Civil Liberties and the Constitution Key Principles and Cour.docx

Civil Liberties and the Constitution: Key Principles and Court Cases

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comfortoyen

Modified 4/28/26

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Quick reference

Foundational Concepts of Civil Liberties

Definition and Distinction

Civil liberties are protections against government power, ensuring individual freedoms.

They differ from civil rights, which are obligations of the government to treat citizens equally.

Foundational documents include state and federal constitutions, which guarantee freedoms such as speech and press.

The Bill of Rights encompasses both civil liberties and civil rights, establishing essential protections for individuals.

The Role of Government

Governments have a duty to protect public health, safety, and welfare, which can conflict with individual freedoms.

Examples include the need for police conduct limits and government surveillance during crises.

The balance between security and liberty is a persistent challenge in American society.

Public opinion often supports protection from crime and disease while valuing personal freedoms.

Historical Context of the Bill of Rights

The Debate Over Inclusion

The proposal for a Bill of Rights was initially rejected during the Constitutional Convention in 1787.

Federalists, led by Alexander Hamilton, argued it was unnecessary and potentially dangerous.

Anti-Federalists, including Thomas Jefferson, insisted on a Bill of Rights to protect individual liberties.

The eventual compromise led to the ratification of the first ten amendments on December 15, 1791.

Ratification Process

The House proposed 17 amendments, the Senate approved 12, and 10 were ratified as the Bill of Rights.

The Tenth Amendment confirmed that powers not delegated to the national government are reserved for the states.

The Bill of Rights serves as a critical safeguard against government overreach and abuse of power.

Nationalization and Selective Incorporation

Initial Limitations of the Bill of Rights

The Supreme Court ruled in 1833 that the Bill of Rights applied only to the national government.

States were initially bound only by their own constitutions, leading to varied protections.

The Fourteenth Amendment (1868) aimed to extend protections but was not interpreted that way for decades.

The Doctrine of Selective Incorporation

Selective incorporation allows individual rights from the Bill of Rights to be applied to the states via the Fourteenth Amendment.

The process began in 1925 with the incorporation of freedom of speech.

By the 1960s, most rights had been incorporated, though some, like parts of the Third and Seventh Amendments, remain unincorporated.

Key Amendments and Their Implications

First Amendment: Freedom of Religion

Guarantees religious freedom through the Establishment Clause and Free Exercise Clause.

Interpretations include the prohibition of an official religion and the concept of a 'wall of separation' between church and state.

Supreme Court rulings have evolved, impacting cases related to schools and government support of religion.

First Amendment: Freedom of Speech and Press

Essential for democracy; protected unless there is a compelling reason to restrict it.

Political speech receives the highest level of protection, while incitement to violence can be restricted.

Types of speech include political, symbolic, hate speech, and student speech, each with varying protections.

Second Amendment: Right to Bear Arms

Protects the right to keep and bear arms, with differing interpretations regarding individual rights versus militia rights.

Supreme Court rulings affirm individual rights for self-defense while allowing for state regulation.

Gun control remains a contentious issue in U.S. politics.

Rights of the Accused

The Fourth, Fifth, Sixth, and Eighth Amendments provide protections for individuals accused of crimes.

Key protections include unreasonable searches, self-incrimination, right to counsel, and protection against cruel punishment.

Legal principles like the exclusionary rule and Miranda rights are critical in safeguarding these rights.

Right to Privacy

Although not explicitly mentioned in the Constitution, the right to privacy has been recognized by the Supreme Court.

This right encompasses personal decisions regarding marriage, contraception, and sexual relationships.

Recent rulings, such as the overturning of Roe v. Wade, illustrate the limitations and ongoing debates surrounding privacy rights.

Ongoing Debates and Issues

Contemporary Civil Liberties Issues

Current debates include birthright citizenship and government authority during crises like COVID-19.

The balance between public safety and individual freedom remains a critical discussion point.

The evolving interpretation of civil liberties continues to shape American legal and political landscapes.

Civil Rights vs. Liberties

Enumerated Powers

Federalists

argued there was no need to specify civil liberties

believed the Constitution already limited government power

feared listing rights might imply others didn’t exist

Antifederalists

argued the Constitution of 1787 would create an all-powerful central government

wanted explicit protections for individual rights

pushed for a Bill of Rights

Result

Bill of Rights added to protect civil liberties

1st Amendment: Religion

The government cannot interfere with religious freedom

The government cannot establish or recognize an official religion

Two Clauses

Establishment Clause

government cannot create an official religion

prevents favoring one religion over another

limits government involvement in religion

Free Exercise Clause

protects individuals’ right to practice religion

not absolute → can be limited if it conflicts with public safety or general laws

Religious Freedom Background

many early colonists came to America due to religious persecution

the United States remains highly religious compared to many Western countries

society is becoming more secular, but at a slower rate

Religious Freedom Cases

Holt v. Hobbs (2015)

Muslim prisoner wanted to grow a beard for religious reasons

prison denied request for security reasons

Supreme Court ruled in favor of prisoner

reasoning: restriction was unnecessary and violated religious freedom

Little Sisters of the Poor v. Pennsylvania

Catholic organization objected to providing contraception coverage

government required it under ACA

Supreme Court ruled in favor of religious organization

reasoning: religious beliefs must be accommodated

Masterpiece Cakeshop v. Colorado Civil Rights Commission

baker refused to make a cake for same-sex wedding due to religious beliefs

Colorado ruled against baker

Supreme Court ruled 7–2 in favor of baker

reasoning: state showed hostility and bias toward religion

Ongoing Religious Freedom Conflicts

Aid to religious schools

generally allowed only for secular (non-religious) purposes

Religious freedom vs. anti-discrimination laws

conflict between religious beliefs and equal treatment laws

Drug laws vs. religious liberty

peyote allowed for Native American religious use

marijuana generally NOT protected for religious use

Federalism

originally, the Bill of Rights applied only to the federal government

through the 14th Amendment, rights were gradually applied to the states

this process is called selective incorporation

Compelling Interest Test

Courts ask:

does the government have a compelling (very strong) interest?

is the law necessary to achieve that interest?

does the law burden religious freedom too much?

➡️ if the government fails → law is unconstitutional

Examples

Peyote

allowed for religious use by Native Americans

Cannabis Church

courts have generally rejected marijuana use as protected religious practice

1st Amendment (Freedom of Speech)

Importance of Free Speech

the United States has extremely strong protections for freedom of expression

reasons free speech is protected:

good ideas can defeat bad ideas

truth comes from debate and argument

democracy requires open discussion

Philosophical Support

John Stuart Mill

argued for liberty and open debate in democracy

believed people understand ideas better when challenged

idea: “someone who only knows their own side knows little”

Speech Under Pressure

free speech is often restricted during national crises

Sedition Act

restricted speech criticizing government

used from Revolutionary period to Civil War

Espionage Act

limited speech during World Wars

Cold War

fear of communism led to speech restrictions

➡️ pattern: in times of fear, speech freedoms decrease

Key Cases

Tinker v. Des Moines

students wore black armbands to protest Vietnam War

school suspended them

Supreme Court ruled in favor of students

rule: students have free speech unless it disrupts school

Morse v. Frederick

student displayed “Bong Hits 4 Jesus” banner

school punished him

Supreme Court ruled against student

rule: schools can restrict pro-drug speech

Skokie Case (1978)

Nazis wanted to march in a Jewish community

ACLU defended their right to march

reasoning: protecting speech protects everyone

Possibilities (Why Free Speech Matters)

freedom of expression

good ideas drive out bad ideas

truth requires debate and disagreement

John Stuart Mill

emphasized that exposure to opposing views strengthens understanding

Restrictions on Civil Liberties in Civil Rights Era

MLK (1961–62)

arrested for peaceful protest

Birmingham (1962–63)

police suppressed protests

Selma (1963)

John Lewis arrested for voting rights protest

➡️ shows conflict between civil rights and civil liberties

Freedom of Speech Regulation & Exceptions

Clear and Present Danger

speech that creates immediate harm or illegal action

Fighting Words / Hate Speech

generally protected unless directly inciting violence

Time, Place, Manner Restrictions

government can regulate when/where speech happens

Prior Restraint

government preventing speech before it occurs

Seditious Libel

speech criticizing government authority

Obscene Materials

not protected

2nd Amendment – Right to Bear Arms

protects individual right to own firearms

Key Laws and Cases

National Firearms Act (1934)

early attempt to regulate guns

DC v. Heller (2008)

confirmed individual right to bear arms

McDonald v. Chicago (2010)

applied 2nd Amendment to the states

➡️ states can regulate guns but cannot fully deny the right

Criminal Procedure: 4th Amendment

protects against unreasonable searches and seizures

Key Concepts

Expectation of Privacy Test

determines if search is legal

Exclusionary Rule

illegally obtained evidence cannot be used in court

Habeas Corpus

protects against unlawful detention

requires government to justify imprisonment

5th Amendment (Interrogations)

right to remain silent

protection against self-incrimination

Miranda Rights

police must inform suspects of their rights before questioning

Reproductive Rights

Griswold v. Connecticut (1961)

established right to privacy (contraception)

Roe v. Wade (1973)

established national right to abortion

Planned Parenthood v. Casey

allowed more government regulation

Gonzales v. Carhart

allowed restrictions on late-term abortion

➡️ trend: increasing state control and regulation

Civil Rights and Liberties: Key Laws, Cases, and Movements

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comfortoyen

Created 4/28/26

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Overview of Civil Rights and Civil Liberties

Definition and Importance of Civil Rights

Civil rights ensure that citizens are entitled to fair and equal treatment under the law, protecting individuals from discrimination and ensuring due process.

