Domestic Policy: Public Policy Defined

Chapter 16: Domestic Policy

• HCERA, passed March 25, 2010, expanded some provisions of the ACA, known as Obamacare.
• Public policies are laws like HCERA that affect citizens and communities.
• The chapter addresses the definition of public policy, policy area differences, the roles of policy analysts and advocates, government programs, and budgetary policy.

What Is Public Policy?

• Public policy is a relatively stable series of focused governmental actions addressing societal matters of concern.
• Public policy serves as a guide for legislative action, is fixed for extended periods, and requires considerable debate and compromise.
• Health care expansion was a Democratic Party priority for decades, formed after years of analysis & reflection on existing policy.
• Before the ACA in 2010, over 50% of US health care spending came from federal programs like Medicare and Medicaid.
• Public policy addresses concerns of a large segment of society, not small groups or individuals.
• Policy includes government actions and the behaviors/outcomes that result.
• Policy can arise when government refuses to act despite shifting circumstances/public opinion.
• In 2004, lawmakers' inaction let the Federal Assault Weapons Ban (1994) expire.

Public Policy as Outcomes

• Elected officials seek credit for policies, while opponents highlight failures.
• Policy can be formally expressed through intended actions of elected/appointed officials.
• Passing the HCERA in 2010, Congress declared its policy through an act directing money appropriation.
• Presidents can implement/change policy via executive orders which guide law implementation.
• Policy change can stem from court actions like Brown v. Board of Education of Topeka (1954) which ended school segregation.
• Congress gave the EPA discretion in the Clean Water Act (1972), dictating steps for water quality
• Individuals or corporations favored by a policy benefit (win), and those ignored or punished lose
• Policy design to encourage students to go to liberal arts colleges may trade school enrollment.
• Promoting charitable giving via tax incentives may lower tax revenues from the rich and shift burdens to the poor.
• Voter reaction to policies depends on whether they perceive those policies help or hurt them.

Finding a Middle Ground: The Social Safety Net

• During the Great Depression in the 1930s, the U.S. developed social safety net policies.
• Under FDR, the federal government created the WPA, CCC, and Home Owners' Loan Corporation to combat unemployment and mortgage debt.
• While some programs were phased out as the Depression eased, some programs such as Social Security & minimum wage, remained.
• The government has added social support programs like Medicare, Medicaid, & WIC.
• A common sentiment is that if one can subsist without government aid, so can others.
• Welfare reforms in the 1990s pushed the welfare safety net to the states, reducing long-term dependence.

Categorizing Public Policy

• Liberals generally favor government-led social and economic reforms.
• Conservatives consider government involvement onerous & prefer public matters be returned to the private sector.
• Goods are commodities, services, & systems that satisfy wants/needs.
• Private goods, like homes/apartments, are owned by people/groups & exclude others via a price. They are also finite and tradable.
• In free-market economics, markets operate best through supply and demand without government intervention.
• Producers and consumers negotiate trade in well-functioning markets, facilitated by currency.
• Farmers protect land for food production and businesses protect their reputation
• Industries can self-regulate to protect their value; according to free-market economics, public policy regulating the exchange of goods is unnecessary.
• Libertarians think government operates less efficiently than the private sector and should be minimized.
• There are problems with exclusively private ownership: not all goods are strictly private.
• Public goods, or collective goods, aren't excludable and are infinite
• Common goods are not excludable but may be finite.
• The tragedy of the commons is the situation in which individuals exhaust a common resource by acting in their own immediate self-interest
• Toll goods are open to all, theoretically infinite if maintained, and are paid for by an outside entity.
• Led by progressives, the U.S. began to govern monopolies distorting market forces at the start of the 20th century.
• Public policy determines the distribution, allocation, and enjoyment of public, common, and toll goods within a society.
• Policymakers must consider who pays the costs of creating/maintaining goods and who receives the benefits.
• Distributive policy collects payments/resources from many but concentrates direct benefits on relatively few.
• In the 1860s, the U.S. government recognized the value of a strong railroad system to move goods and people around the country
• In 1935, The Hoover Dam served the generation of hydroelectric power and the irrigating 2 million acres of land.
• In the U.S taxpayers pay for incentives like Federal Housing Administration mortgage loans that lead to home ownership

