Government Test Five

an intentional course of action by government to deal with some problem or concern

• 1. Problem Recognition and Definition 5. Budgeting - can fund or de-fund policies
• 2. Agenda Setting - prioritizing issues 6. Policy Implementation - execution
• 3. Policy Formulation - mulling the ideas 7. Policy Evaluation - did it work?
• 4. Policy Adoption - by political process

government programs designed to improve quality of life

• � Income Security - gov't. activity started with the Depression and FDR's New Deal
• � Health Care - paid for with private insurance, Medicare and Medicaid
• � Public Education - local, state, and federal funding; "equalization"

1935 law est. old-age insurance; public assistance for children, the poor, and others; and unemployment insurance

all those meeting eligibility criteria are "entitled" to the $; also require "mandatory" spending: funds must be provided if no change in law

federal measurement; in 2009, $22,050 annual income for a family of four

unemployment, lack education/skills, bad work habits; disability, drug use, mental illness; child of poor parents, illegitimacy, divorce

• help those with income below a designated level
• * Supplemental Security Income (SSI) - $ to disabled needy people
• * TANF (Temporary Assistance for Needy Families); $164 - $500 + per month
• * Earned Income Tax Credit (EITC) - subsidizes low-wage workers; politically popular
• * Food Stamps - subsidize both the poor and farmers; run by the Agriculture Dept.; also WIC (women, infants, & children), school lunches & breakfasts

AFDC had seemed to encourage illegitimacy and dependency, and help create a permanent underclass; so, AFDC was replaced with TANF: added work requirements, 5-yr. lifetime limit on aid

• provided regardless of income level (everyone can get it)
• * Social Security - for seniors, 65+ (and survivors and disabled); max $2,323 per month, funded with 12.4% payroll tax (paid - by employer, - by employee)
• * Unemployment - weekly payments for unemployed workers; states manage, avg. pay from $235 (MS) to $641 (RI) per week; funded with 1-10% payroll tax on employer

not individual accounts, but a federal "fund" holding IOUs; in 2016, SS will start paying out more $ than it takes in, in 2037 it'll be bankrupt

tax hikes, benefit cuts, later retirement, means-testing, private accounts

for those receiving SS benefits (65+)(non-means tested); drug benefit added in 2003; funded with 2.9% payroll tax (half and half), but bankrupt by 2017 {health care for old people/seniors}

• Medicaid
• for needy (means-tested) under TANF and SSI; states manage; pay for families under 133% to 185% of poverty level {health care for poor people/needy}

rose dramatically ca. 1990 and 2000-today; public spending has also jumped in those periods (see Figs. 17.3 & 17.4); Medicaid is eating up state budgets

up to 45 million, or 15% of US; by un- or under-employment, youth, choice, pre-existing conditions

• * single-payer system - government provides insurance for private health care services
• * single-provider system - government-run health care, as in Canada, Great Britain; aka "socialized medicine", veterans
• * mandatory health insurance coverage - to be required in Massachusetts by July, 2007; subsidized, goal to create near-universal coverage, personal mandate
• * market reforms - expanded HSAs, tax breaks, more flexible regulations to encourage more competition

• spending inequalities - since - funded with property taxes; states use equalization plans
• competition - through:
• * voucher plans (e.g., Milwaukee, Cleveland) - can help the poor escape bad schools; opposed by teachers' unions, liberal groups, wealthy suburbanites; upheld by S.C.
• * charter schools - provide an alternative to standard schools; free of many regulations; some 800 now in 23 states & D.C. for over 165,000 students

growth, rising incomes, "full" employment, and low inflation

general rise in prices; caused by scarcity of goods or too much $ in circulation

a short-term decline in growth: investment and production fall, and unemployment grows; technically, two straight quarters of negative GDP growth

total value of all goods and services produced

regular expansion and recession of modern market economies

"leave alone" policy; calls for limited government role in the economy, allowing free markets; the "unseen hand"

government takes an active role in the economy; financial reforms (banking, securities, etc.), agriculture, labor, industrial regulations

economic and social (including environmental) expanded in 1960s, '90s; regulation generally slows, channels economic activity

in 1970s and '80s, most actively under Reagan; by laws and exec. orders

control of the national money supply and interest rates

low interest rates spur growth; high rates stunt growth {loose money can cause inflation, improve trade balance}

adjusts the money supply: sets the discount rate and member banks� reserve requirements; 7 members w/14-year terms

very respected and successful Fed Chairman (1987 - 2006)

gov't. spending or tax cuts put new money into the economy to increase growth; tax increases, spending cuts can slow the economy, inflation; "demand" side

lower marginal tax rates encourage work, production, investment, and thus employment; tax cuts may not cut revenues

shows how, at some point, high tax rates start to shrink revenues

1990s CW in D.C.; small deficits/surpluses lower interest rates, thus help the economy grow; taxes are OK if they balance the budget; but no correlation