Sources of civil rights include the Constitution and statutory laws, which provide a framework for legal protections.

The focus of civil rights is on equality and protection from discrimination, emphasizing the role of government in safeguarding these rights.

Definition and Importance of Civil Liberties

Civil liberties refer to the freedoms that protect citizens from government overreach, ensuring that the government does not infringe upon individual rights.

Often referred to as negative rights, civil liberties emphasize the limitations on government power and the protection of individual freedoms.

Key examples include freedom of speech, religion, and the right to privacy, which are essential for a democratic society.

Say less. I’m keeping YOUR EXACT FORMAT + HEADINGS and just cleaning + expanding it so it matches your notebook but is actually clear + test-ready.

Civil Liberties vs. Rights (Ch. 9)

Civil Rights

  • citizens entitled to fair & equal treatment under the law

  • protected through due process

  • sources:

    • Constitution

    • statutory laws

👉 focuses on equality

Civil Liberties

  • what government must NOT do

  • protects citizens from improper government action

  • also called “negative rights”

👉 focuses on freedom

Founders & Political Equality

  • Founders believed in political equality (1776)

  • idea expanded over time

  • originally applied mainly to white men → later expanded to all groups

Racial Segregation & Discrimination

Slavery

  • Dred Scott v. Sandford

    • Black people not considered citizens

  • Emancipation Proclamation

    • freed slaves in Confederate states

  • 13th Amendment

    • officially ended slavery

Reconstruction Era

  • Amendments: 13th, 14th, 15th

    • known as Reconstruction Amendments

  • time period: 1865–1877

Reconstruction Amendments (IMPORTANT)

  • 13th Amendment

    • abolished slavery

  • 14th Amendment

    • citizenship to all born/naturalized

    • due process + equal protection clause

  • 15th Amendment

    • right to vote regardless of race

“Parchment Barrier”

  • idea: rights written on paper are easy to ignore

  • just because something is in Constitution ≠ enforced

Reconstruction (Details)

  • Lincoln assassinated (1865)

  • Radical Republicans take control

    • wanted stronger protections for freed slaves

  • Andrew Johnson

    • tried to block Reconstruction

    • impeached (but not removed)

  • Ulysses S. Grant

    • president during peak Reconstruction

  • over 1,500 Black Americans held public office

  • women’s suffrage rejected at this time

End of Reconstruction

  • Election of 1876

    • disputed election

  • Compromise of 1877

    • Republicans (Rutherford B. Hayes) get presidency

    • Democrats regain control of South

    • federal troops withdrawn → Reconstruction ends

👉 leads to rise of segregation

Legal Restrictions on Civil Rights

Jim Crow Laws

  • laws enforcing racial segregation

  • especially in the South

Plessy v. Ferguson (1896)

  • established “separate but equal” doctrine

  • segregation ruled constitutional

👉 reality: facilities were NOT equal

Poll Taxes

  • tax required to vote

  • prevented poor Black citizens from voting

  • banned by 24th Amendment (1964)

Lead Up to Brown v. Board

  • Missouri ex rel. Gaines v. Canada (1938)

    • states must provide equal education

  • Sweatt v. Painter (1950)

    • rejected “separate but equal” in higher education

    • Black law school ≠ equal to University of Texas

Brown v. Board of Education (1954)

  • ruled segregation in schools unconstitutional

  • overturned Plessy v. Ferguson

👉 key idea:

  • “separate is inherently unequal”

After Brown

  • slow integration

  • massive resistance in the South

  • states used strategies to delay desegregation

Civil Rights in the 1950s–60s

  • resistance to desegregation was strong

  • Southern Manifesto

    • Southern politicians opposed Brown

Little Rock (1957)

  • Arkansas governor blocked Black students

  • Eisenhower sent federal troops

  • enforced integration

Civil Rights Movement

  • public opinion began shifting

  • led by nonviolent protest (MLK)

Civil Rights Act of 1964

  • outlawed discrimination based on:

    • race

    • color

    • religion

    • sex

    • national origin

  • applied to:

    • public places

    • schools

    • employment

Private Discrimination

  • Title VII

    • banned job discrimination

    • applies to public & private employers

  • Griggs v. Duke Power (1971)

    • employers cannot use policies that indirectly discriminate

Voting Rights Act (1965)

  • enforced voting rights protections

  • targeted discrimination in the South

  • allowed federal government to oversee elections

Affirmative Action

  • policies to increase opportunities for minorities

Purpose

  • promote diversity

  • address inequality

Key Idea

  • focus on diversity, NOT just correcting past injustice

Executive Orders

  • 1961 (Kennedy)

    • required equal opportunity in federal contracts

  • 1965 (Johnson)

    • expanded affirmative action

  • Nixon (1969–71)

    • Philadelphia Plan → required minority hiring

Major Court Cases

  • Regents of UC v. Bakke (1978)

    • race can be considered, but no strict quotas

  • Grutter v. Bollinger (2003)

    • upheld affirmative action

  • Fisher v. Texas (2016)

    • allowed

Here are your Chapter 5 notes (translated + in clean study format like your usual notes):

Chapter 5 Notes: Civil Rights

What are civil rights and how are they achieved?

Definition of Civil Rights

  • Civil rights = guarantees of equal opportunity and protection under the law

  • Focus on what the government MUST do to ensure equality

  • Based on ideals from:

    • Declaration of Independence

    • Constitution (freedom, equality, justice)

Examples of Civil Rights Today

  • Right to vote

  • Right to non-segregated education

  • Protection from discrimination (race, gender, disability, etc.)

Key Civil Rights Laws & Amendments

  • 13th Amendment (1865): Abolished slavery

  • Civil Rights Act (1866): Citizenship for all born in U.S.

  • 14th Amendment (1868): Equal protection under the law

  • 15th Amendment (1870): Black men can vote

  • 19th Amendment (1920): Women can vote

  • Indian Citizenship Act (1924): Citizenship for Native Americans

  • Civil Rights Act (1964): Banned discrimination

  • Voting Rights Act (1965): Protected voting rights

  • ADA (1990): Protected people with disabilities

Civil Liberties vs Civil Rights

  • Civil Liberties:

    • Basic freedoms (speech, religion)

    • Limit government power

  • Civil Rights:

    • Require government action

    • Ensure equality for groups

How Civil Rights Are Achieved

Social Movements

  • Organized efforts to fight injustice

  • Based on collective action (groups > individuals)

Two Main Strategies

  1. Internal Strategies

    1. Work inside government:

      1. Laws (Congress)

      2. Court cases

      3. Executive orders

  2. External Strategies

    1. Change public opinion:

      1. Protests

      2. Media

      3. Social media

      4. Civil disobedience

Key Institutions That Help Achieve Civil Rights

President

  • Can support movements publicly

  • Influence Congress

  • Example: Lyndon B. Johnson → Voting Rights Act

Congress

  • Passes laws

  • Slow process but powerful

Courts (Supreme Court)

  • Interpret Constitution

  • Use Equal Protection Clause (14th Amendment)

Levels of Scrutiny (Courts)

  1. Rational Basis (lowest)

    1. Government usually wins

  2. Intermediate Scrutiny

    1. Used for gender cases

  3. Strict Scrutiny (highest)

    1. Used for race, religion, voting rights

    2. Government must prove strong reason

The Civil Rights Movement (1600s–1960s)

Slavery & Abolition

  • Slavery began in 1619

  • Resistance:

    • Revolts

    • Escaping (Underground Railroad)

  • Abolitionists fought to end slavery

    • Example: Frederick Douglass

Dred Scott Case (1857)

  • Black people were not citizens

  • Increased tension → Civil War

Civil War & Reconstruction

  • 13th Amendment: ended slavery

  • 14th Amendment: equal protection

  • 15th Amendment: voting rights

Reconstruction (1865–1877)

  • Black political participation increased

  • Ended by Compromise of 1877

Jim Crow Era

  • Segregation laws

  • “Separate but equal”

  • Upheld in Plessy v. Ferguson (1896)

Fighting Back (1900s)

  • NAACP formed (1909)

  • Focus:

    • Stop violence

    • Legal challenges

Education & Brown v. Board (1954)

  • Ended school segregation

  • Declared segregation unconstitutional

Major Civil Rights Actions

Montgomery Bus Boycott (1955)

  • Rosa Parks refused to give up seat

  • Led to desegregation of buses

Sit-Ins (1960)

  • Students protested segregation

  • Spread across the South

March on Washington (1963)

  • 200,000+ people

  • MLK: “I Have a Dream”

Selma March (1965)

  • Highlighted voting discrimination

  • Led to Voting Rights Act

Major Laws Passed

  • Civil Rights Act (1964):

    • Ended discrimination in public places, jobs, schools

  • Voting Rights Act (1965):

    • Protected voting rights

Expansion of Civil Rights

Women’s Rights

  • Seneca Falls Convention (1848)

  • 19th Amendment (1920) → women vote

  • Title IX (1972) → no gender discrimination in education

  • Ongoing issues:

    • Pay gap

    • Workplace discrimination

Latino Rights

  • Faced segregation and voting barriers

  • Organizations:

    • LULAC

    • United Farm Workers (Cesar Chavez)

  • Strategies:

    • Protests

    • Lawsuits

    • Voter registration

Asian American Rights

  • Faced exclusion laws

  • Japanese internment (WWII)

  • Civil Liberties Act (1988) → apology + reparations

Native American Rights

  • Lost land (Indian Removal Act)

  • Citizenship in 1924

  • “Red Power” movement

  • Focus on:

    • Sovereignty

    • Land rights

Disability Rights

  • ADA (1990)

  • Required accessibility (ramps, etc.)

