chapter 14: domestic/public policy

define public policy

decisions, rules, and regulations produced by our government that express government goals and provide for reward/punishment

what are the two approaches to public policy?

carrot approach (reward) and stick approach (punish)

what are the 2 broad types of policy?

domestiy policy - shape what happens within nation’s borders

foreign policy - shapes united states relations with other nations

social policy

try to promote a range of public goals

why do we have social policies?

to protect citizens against risk

what are examples of social policy protection?

1. illness - healthcare regulations, medicare

2. disability - accessible

3. risk of unemployment - 6 months compensation for unemployment

4. reduced earning capacity as you get older - social security

why do we study social policy?

we study social policy because most of our national budget goes to paying for these programs

what are the 3 tools used to shape economic policy?

1. promotional policies - get the public to do things by rewarding them (carrots of public policy)

2. regulations - rule backed by a penalty (stick apporach); focus is to change individual behavior. if you break the rules, you incur a criminal or civic penalty

3. redistribute tools/policies - redistributing wealth

fiscal policy

controlled by the current government; where the government uses taxing and spending powers to manipulate the economy

monetary policy

controlled by the Federal Reserve Bank; allows the gov to regulate the economy through the manipulation of the money supply and credit

what is the FED?

bankers bank controlled by a 7 member board. elected members serve a 14 year term

contributary programs

forced savings/entitlement programs

non-contributary programs

given based on need (means-testing)

medicaid

healthcare for minors and low income people (CHIP program)

TANF

temporary assistance for needy families; stay on four about a year, only do it twice

who receives the most benefits from public policies?

the elderly and the middle classes receive the most benefits from public policies - they’re better organized and have strong interest groups

what is the Shadow Welfare System?

tax beneefits that come from being middle class and above

what does the femenization of poverty mean?

means that women are much more likely to experience poverty compared to men

what did the PPACA (obamacare) include?

1. insurance companies cannot deny benefits for pre-existing conditions

2. insurance companies have to cover the price of preventative care

3. children could stay on their parent’s insurance until the age of 26

what 3 terms did the states have to agree to in obamacare?

1. insuarance exchanges in every state - different options for insurance

2. individual mandate - everybody has to carry insurance (doesn’t apply anymore)

3. expansion of medicaid subsidies - federal gov paid 90%, states paid 10%

fiscal policy

the government’s use of taxing, monetary, and spending powers to manipulate the economy

inflation

a consistent increase in the general level of prices

tariff

a tax on imported goods

redistribution

a policy whose objective is to tax or spend in such a way as to reduce the disparities of wealth between the lowest and the highest income brackets

progressive

taxation that hits upper-income brackets more heavily

regressive

taxation that hits lower-income brackets more heavily

budget deficit

the amount by which government spending exceeds government revenue in a fiscal year

national debt

the total amount of money the government has borrowed

subsidies

government grants of cash or other valuable commodities, such as land, to an individual or an organization; used to promote acitvities desired by the government, reward political support, or buy off political opposition

contracting

the power of government to set conditions on companies seeking to sell goods or services to government agencies

monetary policies

efforts to regulate the economy through the manipulation of the supply of money and credit; America’s most powerful institution in this area of monetary policy is the Federal Reserve Board

federal reserve system

a system of 12 federal reserve banks that facilitates exchanges of cash, checks, and credit; regulates member banks; and uses monetary policies to fight inflation and deflation

monopoly

a single firm in a market that controls all the goods and services of that market; absence of competition

antitrust policy

government regulation of large businesses that have established monopolies

deregulation

a policy of reducing or eliminating regulatory restraints on the conduct of individuals or private institutions

laissez-faire capitalism

an economic system in which the means of production and distribution are privately owned and operated for profit with minimal or no government interference

keynesians

followers of the economic theories of John Maynard Keynes, who argued that the government can stimulate the economy by increasing public spending or by cutting taxes

supply-side economics

an economic theory that posits that reducing the marginal rate of taxxation will create a productive economy by promoting levels of work and investment that would otherwise be discouraged by higher taxes

welfare state

the collection of policies a nation has to promote and protect the economic and social well being of its citizens

social security

a contributory welfare program into which working americans contribute a percentage of tehir wages and from which they receive cash benefits after retirement or if they become disabled

contributory programs

social programs financed in whole or in part by taxation or other mandatory contributions by their present or future recipients

indexing

a periodic process of adjusting social benefits or wages to account for increases in the cost of living

cost of living adjustments

changes made to the level of benefits of a government program based on the rate of inflation

medicare

a form of national health insurance for elderly people and disabled people

noncontributory programs

social programs that provide assistance to people on the basis of demonstrated need rather than any contribution they have made

means testing

a procedure by which potential beneficiaries of a social assitance program establish their eligibility by demonstrating a genuine need for the assistance

medicaid

a federally and state-financed, state-operated program providing medical services to low-income people

supplemental nutrition assistance program

the largest antipoverty program, which provides recipients with a debit card for food at most grocery stores; formerly known as food stamps

in kind benefits

noncash goods and services provided to needy individuals and families by the federal government

equality of opportunity

a widely shared american ideal that all people should have the freedom to use whatever talents and wealth they have to reach their fullest potential