North American Free Trade Agreement (1993), among US, Mexico, Canada

World Trade Organization (1995), leads negotiations to lower tariffs

trade limits; can temporarily prop up sick industries (but not for long)

est. 1974; reviews, reports budget to House and Senate; made Congress less dependent on OMB

first Congress has to vote to authorize the spending of money

then Congress votes to have the government actually spend the money; usually 13 appropriations bills are passed each year for the federal budget

allows agencies to operate at last year's budget levels until new appropriations bills can be passed

Congress (the spenders) gave itself more power in the budget process; created CBO; larger deficits have been the rule since then

budget shortfall in one fiscal year

budget overage in one fiscal year

sum of budget deficits (- surpluses) over all years; bad if it grows as % of GDP

starts from next year's presumed growth, not this year's spending; no increase or an increase below that "baseline" is called a budget "cut"

• Recession Economy Taxes Spending Events Deficits
• 1970s 1974, '80 Stagflation Creep up Grows Malaise Grow
• 1980s 1981-82 Boom Cut, '81 Grows Big Cold War Grow Big
• 1990s 1990-91 Boom, esp. stocks Raised, '90 & 93; cut �96 Shrinks Market boom/bubble Shrink; surpluses
• 2000s 2000-01

Financial meltdown Grow Big

2010s Slow growth Cuts expire, new taxes Stays Big Obamacare Massive

policy to avoid participation in foreign affairs

policy of active participation in foreign affairs; stronger since WWII

policy to act without consulting (many) other nations

policy to cooperate, consult with other states before acting

taxes on imports to raise funds and protect domestic industries

1823 pledge to oppose any European expansion into the Western Hemisphere; Roosevelt Corollary stated US responsibility for stability

idea that the US was divinely mandated to expand to the Pacific

if one country is attacked, all others come to its defense; the premise behind the League of Nations, the UN, NATO, etc.

global organization for collective security, global well-being

International Monetary Fund; stabilizes exchange rates among major currencies

provides loans for large development projects; aid is conditional

Union of Soviet Socialist Republics, Soviet Russia (1917-1992); �Red Army�

armed borders of communist countries: walls to keep people in, not out

opposition to expansion of Soviet power, esp. in Europe and Asia; NSC-68

North Atlantic Treaty Organization (1950); collective security for W. Europe

Mao Zedong's forces def. Chaing�s Nationalists

(US {and soviets} troops fight) Korea (1950-53), Vietnam (1954-75),Grenada (1983)

Iran, Cuba, Africa (many), Afghanistan (1979-87), Nicaragua, El Salvador

• Soviets tried to deploy IRBMs in Cuba; Kennedy blockade Cuba, threatened invasion; Krushchev backed off, and took the missiles out; nearest we've ever come to a nuclear war
• D'tente
• relaxation of tensions between US and USSR in the 1970s; marked by . . .

SALT, SALT II (defeated in Senate, 1979), START talks

Reagan's missile defense, bypassed '72 ABM Treaty

military response capabilities that prevent enemies from attacking; e.g. MAD{mutual assured destruction

pre-eminent in foreign and military policy; centralizes information, authority; can act quickly and decisively

chief foreign policy bureaucracy; "Foggy Bottom"

military bureaucracy, in Pentagon; heads armed forces

collects and analyzes information and intelligence about foreign countries and events; gets data from DIA, NSA, etc.

advises president on foreign and military affairs

created after 9/11 to coordinate domestic US security efforts against terrorism

agenda-setting, oversight, approves treaties & ambassadors (Senate), appropriations; passed War Powers Act, restrained CIA in 1970s

promote development, lobby for foreign policy positions, actions: e.g. Amnesty International, Int�l. Red Cross, Greenpeace

most significant (militarily) are Great Britian, Israel, Key western democracies

radical Muslim agenda to destroy the West & infidels, esp. Jews

• * Islamist Shia - ruling mullahs of Iran (1979-); took US Embassy hostages, fund Hezbollah, Iraq's al Sadr, many other terrorist groups
• * Islamist Sunni - esp. Wahabbist fundamentalists: anti-modern, global, Saudi-funded
• * fascist Baathists - Assad's Syria, Saddam Hussein's Iraq; totalitarian thugs

• Years US Name of War; Causes, Why Fought;
• Involved - President Results
• 1991 Gulf War Iraq invasion of Kuwait, threat to Saudi oil fields
• - Bush 41 Saddam expelled from Kuwait, survives; Saudis defended
• 2001-now Afghan War 9/11 attacks; attempt to destroy al-Qaeda (�the base�)
• - Bush/Obama Taliban destroyed; bin Laden escapes
• 2003-09 Iraq War Iraqi aggression, WMD, terrorist ties, failed attrition
• - Bush Saddam deposed; insurgency, first Arab democracy