LGBTQ+ Rights

  • Began with Stonewall (1969)

  • Key wins:

    • End of “Don’t Ask Don’t Tell”

    • Obergefell v. Hodges (2015) → same-sex marriage

Civil Rights Today

Affirmative Action

  • Helps disadvantaged groups

  • Controversial

  • 2023: Supreme Court limited it

Immigration

  • Debate over undocumented immigrants

  • DACA protects some immigrants

Islamophobia

  • Increased after 9/11

  • Led to discrimination and hate crimes

Criminal Justice System

  • Mass incarceration

  • Racial disparities

  • Reform efforts (First Step Act)

Black Lives Matter (BLM)

  • Started 2013

  • Focus:

    • Police brutality

    • Systemic racism

  • One of largest movements in U.S. history

Key Takeaways

  • Civil rights = government must ensure equality

  • Achieved through:

    • Social movements

    • Laws

    • Court decisions

  • Still evolving today

  • Collective action is key to change

Key Terms to Know

  • Civil rights

  • Social movements

  • Collective action

  • Equal Protection Clause

  • Levels of scrutiny

  • Jim Crow laws

  • De jure vs de facto

  • Affirmative action

  • DACA

If you want, I can turn this into a super short cheat sheet for your test (like 1-page memory version) or give you likely exam questions + answers.

Got you. Here are very detailed Lecture 20 notes in the same clean format we’ve been doing, but made way more legible and expanded so you can actually write it down and understand it. Based on your uploaded Lecture 20 text.

Lecture 20 Notes: Prescription Drug Policy in the U.S.

Public Policy

  • Public policy = things the government does

  • Government institutions are important because they create policies

  • Policy is the actual outcome of government action

Example of Public Policy

  • Prescription drug policy

  • This includes:

    • which drugs are allowed

    • how drugs are approved

    • how much drugs cost

    • who gets access to them

    • how insurance and government programs cover them

Prescription Drugs

What are Prescription Drugs?

  • Prescription drugs are medications that require approval from a doctor

  • You cannot usually buy them freely like over-the-counter medicine

  • A doctor must prescribe them, and then you get them from a pharmacy

Examples

  • blood pressure medicine

  • cholesterol medicine

  • diabetes medicine

  • medications for serious illnesses

  • weight loss drugs

  • vaccines in some situations

  • treatment for diseases like hepatitis C or cystic fibrosis

Two Main Types of Prescription Drugs

1. Name-Brand Drugs

  • Name-brand drugs are new drugs created by a pharmaceutical company

  • These drugs are usually protected by a patent

  • A patent gives the company the legal right to be the only one selling that drug for a certain amount of time

Patent

  • A patent is a legal protection for an invention

  • In this case, the invention is a new drug

  • Usually lasts around 20 years

  • During that time, other companies cannot legally copy the drug

Why Patents Matter

  • Drug companies spend a lot of money developing new drugs

  • Patents help companies make money back from research and development

  • Without patents, another company could copy the drug immediately and sell it cheaper

Problem

  • Since only one company can sell the drug, there is little competition

  • This usually means the drug is very expensive

2. Generic Drugs

  • Generic drugs are legal copies of name-brand drugs

  • They are made after the patent expires

  • The FDA still has to approve them, but the approval process is easier

Generic Drugs Usually

  • have the same active ingredient

  • work the same way

  • have the same medical effect

  • cost much less

Why Generics Are Cheaper

  • companies do not have to repeat all the original research

  • more companies can sell the same drug

  • more competition lowers the price

Key Difference

  • Name-brand drugs = expensive because protected by patents

  • Generic drugs = cheaper because competition exists

Article I and Patents

Congress and Patent Power

  • Article I of the Constitution gives Congress the power to create systems for:

    • patents

    • trademarks

    • intellectual property protection

Why This Connects to Prescription Drugs

  • Patents protect new drugs

  • Congress creates the legal system that allows companies to own drug patents

  • This affects drug prices because patents prevent competition for years

FDA: Food and Drug Administration

Role of the FDA

  • FDA = Food and Drug Administration

  • It decides whether drugs can be sold in the United States

The FDA Approves Drugs Based On

  • scientific evidence

  • experiments

  • safety

  • effectiveness

A Drug Must Be

  • safe enough to use

  • effective for the condition it treats

  • supported by strong scientific evidence

FDA Approval for New Drugs

  • New drugs have a high burden of proof

  • The company has to prove the drug works and is not dangerously unsafe

  • Testing can take years

Why Approval Takes So Long

  • clinical trials are complicated

  • the FDA is cautious

  • mistakes can seriously harm people

FDA Approval for Generic Drugs

  • Generic drugs have a lower approval burden

  • Since the name-brand version was already approved, the generic company does not need to prove everything from the beginning

Generic Companies Must Show

  • the drug is basically equivalent

  • it has the same active effect

  • it works like the original drug

Why the FDA Is Very Cautious

Historical Reason

  • In the 1960s, there were major concerns about unsafe drugs causing serious harm, including birth defects

  • This created pressure for the FDA to be much more careful

Political Logic

  • If the FDA approves a bad drug, the harm is very visible

  • People can point to the FDA and say, “You approved this dangerous drug”

  • If the FDA delays a helpful drug, the harm is less obvious

  • People may not see the lives that could have been helped

Result

  • FDA leaders often have an incentive to be extremely cautious

Criticism of the FDA

  • Some people argue the FDA moves too slowly

  • They believe slow approval prevents good drugs from reaching patients quickly

Main Tradeoff

  • If FDA is too fast:

    • dangerous drugs may reach the public

  • If FDA is too slow:

    • helpful drugs may be delayed

    • people with serious illnesses may suffer while waiting

Disease Communities and Pressure Groups

Disease Communities

  • People with serious diseases often organize into advocacy groups

  • These groups may include:

    • patients

    • family members

    • doctors

    • researchers

What They Want

  • faster drug approval

  • more research funding

  • better insurance coverage

  • access to experimental or new treatments

Why They Matter Politically

  • They pressure the government

  • They pressure the FDA

  • They make public arguments that delays can cost lives

Drug Pricing in the United States

U.S. Drug Pricing System

  • The U.S. has a more market-based health care system

  • Prices are often determined by:

    • pharmaceutical companies

    • insurance companies

    • private negotiations

    • patents

    • market demand

Key Issue

  • The U.S. government usually does not negotiate drug prices as strongly as some other countries

Why U.S. Prices Are High

  • Name-brand drugs are protected by patents

  • There is less price negotiation

  • Companies want to recover research costs

  • Companies also want profit

  • Insurance may cover some drugs, but not always

Important

  • People with insurance may still pay a lot

  • People without insurance may not be able to afford the drug at all

U.S. vs. Single-Payer Systems

United States System

  • More market-based

  • Many people rely on private insurance

  • Some people have Medicare or Medicaid

  • Not everyone has equal coverage

Pros

  • More incentives for drug development

  • Companies can make large profits

  • May encourage innovation

Cons

  • drugs can be extremely expensive

  • access depends on insurance

  • people without coverage may go without treatment

Single-Payer Systems

  • Example: countries like the United Kingdom or Canada

  • Government has more control over health care spending

  • Government can negotiate prices more directly

How It Works

  • government says:

    • “If you want to sell the drug here, you must sell it at this price”

  • government has a health care budget

  • it cannot pay unlimited amounts for every drug

Result

  • drugs may be cheaper

  • but access may be restricted

  • some drugs may not be covered quickly or at all

Rationing

What is Rationing?

  • Rationing means limiting access to something because resources are limited

  • In health care, rationing means deciding:

    • who gets a drug

    • when they get it

    • whether the government or insurance will pay for it

Important Idea

  • Every system rations in some way

In the U.S.

  • rationing often happens by price

  • people may not get the drug if they cannot afford it

In Single-Payer Systems

  • rationing often happens by government decision

  • the government may decide a drug is too expensive for the benefit it gives

Blockbuster Drugs

What Are Blockbuster Drugs?

  • Blockbuster drugs are major new drugs that treat serious or widespread illnesses

  • They can make billions of dollars

  • They may dramatically improve or save lives

Examples from Lecture

  • hepatitis C drugs

  • cystic fibrosis drugs

  • weight loss / diabetes drugs

  • vaccines

Example 1: Hepatitis C Drugs

What is Hepatitis C?

  • Hepatitis C is a viral liver infection

  • It can affect people for years without obvious symptoms

  • Over time, it can destroy the liver

Possible Consequences

  • chronic illness

  • liver damage

  • liver failure

  • possible need for liver transplant

Breakthrough Treatment

  • Around 2010–2013, new drugs were discovered

  • These drugs could cure hepatitis C in a short period of time

  • Instead of taking medicine forever, patients could take pills for a limited time and be cured

Why This Was Major

  • It changed hepatitis C from a lifelong disease into something curable

  • Huge medical breakthrough

Problem: Cost

  • The drugs were extremely expensive

  • Around $1,000 per day

  • Total treatment could cost around $80,000–$100,000

Why This Created a Policy Problem

  • If millions of people need the treatment, the total cost becomes enormous

  • Medicaid, Medicare, and private insurance could face huge costs

Policy Question

  • Should everyone get the cure immediately even if it costs billions?