Regulatory Policy

• Regulatory policy features concentrated costs and diffuse benefits, being most effective for controlling or protecting public/common resources.
• Such policies prevent manufacturers/businesses from polluting, selling harmful products, or compromising worker health.
• In the U.S., calls for robust regulatory policy grew around the turn of the 20th century (Industrial Age).
• Muckrakers exposed manufacturer abuses, contributing to the Pure Food and Drug Act (1906) and agencies like the FDA.

Redistributive Policy

• It redistributes resources in society from one group to another.
• Costs and benefits are concentrated, but different groups bear the costs and enjoy the benefits.
• They intend to transfer income/wealth for a minimal standard of living.
• Wealthy/middle class pay into the federal tax base, which funds need-based programs for low-income people and families.
• Examples: Head Start, Medicaid, TANF, SNAP, Pell grants, and tax credits for home ownership.

Policy Arenas

• In practice, public policy is specific programs providing resources, creating regulations, and equitably funding the government.
• Policies can be categorized by goals or sector, although many serve multiple purposes.

Social Welfare Policy

• U.S. welfare policy began in the 1930s (Great Depression), becoming a major federal function by the 1960s.
• First, it ensures some equity level in free-market economics.
• Many politicians feared the high unemployment and low-income levels plaguing society would become a threat to democracy like Germany and Italy
• Second, social welfare policy creates an automatic stimulus by building a safety net.
• Social Security is one of the oldest and largest pieces of social welfare policy, costing the U.S. about $845B in 2014, and costing taxpayers and employers alike
• Social security addressed the three concerns of low standards of living.
• First, the retirement benefit allows workers to claim a pension (entitlement program) after completing a minimum number of years.
• Changes in legislation increased the retirement age to 67 for workers born after 1959
• Secondly, a disability payout for mental of physical illness and lastly supplemental security income provides assistance when elderly when below an income threshold
• The Republican Party sought to prevent the Social Security system from collapsing (predictions).
• They proposed privatizing the program, but their efforts ultimately failed.
• President George W. Bush discussed social security in Florida at the outset of his second term in 2005
• There are numerous other plans for saving the program.

Medicare and Medicaid

• While Social Security sustains the aged/disabled via cash payments, Medicare/Medicaid ensure vulnerable populations access health care.
• Medicare, like Social Security, is an entitlement program funded through payroll taxes providing low-cost health insurance.
• It provides three coverage forms, guaranteed hospitalization insurance, supplemental coverage for doctor visits, and a prescription drug benefit.
• Due to demographic shifts, Medicare faces the same challenges with rising healthcare costs. In 2014, Medicare cost the federal government almost $597B.
• Medicaid is a formula-based program where beneficiaries must demonstrate a certain income category for health insurance.
• Access to health care may be limited, because fewer providers accept payments from the program (it pays them less for services than does Medicare).
• The ACA (2010) sought to change Medicaid by providing more money if states agreed to raise minimum income requirements and many denied.
• Total Medicaid costs were about $492B in 2014, about $305 billion by the federal government.
• A few examples of other programs include, TANF, SNAP and various housing assistance programs.

Science, Technology, and Education

• After WWII, the United States realized it needed to reintegrate servicemen and develop a technical military-industrial complex.
• After WWII the US government passed laws to assist education and research for workers and industry.

Business Growth and Regulation

• Economic size and strength is important to politicians and dependending on how citizens believe in their own future prosperity jobs.
• Programs intended to grow the economy by benefiting businesses are balanced with those protecting consumers and regulating businesses.

