policy

Redistributive policy
Shifts resources from the haves to the have-nots E.g., Medicaid Usually controversial Highlights differences between how Democrats and Republicans view the role of government

Types of public policy, contd.

Distributive policy
Funded by the whole taxpayer base to address the needs of a particular group E.g., homeowners tax deductions Popular because benefits go to specific group while costs are so widely spread no one notices them Pork barrel projects, in which legislators try to secure federal dollars to support programs in their home districts, are often associated with distributive policies

Types of public policy, contd.

Regulatory policy
Designed to change or restrict the behavior of certain groups or individuals E.g., environmental policy Goal is to protect citizens Politics surrounding the creation of regulatory policy is highly confrontational
This weeks vote on FEMA funding linked to clean cars

Who makes public policy?

Legislatures Executive Bureaucracy (federal, state, local) Courts

Steps of the policymaking process

1. Agenda setting: public attention focuses on a public problem or issue
Triggering event: an external event that puts an issue on to the policy agenda

2. Policy formulation: policymakers take up the issue.

3. Policy adoption: policymakers formally adopt a policy solution, usually in the form of law or laws

Steps of the policymaking process, contd

4. Policy implementation: staffs in government agencies are given responsibility for making the policy work 5. Policy evaluation: policy analysts inside and outside the government determine whether the policy is addressing the problem and whether implementation is proceeding well, and recommend changes

Social welfare vs. social insurance

Social welfare policy: public policies that seek to meet basic needs of people who are unable to provide for themselves
E.g., Medicaid Means-tested: beneficiaries qualify by demonstrating need Designed to fix short-term problems

Social insurance: offers benefits in exchange for contributions made by citizens to offset future economic needs
E.g., Medicare Applies to all people Usually popular

Social Security
How it works: a social insurance program to which people pay during their working lives in order to receive benefits when they retire Is Social Security going broke?
In 2017 benefit payments will begin to exceed taxes collected In 2041 trust fund will run out of money

The politics of Social Security today talk of partial privatization

Welfare policy
The New Deal and the creation of AFDC Controversy over AFDC in the 1990s TANF and welfare today

Other welfare programs

Food assistance
Supplemental Nutrition Assistance Program (SNAP); national school lunch and school breakfast programs; Special Supplemental Nutrition Program for Women, Infants, and Children

Head Start
Preschool education for low-income children

Health care
Medicare Created as an amendment to Social Security Act in 1965 Provides health insurance for the elderly and disabled Hospital insurance funded by tax and other services paid for by premium Costs are rising rapidly; program is unsustainable in current form Medicaid Created as an amendment to Social Security Act in 1965 Provides medical care to the poor Funded jointly by national and state governments Costs have been rising, leading to concerns about states ability to pay for program

Middle class and corporate welfare

Subsidy: financial incentive given by the government to corporations, individuals, or other governments

Middle class subsidies

Education subsidies, such as student loan programs Homeownership subsidies, such as mortgage interest tax deductions and loans to veterans

Corporate subsidies

Fiscal vs. monetary policy

Fiscal policy Monetary policy

Government regulates the Government regulates the economy through its economy by manipulating powers to tax and spend interest rates President and Congress play the major roles The Federal Reserve Board plays the major role

Tax policy
Progressive tax (e.g., income tax): tax whose rate increases with income Regressive tax (e.g., sales tax): tax that requires poor people to pay a higher proportion of their income, compared with the well-off

Reforming the tax code

A complex tax code A tax code with a little something for everyone (e.g., homeowners, charities, business owners, students) Goes through hundreds of changes every year

Reforming the tax code, contd.

Proposed reforms to the tax code
Flat tax: a tax system in which all people pay the same percentage of their income Consumption tax: a plan in which people are taxed not on what they earn but on what they spend
Value-added tax (VAT): a consumption tax levied at each stage of production, based on the value added to the product at that stage

Foreign policy and its types

Foreign policy: the diplomatic policy of a nation in its
interactions with other nations

Crisis policy: foreign policy, usually made quickly and

secretly, that responds to an emergency threat

Strategic policy: foreign policy that lays out a countrys

basic stance toward international actors or problems

Structural defense policy: foreign policy dealing with

defense spending, military bases, and weapons procurement

Who makes foreign policy?