  • Should treatment be limited to the sickest patients first?

  • Who should pay?

U.S. vs. Other Countries on Hepatitis C Drugs

United States

  • Many insured patients could get coverage

  • But costs were very high

  • Medicaid programs faced major budget pressure

United Kingdom

  • Tried to negotiate lower prices

  • May restrict access based on budget

Other Countries

  • Countries like India, Egypt, and China pushed for lower costs or different access arrangements

Example 2: Cystic Fibrosis Drugs

What is Cystic Fibrosis?

  • Cystic fibrosis is a genetic disease

  • It affects fewer people than obesity or hepatitis C

  • It can seriously harm quality of life and life expectancy

Medical Breakthrough

  • Scientists found the gene connected to cystic fibrosis in 1989

  • It took decades to turn that knowledge into treatment

New Treatments

  • Around 2019, major new treatments improved quality of life

  • These drugs were life-changing for many patients

Why It Matters

  • Shows how scientific research can eventually lead to major medical breakthroughs

  • But the process is slow and expensive

Problem: Cost Again

  • Even when the drug works, it may be extremely expensive

  • Insurance coverage matters a lot

  • Patients may depend on Medicare, Medicaid, or private insurance

Policy Issue

  • Should society pay extremely high prices for rare disease treatments?

  • If the number of patients is small, should the price be higher?

  • How do we balance compassion with cost?

Example 3: Weight Loss / Diabetes Drugs

Weight Loss Drugs

  • Some new drugs were originally created for diabetes

  • They also help with weight loss

  • They target brain/body systems that affect hunger and metabolism

Why They Are Popular

  • They seem highly effective

  • Obesity affects a large percentage of Americans

  • Could improve health outcomes

Policy Problem

  • These drugs are very expensive

  • Many insurance plans do not cover them for weight loss

  • Medicare generally does not cover weight loss drugs just for obesity

Why This Is a Huge Budget Issue

  • If 40% of Americans have obesity, that could be around 140 million people

  • If millions of people take a drug that costs thousands per year, total spending could become enormous

Main Concern

  • Covering these drugs for everyone could be “budget destroying”

Key Policy Question

  • Should obesity drugs be treated like necessary medicine?

  • Should insurance cover them?

  • Should government programs pay for them?

  • Should access depend on medical severity?

Innovation vs. Affordability

The Big Tradeoff

High Prices Can Encourage Innovation

  • Companies may invest in research because profits are possible

  • Drug development is risky

  • Many drugs fail before reaching the market

But High Prices Limit Access

  • People may not be able to afford life-changing drugs

  • Insurance may deny coverage

  • Public programs may face huge costs

Conservative / Libertarian View

  • Drug companies take big risks

  • High profits encourage innovation

  • If government controls prices too much, companies may develop fewer drugs

  • Market competition and generic drugs eventually lower prices

Main Idea

  • Profit motive creates medical innovation

Liberal / Progressive View

  • Life-saving drugs should not be unaffordable

  • Government should negotiate or regulate prices

  • Other countries get lower prices while the U.S. pays more

  • People without insurance suffer the most

Main Idea

  • Access and affordability should matter as much as innovation

The Global Drug Pricing Problem

Why Other Countries Often Pay Less

  • Other governments negotiate harder

  • They may refuse to cover drugs above a certain price

  • Some countries have stronger public health systems

Criticism

  • Some argue other countries “free ride” on U.S. innovation

  • Because the U.S. market is so profitable, companies can still make money even if other countries pay less

U.S. Problem

  • Americans often pay more than people in other countries

  • This creates debate over fairness

Key Question

  • Should the U.S. continue paying high prices to encourage innovation?

  • Or should the U.S. negotiate prices like other countries?

Competition and Generics

How Prices Eventually Fall

  • Once patents expire, other companies can produce generics

  • Generic competition lowers prices

Example

  • A drug may be very expensive at first

  • After years, generic versions appear

  • Price may drop dramatically

Problem

  • Patients who need the drug before the patent expires may not be able to wait

  • For serious diseases, delayed affordability can be life-or-death

Vaccines

How Vaccines Are Different

  • Vaccines usually have lower profit margins than blockbuster drugs

  • They are often cheaper than long-term treatments

  • They are designed to prevent disease instead of treating it after infection

Benefits

  • prevent illness

  • reduce deaths

  • protect public health

  • especially important for older or vulnerable people

Vaccine Safety

  • Vaccines are generally very safe

  • But there is always some risk of side effects

  • Because vaccines are given to healthy people, safety standards are especially important

Operation Warp Speed / COVID Vaccines

Emergency Situation

  • COVID created urgent demand for vaccines

  • Operation Warp Speed helped speed up vaccine development and distribution

Why It Was Different

  • normal vaccine development takes years

  • emergency funding and government support sped up the process

Impact of COVID Vaccines

  • helped lower severe illness

  • especially helped older and high-risk people

  • reduced death rates

Debate

  • Some people question vaccine benefits for younger people

  • Others argue vaccines helped society reduce the deadliness of the virus overall

Main Political Conflict in Prescription Drug Policy

Core Question

How do we balance:

  • medical innovation

  • drug safety

  • affordable prices

  • access for patients

  • government budgets

  • private company profits

Why This Is Hard

  • New drugs can save or change lives

  • But they can cost massive amounts of money

  • If government pays for everything, budgets can explode

  • If government does not pay, people may suffer or die without treatment

Key Terms to Know

Public Policy

  • what government does

Prescription Drug

  • medication requiring doctor approval

FDA

  • agency that approves drugs for safety and effectiveness

Patent

  • legal protection that prevents others from copying a new drug

Name-Brand Drug

  • original patented drug

Generic Drug

  • cheaper copy after patent expires

Blockbuster Drug

  • highly successful drug that treats major disease and makes huge profits

Rationing

  • limiting access because resources or money are limited

Single-Payer System

  • health system where government pays for most care and can negotiate prices

Medicare

  • federal health insurance mainly for older Americans

Medicaid

  • government health program for low-income people, run by states and federal government

Big Takeaways

  • Prescription drug policy shows how government affects everyday life

  • The FDA decides which drugs can enter the market

  • Patents make new drugs expensive but encourage innovation

  • Generic drugs lower prices after patents expire

  • U.S. drug prices are higher than many other countries

  • Other countries negotiate prices more aggressively

  • Blockbuster drugs create huge policy problems because they can be life-changing but extremely expensive

  • The biggest debate is whether the government should focus more on:

    • keeping prices low

    • encouraging drug innovation

    • expanding access

    • controlling public spending

Test Memory Version

  • Policy = what government does

  • FDA = safety + effectiveness

  • Patent = monopoly → high prices

  • Generic = competition → low prices

  • U.S. = market-based → expensive drugs

  • Single-payer = government negotiates → cheaper but restricted access

  • Blockbuster drugs = amazing medically, difficult financially

  • Main conflict = innovation vs. affordability

Lecture 21 Notes: Local Government, School Boards, and Texas Education Politics

Main Topic of Lecture 21

  • This lecture focuses on local government

  • Specifically:

    • school boards

    • school districts

    • school politics in Texas

    • the state takeover of Houston ISD

Big Idea

  • Government institutions are important because they create policies

  • Local governments also make major decisions that affect daily life

  • Education policy is mostly controlled by state and local governments, not the federal government

Local Governments in Texas

Texas Has Many Governments

  • Texas has over 5,000 different governments

  • These include:

    • county governments

    • city governments

    • special districts

    • school districts

Examples

  • 254 county governments

  • around 2,600 special districts

    • water districts

    • sewage districts

    • transportation districts

  • around 1,000 school districts

School Districts

  • School districts are a separate type of local government

  • Example:

    • Houston Independent School District (HISD)

Important

  • HISD is not the same thing as the City of Houston

  • The city government and the school district are separate governments

  • They have different elections, leaders, and responsibilities

The U.S. Has Many Elections

Big Picture

  • The United States has more elections than most democracies

  • Each local government usually has elections

  • This includes:

    • school boards

    • city officials

    • county officials

    • special district officials

Why This Matters

  • More elections can mean more democracy

  • But it can also create voter confusion and low turnout

Accountability vs. Participation

Accountability

  • Elections allow voters to hold leaders responsible

  • If voters dislike a decision, they can vote officials out

Problem

  • There are so many elections that many people do not participate

  • Local elections often have very low turnout

Main Tension

  • More elections = more accountability

  • But more elections can also = fewer people paying attention

Nonpartisan Local Elections

What Are Nonpartisan Elections?

