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
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