Policymakers

• Policy advocates hold a normative position and seek to influence policy to achieve specific goals.
• They use facts, evidence, and analysis to persuade officials/the public.
• Lobbying groups and think tanks promote the agenda of policy advocates.
• AARP is a lobbying group that persuades the government to provide more public resources/services to seniors & is part of the Democratic Party's coalition.
• Their aims are lower healthcare costs and secure Social Security pension payments.
• AARP supported the Republican proposal in 2002 to include prescription drugs.
• In 2014 First Lady Michelle Obama showed her AARP membership card -Policy analysts objectively identify choices for decision makers, gauging impacts if implemented.
• Because advocates understate costs & overstate benefits, policy analysis is a highly-politicized aspect of government.
• Policy analysts should provide the most accurate analysis possible.
• The RAND Corporation has conducted numerous objective policy analyses.
• Congress and the president created nonpartisan policy branches.
• Authorized in the 1974 Congressional Budget and Impoundment Control Act, the CBO increases Congress' independence from the executive branch.
• Is is responsible for scoring all pending legislation's spending for the budget

Policy Process

• The policy process involves four stages: (1) agenda setting, (2) policy enactment, (3) policy implementation, and (4) evaluation.
• Moving a new policy through these sequential stages is difficult.
• Agenda setting is the first stage and has problem identification and alternative specification subphases.
• Issues must merit discussion for government.
• The U.S. spent $3.8 trillion in 2016.
• Policymakers make effort to shield long-term priorities from election cycles and changes in public opinion.
• Putting some policy functions out of Congressional reach reflects economic philosophies about how to grow/maintain the economy.

Approaches to the Economy

Laissez-faire Economics

• Advocates argued that the best way for the government to interact with the economy was through laissez-faire economics.
• Key to economic growth and development was the government allowing private markets to operate efficiently
• Private investors were better equipped than governments to figure out which sectors were most likely to grow.
• They also tended to oppose government efforts to establish quality controls but finally.
• Laissez-faire proponents felt that keeping government out of business would create an automatic cycle of up and down economic cycles

Keynesian Economics

• Developed to implent a new economic regulation
• Argues that if recessions become too deep, or last for too long, that models of recession may not work
• Economic growth tied to individuals that consume goods
• Keynes suggested payments to the unemployed, retired, as well as tax incentives for the middle class.
• The government would reduce the economic stimulus once the economy has started flowing and had capital flowing again
• Keynesian dominated from the 1930's-1970s

Supply-Side Economics

• In the 1970s high inflation began to impact economic growth
• The social welfare and tax policies were overstimulating the economy and demand outstripped investors and willingness to produce
• Approach to economic growth is supply-side economics
• Regulation and high taxes reduce economic growth

Budget (Mandatory Spending)

• Driven to create a minimal amount of aggregate demand, combined with depression era for social welfare policy
• Led to the president and congress to design a federal budget for with spending into broad categories and discretionary
• of those the mandatory spending is larger consisting of 2.5 trillion with 59% of federal expenditures
• For Entitlement and Qualifications
• Easy to estimate the ages and the demographics

Discretionary spending

• Not devoted toward mandatory spending and Congress must pay for this each Year
• $1.2 trillion for discretionary spending will pay for Employees salaries and Federal buildings
• Also covers science, technologies, costs and redistributed benefits
• Half of the discretionary spending is for the military
• In theory the amount of revenue should be equal to these expenses
• Balancing the budget goal for Republican and Democratic for a few decades

Tax Policy

• Governments must pay taxes to operate
• Residents in the way provides are taxes
• Two ways and all the money and government collect the less Resident they give, attempt to raise revenue. -goal of Tax policy

Keysenian View

• Systems that includes effective tax revenue

Supply-Side

• Lower overall rate and if it make more money

Fed Board and Interest Rates

• Financial panics when two many worried about they would lose their investment then try to withdraw the money -Act of the Fed Reserve
• Promoting the government
• The Feds road now included monetary policies
• The FED is overseen governor by the president of States
• Most of board participate as a committee