  • Nonpartisan elections do not list political party labels

  • Candidates appear without “Democrat” or “Republican” next to their names

Examples

  • school board elections

  • some city elections

  • some county/local races

Problem with Nonpartisan Elections

  • Voters may not know much about the candidates

  • Without party labels, it is harder to choose

  • People may see two random names and not know what each person believes

Result

  • fewer people vote

  • people may skip those races

  • highly informed or highly motivated voters have more influence

Home Rule vs. Dillon’s Rule

Home Rule

  • Home rule means cities have more freedom to govern themselves

  • Cities can make many of their own local policies

Examples of Home Rule Cities

  • Houston

  • Austin

  • Dallas

Important

  • Under home rule, cities may create policies that fit their local needs

  • Austin may make different choices than Houston or Dallas

Dillon’s Rule

  • Dillon’s Rule means local governments only have powers given by the state

  • Cities can only make laws if the state has not already controlled that issue

Simple Meaning

  • The state government is above the city government

  • If the state says no, the city cannot do it

Conflict Between Cities and the State

  • Texas often has political conflict between:

    • blue cities

    • Republican state government

Example

  • Austin passed rules that made it harder for Uber and Lyft to operate

  • Uber and Lyft left Austin

  • Then the state government passed a law stopping Austin from enforcing those rules

Main Point

  • Cities may try to use home rule

  • But the state can overrule them under Dillon’s Rule logic

Education Policy

Education Is Compulsory

  • Compulsory = required by law

  • Children in Texas must attend school between about ages 6 and 16

Why This Matters

  • School attendance is one of the few obligations government places on individuals

  • If students do not attend school, truancy officers may contact families

Types of Schooling

Students can attend:

  • public school

  • private school

  • homeschool

Important

  • Because school is legally required, government must make public education available

History of Public Education

The U.S. and Public Education

  • The United States helped pioneer public education

  • Public education became one of the most important public services

Horace Mann

  • Horace Mann was an important education reformer in the 1840s

  • He supported public education

Less Positive Side

  • Some early support for public education came from a desire to assimilate immigrants

  • Some reformers believed schools could “Americanize” immigrant children

John Dewey

  • John Dewey was a major philosopher of education

  • He argued that universal education was central to democracy

Dewey’s Main Idea

  • Democracy needs educated citizens

  • People must be able to:

    • read

    • understand political arguments

    • participate in civic life

    • make informed decisions

Education and Equality

  • Schools are supposed to give people more equal opportunities

  • Public education helps reduce the effects of wealth differences

School Boards as Local Governments

School Boards Are Governments

  • School boards are elected governing bodies

  • They manage school districts

  • They are separate from city governments

School Boards Can

  • raise money

  • collect taxes

  • spend money

  • hire superintendents

  • oversee school policies

  • make major educational decisions

Special-Purpose Government

  • School districts are a type of special-purpose government

Special-Purpose Government

  • government that focuses on one main thing

For School Districts

  • the main purpose is education

General-Purpose Government

  • General-purpose governments do many things

Examples

  • city governments

  • county governments

They Handle

  • roads

  • police

  • parks

  • public safety

  • zoning

  • public services

Problem with School Board Elections

Low Turnout

  • School board elections often have low voter turnout

  • This is especially true when they happen in odd-numbered years or special election dates

Why Turnout Is Low

  • school board races are not high-profile

  • voters may not know candidates

  • elections may happen in off-years

  • races are often nonpartisan

  • local news coverage has declined

Ballot Drop-Off

  • Even when school board races are on the same ballot as president or Congress, many people stop voting before reaching the bottom of the ballot

Ballot Drop-Off

  • when voters vote for top races but skip lower-level races

Example

  • voter chooses president

  • voter chooses senator

  • voter skips school board race

Local Governments Are Creatures of the State

Meaning

  • Local governments only exist because the state allows them to exist

  • State governments have power over local governments

States Can

  • create school districts

  • merge districts

  • dissolve districts

  • change district boundaries

  • take over districts

Main Point

  • Local governments are not fully independent

  • The state has final authority

State Takeovers of School Districts

What Is a State Takeover?

  • A state takeover happens when the state removes local control from a school district

  • The state may replace elected school board members with appointed leaders

Why Takeovers Happen

  • poor student performance

  • long-term failing schools

  • corruption

  • financial problems

  • political conflict

Politics of Takeovers

  • Takeovers often become political

  • A Republican state government may take over a school district in a Democratic city

  • Democrats may see this as removing local democracy

  • Republicans may argue it is necessary for accountability and student performance

Houston ISD Takeover

Background

  • A Texas law passed in 2015

  • It allowed the state to take over school districts that repeatedly failed to meet state standards

Agency Involved

  • TEA = Texas Education Agency

  • TEA oversees public education in Texas

Why HISD Was Targeted

  • HISD had schools with repeated performance problems

  • There were also accusations of school board corruption or dysfunction

Result

  • TEA moved to take over HISD

  • This led to a long court battle at state and federal levels

Outcome

  • TEA eventually won

  • The elected HISD school board was removed

  • The state appointed a new board

New Leadership

  • A new nine-member board was appointed

  • Mike Miles was named superintendent

Mike Miles and HISD Reform

Mike Miles’ Approach

  • Mike Miles created a new system for HISD

  • He changed:

    • staffing

    • teacher expectations

    • lesson planning

    • discipline

    • school accountability

    • school organization

New Education System (NES)

  • NES = New Education System

  • Applied first to a group of underperforming schools

Targeted Schools

  • around 28 underperforming schools

  • mostly schools considered low-performing

Goal

  • dramatically improve student outcomes

  • increase accountability

  • change school culture

Teacher Changes Under NES

Resign and Reapply

  • Teachers at some NES schools had to resign and reapply for their jobs

Purpose

  • create major teacher turnover

  • remove underperforming teachers

  • rebuild the staff

Teacher Pay

  • Teachers could earn higher salaries

  • Some salaries were raised to around $85,000

  • Pay was connected to performance

Tradeoff

  • higher pay

  • but stricter expectations and less flexibility

Vacation / Sick Leave Changes

  • Teachers had less freedom to take time off

  • The system became stricter about attendance and performance

Instructional Changes

Scripted Lessons

  • Teachers no longer had full control over lesson planning

  • Lessons were centrally planned

  • Teachers were told what to teach minute-by-minute

Purpose

  • make instruction more consistent

  • make teachers follow a specific plan

  • reduce variation between classrooms

Criticism

  • reduces teacher creativity

  • makes teaching feel robotic

  • may focus too much on tests

Frequent Assessments

  • Students took many short assessments

  • Data was used to see if students understood lessons

Data-Driven Instruction

  • instruction based on test results

  • if students performed poorly, teachers adjusted instruction

Teacher Coaching

  • Teachers received more coaching

  • Administrators monitored classrooms closely

  • Teachers were evaluated based on performance

Result

  • strong accountability

  • but also pressure and stress for teachers

Discipline Under NES

No Excuses Philosophy

  • NES uses a “no excuses” education model

  • Focuses on:

    • high expectations

    • strict discipline

    • fast consequences

    • strong accountability

Examples

  • consequences for being late

  • strict classroom rules

  • lots of monitoring

  • discipline for disruption

Criticism of No Excuses

  • critics say it feels too harsh

  • can resemble a military-style school culture

  • may punish students too quickly

  • may lead to suspensions or detentions

Library Controversy

Libraries Changed

  • Some school libraries were no longer used as traditional libraries

  • They were transformed into behavior / discipline spaces

Purpose

  • remove disruptive students from classrooms

  • allow other students to continue learning

Criticism

  • reduces access to books and library resources

  • turns learning spaces into punishment spaces

  • symbolically controversial

Accountability System

Student Accountability

  • students were tested often

  • performance data was closely tracked

  • schools were judged by test improvement

Teacher Accountability

  • teachers were watched closely

  • their performance was measured by student outcomes

  • teachers could be rewarded with higher pay

  • teachers could also be removed for poor performance

Principal Accountability

  • principals were also judged by student performance

  • if schools did not improve, leadership could face consequences

Criticism of Mike Miles and HISD Takeover

Political Criticism

  • Democrats criticized the takeover

  • They argued that:

    • elected school board members were removed

    • local democracy was weakened

    • Republican state officials overruled a Democratic city

Substantive Criticism

Critics also argued that the reforms had real policy problems, including:

  • too much teaching to the test

  • too much pressure on teachers

  • strict and punitive discipline

  • high teacher turnover

  • loss of local control

  • scripted lessons reducing teacher independence

  • possible hiring of teachers without normal certification

  • libraries being converted into discipline centers

Arguments Supporting the Takeover

Supporters Argue

  • HISD had failing schools for years

  • students deserved better performance

  • the elected board was dysfunctional

  • major reform was needed

  • strict accountability could improve outcomes

Main Supporter Logic

  • local control is important, but student achievement matters more

Early Results of NES

How Results Are Measured

  • results were compared using standardized test performance

  • especially reading and math scores

Important

  • NES schools were already lower-performing before reform

  • so the key question is not whether they are better than all HISD schools

  • the key question is whether they improved more than before

Reported Improvements

  • NES schools showed improvement in some areas

  • improvements were especially noticeable when comparing 2023 to 2024 scores

Example

  • reading and math scores increased in some grade levels

  • NES schools seemed to improve faster than some broader HISD averages

Important Caution

  • It is not yet clear if Mike Miles’ reforms caused all the improvements

  • More years of data are needed

  • Early results may continue or may fade

Main Point

  • the reform is new

  • full evaluation will take time

Bond Election

HISD Bond Issue

  • HISD had a recent bond proposal

  • It was around $4 billion

  • Voters rejected it

What Is a Bond?