The president in all of the following roles:
Chief executive Head of state Commander-in-chief Chief diplomat Chief legislator

Who makes foreign policy?, contd.

Executive branch
National Security Council: organization within the Executive Office of the President that provides foreign policy advice to the president State Department: executive branch department charged with managing foreign affairs Defense Department: executive branch department charged with managing the countrys military personnel, equipment, and operations

Who makes foreign policy?, contd.

Joint Chiefs of Staff: senior military officers from four branches of the U.S. armed forces Intelligence community: agencies and bureaus responsible for obtaining and interpreting information for the government CIA: government organization that oversees foreign intelligence gathering and related classified activities New director of national intelligence: overseer and coordinator of activities of the agencies involved in intelligence activities; presidents main intelligence adviser Department of Homeland Security: unifying force in efforts of the government to prevent and respond to attacks on U.S.

Who makes foreign policy?, contd.

Congress
Ratify treaties (Senate) Confirm appointments (Senate) Declare war Exercise spending power Oversee executive branch Pass legislation

Power struggles
Since both Congress and the president have foreign policy powers, the Constitution may be an invitation to struggle Declarations of war out of date?

War Powers Act

President must notify Congress if troops are moved into hostilities or where hostilities are imminent Those troops can stay for only 60 days unless Congress passes a specific authorization Meant to stop endless (Vietnam) and secret (Cambodia) wars Unconstitutional? Widely ignored?

External actors in world politics

Other countries Intergovernmental organizations (IGOs): bodies, such as the
United Nations, whose members are countries

Nongovernmental organizations (NGOs): organizations

comprising individuals or interest groups from around the world that focus on a special issue

Multinational corporations (MNCs): large companies that do

business in multiple countries

Miscellaneous other actors: groups that do not fit the other

categories, such as the Middle Easts Palestinians, who have no government, or terrorist groups

Citizenship and Policy

Domestic
We do not vote on policy directly, but we do vote for our elected officials who then develop and implement policy. We can influence policy via voting and feedback to elected officials. If we hate a politician's policies, we need to vote him/her out of office.

Foreign
Obviously, we have no say over foreign policy, except when we vote for president. As voters, we need to play close attention to candidates position on foreign policy matters.

Stabilizing the Economy

Economic stability is condition of economic growth. Instability involves inflation or recession. Inflation occurs when demand is high and prices rise. Recession is marked by a decline in the economy.

Monetary Policy
Money establishes a system of exchange for goods. Supply controlled by Federal Reserve (the Fed)
Board of Governors sets rules and regulations.

System of banks governed by reserve requirements.

Establish discount rate of interest. Work within open market operations.

Fiscal Policy
Use of public policy to maintain economic stability.

President and Congress formulate policy through budget.

Key tools are budget deficits and surpluses (how much of each).
Stimulus plans.

Deficit (this years spending beyond budget) v Debt (accumulated over-spending/obligations)

Which one is which

Monetary policy regulates money supply, interest rates, value of assets.
how much money is printed How money flows in the economy What its worth

Fiscal Policy promotes large scale (macro) economic goals affecting the nation
Budget (taxes & spending) Debt mgt, Investment Big issues: employment, growth, price stability

Deliberate use of taxing and spending to influence economy & keep it stable

Who does these things?

Monetary Policy The Federal Reserve Headed by Chairman Ben Bernanke

Who Does These Things?

Fiscal Policy Congress & President Examples:

Under Consideration
Economic Indicators Many Data Sources
Legislative & Executive

Current Policy from two perspectives

Simpson & Bowles Paul Ryan and the Presidents Budget

Quick Quiz: Link tool to policy

Interest rates are being adjusted to control inflation or promote borrowing. Thats a sign of what type of policy? Who is doing it? Changes in taxes/spending or debt management to promote employment or growth is a sign of what type of policy? Who is managing the policy?