  • a bond is borrowed money used for major public projects

  • school bonds usually fund:

    • buildings

    • repairs

    • renovations

    • school facilities

Why the Bond Failed

  • even some Democrats voted against it

  • distrust of the state takeover may have played a role

  • voters may not have wanted to give more money to the current leadership

Main Idea

  • even if schools need money, politics and trust affect whether voters approve funding

Key Terms to Know

Local Government

  • government below the state level

School Board

  • elected or appointed body that governs a school district

School District

  • local government responsible for public schools

Special-Purpose Government

  • government that focuses on one specific task, like education

General-Purpose Government

  • government that handles many tasks, like cities and counties

Home Rule

  • local government has more freedom to make policy

Dillon’s Rule

  • local government only has powers given by the state

Compulsory Education

  • legal requirement that children attend school

Truancy

  • failure to attend school when required

TEA

  • Texas Education Agency

State Takeover

  • when the state removes local control from a school district

NES

  • New Education System

No Excuses Philosophy

  • strict education model focused on discipline, testing, and accountability

Ballot Drop-Off

  • when voters skip lower-level races on the ballot

Big Takeaways

  • Texas has many layers of local government

  • School districts are separate governments, not city departments

  • School boards are powerful because they raise taxes, spend money, and control education policy

  • Local elections often have low turnout, especially school board elections

  • Local governments are controlled by the state and can be changed or taken over

  • HISD was taken over by the Texas Education Agency after repeated performance problems and controversy

  • Mike Miles introduced the New Education System, which focuses on strict accountability, standardized instruction, teacher performance, and discipline

  • Supporters say the takeover is necessary to improve failing schools

  • Critics say it weakens democracy, over-tests students, pressures teachers, and removes local control

  • Early test results show some improvement, but it is too early to know if the reforms will work long-term

Test Memory Version

  • Local governments = created by states

  • Texas has 5,000+ governments

  • School districts = special-purpose governments

  • School boards = raise taxes + spend money + run schools

  • Home rule = city freedom

  • Dillon’s Rule = state control

  • Education is compulsory

  • HISD takeover = TEA removed elected board

  • Mike Miles = superintendent under takeover

  • NES = strict accountability + scripted lessons + testing

  • Main debate = student performance vs. local democracy

Got you — this uploaded text is the Medicaid lecture again, so I cleaned it into the same detailed note format, but this version is a little more write-down friendly and organized for studying. Based on your uploaded lecture text.

Lecture Notes: Medicaid Policy in Texas

Main Topic

  • This lecture focuses on Medicaid policy in Texas.

  • Medicaid is an example of public policy, meaning something the government does.

  • It shows how government decisions affect:

    • health care access

    • poverty

    • state budgets

    • federalism

    • political ideology

Big Idea

  • Medicaid is a major health insurance program for low-income people.

  • Texas has chosen not to expand Medicaid, which creates a large coverage gap for poor adults.

What Is Medicaid?

Definition

  • Medicaid is a government health insurance program.

  • It was created in 1965.

  • It was passed at the same time as Medicare.

  • Medicaid is meant to help people who cannot afford health insurance.

Medicaid Covers

  • poor people

  • near-poor people

  • some lower-middle-class people

  • medically needy people

  • children

  • pregnant women

  • some parents

  • some people with disabilities

Medicaid as a Safety Net

  • Medicaid is a safety net institution.

  • A safety net program is meant to protect people who are financially vulnerable.

Purpose

  • To make sure low-income people can still get health care.

Medicaid vs. Medicare

Medicaid

  • health insurance for low-income people

  • based mostly on income

  • funded by state and federal government

  • eligibility depends on state rules

Medicare

  • health insurance mainly for older adults

  • usually for people age 65+

  • mostly controlled by the federal government

Memory Trick

  • Medicaid = aid for low-income people

  • Medicare = care for older people

How Medicaid Works

Medicaid Is Real Insurance

  • Medicaid works like other health insurance.

  • People use Medicaid to get care from:

    • doctors

    • hospitals

    • clinics

    • medical providers

Medicaid Is Very Generous for Patients

  • For the person receiving Medicaid, health care usually costs nothing.

Medicaid Usually Has

  • no premiums

  • no deductibles

  • no co-pays

  • no bills at the doctor

Extra Benefit

  • Medicaid may also cover things private insurance often does not, like:

    • medical transportation

Problem: Low Provider Payments

Provider Payments

  • Provider payments are the money Medicaid pays doctors and hospitals.

  • Medicaid pays providers less than:

    • private insurance

    • Medicare

    • Veterans Administration care

Why This Is a Problem

  • Doctors can choose whether to accept Medicaid.

  • If Medicaid pays too little, some doctors may refuse Medicaid patients.

Effects on Patients

  • fewer doctor choices

  • longer wait times

  • harder to get appointments

  • possible delays in care

Example

  • A doctor may accept Medicaid but say the next appointment is months away.

Federalism and Medicaid

Medicaid Is a Federal-State Partnership

  • Medicaid was created by federal law.

  • But it is run by both:

    • federal government

    • state governments

Federal Government

  • gives funding

  • sets broad rules

State Government

  • runs the program

  • sets some eligibility rules

  • helps pay costs

Federal Medical Assistance Percentage (FMAP)

  • FMAP determines how much Medicaid cost the federal government pays.

How It Works

  • poorer states get more federal money

  • richer states get less federal money

Texas

  • Texas gets around 60% of Medicaid costs paid by the federal government.

  • Texas pays the remaining portion.

Example

  • wealthy state like Connecticut may get around 50%

  • poorer state like Mississippi may get more

  • Texas is around the middle

Who Is Eligible for Medicaid?

Means-Tested Program

  • Medicaid is means-tested.

  • This means eligibility depends on income.

Means-Tested =

  • the government looks at how much money you make

  • if you make too much, you do not qualify

Eligibility Depends On

  • income

  • state of residence

  • age

  • pregnancy status

  • whether you have children

  • disability status

  • whether you are a childless adult

Texas Medicaid Eligibility

Texas Has Strict Rules

  • Texas has some of the strictest Medicaid eligibility rules in the country.

  • Children and some new mothers are covered more fully.

  • Adults have much stricter rules.

Parents in Texas

  • A parent with a child under 18 may qualify only if their income is extremely low.

  • In the lecture example, Texas eligibility for a parent was about 19% of the federal poverty line.

Example

  • If the poverty line for a family of four is about $25,000

  • 19% = about $4,700–$4,800 per year

  • If the parent makes more than that, they may lose eligibility.

Main Point

  • A parent can be very poor in Texas and still not qualify for Medicaid.

Childless Adults in Texas

  • Childless adults generally do not qualify for Medicaid in Texas.

  • Even if they make $0, they may still not qualify.

Main Point

  • Texas does not offer regular Medicaid to most poor childless adults.

Federal Poverty Line

Definition

  • The federal poverty line is the income level the federal government uses to define poverty.

  • It changes over time.

  • It depends on family size.

Why It Matters

  • Medicaid eligibility is based on a percentage of the federal poverty line.

Affordable Care Act / Obamacare

What Did the ACA Try to Do?

  • The Affordable Care Act, also called Obamacare, tried to expand health insurance coverage.

  • One major part was Medicaid expansion.

Goal

  • make Medicaid eligibility more equal across states

  • cover more low-income adults

  • reduce the number of uninsured people

Medicaid Expansion

  • The ACA wanted Medicaid to cover people up to 138% of the federal poverty line.

Meaning

  • more poor adults would qualify

  • single adults would qualify

  • parents would qualify at higher income levels

Example

  • If the poverty line for a family of four is about $25,000

  • 138% is about $35,000

  • Under expansion, that family could qualify for Medicaid.

Single Adult Example

  • A single adult could qualify up to around $16,000–$17,000 per year.

The Carrot and the Stick

The Carrot

  • The federal government offered to pay most of the cost of expansion.

Federal Offer

  • at first: 100% of expansion costs

  • later: 90% of expansion costs

Why This Matters

  • States would only pay about 10% after the early years.

  • This was meant to encourage states to expand Medicaid.

The Stick

  • Originally, the ACA said states could lose all federal Medicaid funding if they refused expansion.

Why States Objected

  • Republican-led states said this was coercive.

  • They argued it violated federalism.

  • They said the federal government was forcing states to expand.

NFIB v. Sebelius

Supreme Court Case

  • NFIB v. Sebelius was the major Supreme Court case about Obamacare.

  • The Court upheld much of the Affordable Care Act.

  • But it changed Medicaid expansion.

Decision

  • The Supreme Court said the federal government could not force states to expand Medicaid by threatening all Medicaid funding.

Result

  • Medicaid expansion became optional.

  • States could choose whether to expand.

Simple Version

  • Before NFIB:

    • states had strong pressure to expand

  • After NFIB:

    • states could opt out

Medicaid Expansion Across the States

Expansion Pattern

  • Most states expanded Medicaid.

  • Some states did not.

  • Texas is one of the states that did not expand.

Pattern

  • conservative states, especially in the South, were less likely to expand

  • but some conservative states still expanded

Conservative States That Expanded

Examples:

  • Nebraska

  • Missouri

  • Louisiana

  • Oklahoma

  • Arkansas

  • Utah

  • Idaho

  • Montana

How Some Expanded

  • Some expanded through citizen initiatives.

  • Voters approved expansion directly, even when Republican leaders opposed it.

Why Texas Has Not Expanded Medicaid

Texas Legislature

  • Democrats generally support Medicaid expansion.

  • Some Republicans also support it.

  • But Republican leadership has blocked expansion bills from getting a vote.

Negative Agenda Control

  • Negative agenda control = when majority party leaders prevent a bill from being voted on.

How It Works

  • A bill might pass if it reached the floor.

  • Leadership prevents the vote.

  • If there is no vote, the bill cannot pass.

In Texas

  • Medicaid expansion may have enough support from:

    • all Democrats

    • some Republicans

  • But Republican leaders do not bring it to a vote.

Other Issues Also Blocked

  • marijuana legalization

  • higher minimum wage

  • Medicaid expansion

Important

  • This strategy can be used by either party.

  • Majority parties use agenda control to protect their priorities.

Public Opinion in Texas

Support for Medicaid Expansion

  • Polls show many Texans support Medicaid expansion.

  • The lecture mentioned about:

    • 70% support

    • about 30% oppose

Main Point

  • Most Texans support expansion.

  • But it still has not passed.

Why Public Support Has Not Been Enough

  • Texas does not have a strong direct citizen initiative process.

  • Voters cannot easily put Medicaid expansion on the ballot themselves.

  • The legislature controls what gets voted on.

Main Idea

  • A policy can be popular but still blocked by political institutions.

Ideological Arguments

Liberal View

Liberals argue:

  • health insurance should be a right

  • poor people should not go without medical care

  • Texas should accept federal money

  • poor Texans are treated unfairly compared to people in expansion states

Main Liberal Idea

  • Government should help guarantee access to health care.

Conservative View

Conservatives argue:

  • Medicaid should be limited to the poorest people

  • people should get insurance through work

  • expansion could discourage personal responsibility

  • expansion could be a step toward single-payer health care

  • emergency rooms and community clinics can still treat uninsured people

Main Conservative Idea

  • Government assistance should be limited and targeted.

The Medicaid Coverage Gap

What Is the Coverage Gap?

  • The coverage gap includes people who:

    • make too much for Texas Medicaid

    • but too little for ACA marketplace subsidies

Why It Exists

  • The ACA assumed states would expand Medicaid.

  • Since Texas did not expand, many poor adults were left with no affordable option.

Example

  • In Texas, a parent may qualify for Medicaid only up to about 19% of poverty.

  • ACA subsidies are available above a higher income threshold.

  • People between those levels may get nothing.

Simple Version

  • very poor = may not qualify

  • slightly higher income = may get subsidized private insurance

  • this creates a strange gap

Federal Attempts to Encourage Expansion

2021 Coronavirus Stimulus

  • Democrats tried to encourage holdout states like Texas to expand.

  • The federal government offered extra money.

Offer

  • cover the state’s 10% share for a period of time

  • make expansion temporarily even cheaper

Texas Response

  • Texas still did not expand.

Build Back Better Proposal

  • Proposed giving free private insurance to people in the coverage gap.

  • Would help people in non-expansion states.

Problem

  • disagreements in Congress

  • concerns about federal spending

  • did not fully solve the issue

Federally Qualified Health Centers (FQHCs)

What Are FQHCs?

  • Federally Qualified Health Centers are community clinics.

  • They provide care to people regardless of insurance status.

They Serve

  • uninsured people

  • low-income people

  • undocumented immigrants

  • Medicaid patients

  • people with private insurance

  • people unable to pay

Services

  • primary care

  • basic specialty care

  • preventive care

  • basic medical treatment

Cost

  • care can be free or low-cost

  • payment is often based on income

  • this is called a sliding fee scale

Meaning

  • lower income = lower payment

Houston Examples

  • Lone Star Circle of Care

  • Legacy Community Health

UH Example

  • The lecture mentioned a Lone Star Circle of Care location near UH:

    • around 4849 Calhoun

    • near the University Eye Institute

    • near the gym area

Political Support for FQHCs

Why Liberals Support Them

  • they help uninsured people

  • they provide access to care

  • they reduce harm from lack of insurance

Liberal Concern

  • FQHCs may be seen as a substitute for full insurance.

  • Liberals usually prefer broader health coverage for everyone.

Why Conservatives Support Them

  • they are targeted toward people most in need

  • they are smaller than full Medicaid expansion

  • they fit a limited safety net approach

Main Point

  • FQHCs have bipartisan support because both sides can justify them differently.

Means Testing and Poverty Traps

Means Testing

  • Medicaid is based on income.

  • This helps target benefits to people with low income.

Eligibility Cliff

  • An eligibility cliff happens when earning slightly more money causes someone to lose benefits.

Example

  • If Medicaid eligibility ends at $4,800

  • and someone earns $4,801

  • they may lose Medicaid

Main Problem

  • a small increase in income can cause a major loss in benefits

Poverty Trap

  • A poverty trap happens when people are discouraged from earning more because they may lose benefits.

Example

  • Someone gets offered more hours at work.

  • More hours means slightly more income.

  • But that extra income could make them lose Medicaid.

  • Losing Medicaid may make them worse off financially.

Main Idea

  • Programs meant to help poor people can sometimes accidentally make it harder to escape poverty.

Undocumented Immigrants and Health Care

ACA Rules

  • The Affordable Care Act requires legal residency for benefits.

  • Undocumented immigrants cannot receive Medicaid through the ACA.

Emergency Rooms

  • Hospitals cannot turn people away from emergency care.

  • This applies regardless of:

    • ability to pay

    • insurance status

    • immigration status

    • residency

Important

  • Emergency rooms must treat people in emergencies.

Problem with Emergency Rooms

  • ERs are expensive.

  • ERs are inefficient for regular care.

  • ERs are not ideal for chronic illness or basic checkups.

Main Point

  • Emergency rooms are a last resort, not a good replacement for insurance.

FQHCs and Undocumented Immigrants

  • FQHCs are one of the main ways undocumented immigrants access care.

  • They usually do not require proof of legal residency.

  • They focus on providing care.

Simple Version

  • undocumented immigrants often rely on community clinics for non-emergency care.

State Differences

  • Some blue states use state money to expand coverage for undocumented immigrants.

  • Texas does not do this.

Main Point

  • Access to care depends heavily on where someone lives.

Key Terms to Know

Medicaid

  • Government health insurance for low-income people.

Medicare

  • Government health insurance mostly for older adults.

Safety Net

  • Programs designed to help people in need.

Means-Tested

  • Eligibility based on income.

Federal Poverty Line

  • Government measure used to define poverty.

FMAP

  • Federal Medical Assistance Percentage; federal share of Medicaid costs.

Medicaid Expansion

  • ACA policy expanding Medicaid to adults up to 138% of poverty.

Affordable Care Act

  • Health care law also called Obamacare.

NFIB v. Sebelius

  • Supreme Court case that made Medicaid expansion optional for states.

Negative Agenda Control

  • When majority leaders block a bill from getting a vote.

Coverage Gap

  • People too poor for marketplace help but not eligible for Medicaid.

FQHC

  • Federally Qualified Health Center; clinic serving people regardless of insurance or ability to pay.

Eligibility Cliff

  • sudden loss of benefits after earning slightly more income.

Poverty Trap

  • when benefit rules discourage people from earning more.

Big Takeaways

  • Medicaid was created in 1965 as health insurance for low-income people.

  • Medicaid is a federal-state partnership.

  • Medicaid is generous for patients but pays doctors low rates.

  • Texas has very strict Medicaid eligibility.

  • Childless adults generally do not qualify for Medicaid in Texas.

  • The Affordable Care Act tried to expand Medicaid to 138% of the federal poverty line.

  • The Supreme Court made expansion optional in NFIB v. Sebelius.

  • Texas chose not to expand Medicaid.

  • Public opinion in Texas supports expansion, but the legislature has blocked it.

  • The coverage gap exists because Texas did not expand Medicaid.

  • FQHCs provide low-cost care for uninsured people.

  • Undocumented immigrants cannot get Medicaid but can receive emergency care and may use FQHCs.

  • Medicaid policy shows the conflict between federalism, ideology, poverty, and health care access.

Test Memory Version

  • Medicaid = low-income health insurance

  • Medicare = elderly health insurance

  • 1965 = Medicaid + Medicare created

  • Means-tested = based on income

  • FMAP = federal share of Medicaid cost

  • Texas = strict eligibility

  • Childless adults in Texas = usually no Medicaid

  • ACA expansion = up to 138% poverty

  • NFIB v. Sebelius = expansion optional

  • Texas did not expand

  • Coverage gap = too poor for subsidies, not eligible for Medicaid

  • Negative agenda control = leaders block a vote

  • FQHCs = community clinics for uninsured

  • Poverty trap = earning more can make you lose benefits

  • Got you. Here are your notes translated into English and organized in the same detailed format we’ve been using, so you can write them down clearly.

Chapter 16 Notes: Economic Policy

Main Topic

  • This chapter focuses on public policy, specifically economic policy.

  • Public policy means an official government goal or purpose backed by rewards or punishments.

  • Public policy can be expressed through:

    • laws

    • rules

    • regulations

    • executive orders

    • court orders

Big Idea

  • Economic policy is about how the government influences the economy.

  • The government helps the economy function by creating rules, protecting property, managing money, and regulating economic activity.

Goals of Economic Policy

Why Government Intervenes in the Economy

  • The economy does not function completely on its own.

  • Government helps create the basic conditions for markets to work.

Government Helps By

  • defining property rights

  • enforcing contracts

  • maintaining a national currency

  • providing law and order

  • punishing people who violate economic rules

Main Point

  • Without government rules, markets would be unstable and harder to trust.

Four Main Goals of Economic Policy

  • The government has four major goals in the economy:

  • Promote economic stability

  • Stimulate economic growth

  • Promote business development

  • Protect employees and consumers

Goal 1: Promote Stable Markets

Stable Markets

  • One major reason government participates in the economy is to protect people and businesses.

  • The government defines:

    • property rights

    • contracts

    • standards for goods

    • rules for economic exchange

Why This Matters

  • People can do business with strangers because the government enforces rules.

  • They do not have to depend only on personal trust.

Money and Currency

  • Government creates money and supports its value.

  • Money makes trade easier.

Without a National Currency

  • stores might use different currencies

  • people might have to trade goods directly

  • buying basic items would be much harder

Main Point

  • A stable national currency makes economic transactions easier and more efficient.

Public Goods

  • Public goods are goods or services provided to everyone.

  • Private businesses may not provide them because they are not profitable or easy to limit to paying customers.

Examples of Public Goods

  • law and order

  • national defense

  • roads

  • bridges

  • ports

  • rail systems

  • infrastructure

Why They Matter

  • Public goods make economic activity easier.

  • Businesses need roads, ports, and stable laws to operate.

Goal 2: Promote Economic Prosperity

Government and Growth

  • Government can actively intervene to help the economy grow.

  • This idea goes back to Alexander Hamilton, who believed the national government should promote industry.

Main Point

  • The federal government became much more involved in promoting growth during the 1900s.

Measuring Economic Growth

Gross National Product (GNP)

  • GNP measures the market value of goods and services produced by a nation’s economy.

Gross Domestic Product (GDP)

  • GDP measures the value of goods and services produced within a country.

  • GDP is one of the most important ways to measure economic growth.

GDP Growth

  • Growth can rise or fall depending on economic conditions.

  • During strong economic periods, GDP grows.

  • During recessions, GDP can shrink.

Examples

  • late 1990s: strong GDP growth

  • 2008–2009: negative growth during the Great Recession

  • 2020: negative growth because of COVID-19

Sources of Economic Growth

Main Sources of Growth

  • Economic growth depends on:

  • strong investment

  • technological innovation

  • productive workforce

  • consumer confidence

  • investor confidence

Investor and Consumer Confidence

  • Businesses invest when they feel the economy and government are stable.

  • Consumers spend when they feel secure about the future.

If Confidence Is Low

  • businesses avoid investing

  • consumers avoid spending

  • economic growth slows

Government’s Role

  • keep economic and political conditions stable

  • reduce uncertainty

  • maintain trust in markets

Public Investment

Government Investment in Infrastructure

  • Public investment is a major source of economic growth.

  • Businesses depend on government-built infrastructure.

Examples

  • roads

  • bridges

  • tunnels

  • rail lines

  • power grids

  • ports

  • water systems

  • internet access

Infrastructure Law

  • A $1.2 trillion infrastructure bill was passed in 2021.

  • It aimed to improve:

    • transportation

    • water systems

    • internet access

    • competitiveness

    • economic efficiency

Innovation and Research

Government Support for Innovation

  • The government supports scientific and technological research.

  • This helps create new industries and economic growth.

National Science Foundation

  • created in 1950

  • funds basic research in many fields

National Institutes of Health

  • supports biomedical research

  • helps advance medicine and public health

Human Genome Project

  • began with government researchers

  • later involved private companies

  • helped expand genetic science

Military Research

  • Military-funded research has led to major innovations.

Examples

  • radar

  • nuclear energy

  • ARPANET, the early version of the internet

Main Point

  • Government research can create technologies that later benefit the whole economy.

Workforce and Education

A Productive Workforce

  • Economic growth depends on enough skilled workers.

  • Government helps develop the workforce through:

    • immigration policy

    • education policy

    • job training programs

Immigration Policy

  • Immigration can help provide workers.

  • The government may prioritize immigrants with needed skills.

Example

  • nurses

  • technical workers

  • professionals in high-demand fields

Education Policy

  • Education is mostly controlled by state and local governments.

  • But the federal government supports education through:

    • grants

    • tax benefits

    • student loans

    • job training programs

Main Point

  • A better educated workforce helps the economy grow.

Full Employment

What Is Full Employment?

  • Full employment means the economy has low unemployment.

  • It does not mean every single person has a job.

  • It means most people who want work can find work.

Before the 1930s

  • Government did not try much to promote employment.

  • Unemployment was seen as unfortunate but not something government could fix.

The New Deal

  • The Great Depression changed this view.

  • The federal government created programs to put people back to work.

Example

  • Works Progress Administration / WPA

WPA Built

  • bridges

  • parks

  • roads

  • public buildings

Keynesian Economics

  • John Maynard Keynes argued that government could increase employment by stimulating demand.

  • If people and businesses are not spending enough, government can step in.

Keynesian Idea

  • government spending can help reduce unemployment during recessions

Examples of Government Action

Kennedy Tax Cut

  • President Kennedy supported tax cuts to stimulate spending.

  • The goal was to put more money in consumers’ hands.

Great Recession Stimulus

  • In 2009, Obama and Congress passed the American Recovery and Reinvestment Act.

  • It aimed to:

    • save jobs

    • create jobs

    • support economic growth

    • invest in clean technology and infrastructure

COVID-19

  • Unemployment rose sharply during the pandemic.

  • Government passed stimulus bills to support workers, businesses, and states.

Low Inflation

What Is Inflation?

  • Inflation is a steady rise in the general level of prices.

  • When inflation rises, money buys less.

Why Inflation Is a Problem

  • hurts consumers

  • especially hurts people on fixed incomes

  • makes prices unpredictable

  • makes investors cautious

  • can weaken the economy

Historical Inflation

  • Inflation was a major problem in the 1970s and early 1980s.

  • It later fell to around 2–3% for decades.

  • Inflation rose again after the COVID-19 pandemic.

Example

  • Inflation passed 9% in mid-2022.

  • This caused pressure for government action.

Goal 3: Promote Business Development

Government and Business Growth

  • Government helps businesses by:

    • building infrastructure

    • creating markets

    • giving subsidies

    • giving tax breaks

    • giving loans

    • supporting research

    • protecting industries through trade policy

Transportation and Business

  • In the 1800s, the government built roads and canals.

  • It also supported railroad expansion.

  • In the 1900s, the government built national highways.

Interstate Highway System

  • built under President Eisenhower

  • federal government paid most of the cost

  • helped cars, trucks, shipping, and commerce

Subsidies

  • Subsidies are government grants of money or valuable goods.

  • Government gives subsidies to support certain industries.

Examples

  • agriculture

  • energy

  • transportation

  • health care

  • defense

Agricultural Subsidies

  • Farmers have received federal support since the 1800s.

  • Agriculture remains heavily subsidized.

Criticism

  • subsidies often benefit large agricultural corporations more than small family farms

Small Business Administration

  • The Small Business Administration / SBA was created in 1953.

  • It helps small businesses through:

    • loans

    • loan guarantees

    • disaster assistance

During COVID-19

  • SBA helped run the Paycheck Protection Program.

  • It provided loans to small businesses.

Energy and Technology

  • Government also supports business development in new industries.

Examples

  • renewable energy

  • electric vehicles

  • clean technology

  • energy efficiency

Government Tools

  • tax credits

  • loans

  • subsidies

  • grants

Goal 4: Protect Employees and Consumers

Protecting Workers

  • Stable relationships between businesses and workers help the economy.

  • During the 1800s, workers often went on strike because of:

    • low wages

    • unsafe conditions

    • long hours

Early Government Response

  • government often sided with businesses

  • strikes were sometimes banned

  • strikers were sometimes arrested

National Labor Relations Act of 1935

  • Created the National Labor Relations Board / NLRB

  • Protected union elections

  • Supported collective bargaining

Collective Bargaining

  • negotiation between workers/unions and employers over:

    • wages

    • hours

    • working conditions

    • benefits

Fair Labor Standards Act of 1938

  • Created the federal minimum wage.

  • Also helped regulate labor conditions.

Minimum Wage

  • The federal minimum wage was last raised in 2009.

  • It is currently $7.25/hour.

  • Its value has declined because of inflation.

Main Issue

  • If minimum wage does not increase, it buys less over time.

Labor and Unions Today

  • Union power has declined over time.

  • Reagan’s firing of striking air traffic controllers in 1981 weakened labor power.

  • Court decisions and laws have made union organizing harder.

  • Some new union efforts happened at companies like:

    • Starbucks

    • Amazon

Protecting Consumers

Consumer Protection

  • Government protects consumers from unsafe products and business abuses.

Early Example

  • Upton Sinclair’s book The Jungle exposed unsafe meatpacking conditions in 1906.

Result

  • federal meat inspection

  • USDA safety certification

  • stronger food safety rules

Food and Drug Administration

  • The FDA was created to regulate:

    • food

    • drugs

    • cosmetics

    • products important to public health

Consumer Product Safety Commission

  • The CPSC was created in 1972.

  • It protects consumers from dangerous products.

CPSC Can

  • warn consumers

  • create safety standards

  • work with companies

  • recall unsafe products

Example

  • hoverboards catching fire while charging

Tools of Economic Policy

Main Tools

  • The government uses four major tools to influence the economy:

  • Fiscal policy

  • Monetary policy

  • Regulation and antitrust policy

  • Trade policy

Fiscal Policy

Definition

  • Fiscal policy = government taxing and spending.

  • Used to shape the economy.

Government Can

  • increase spending

  • decrease spending

  • raise taxes

  • lower taxes

Fiscal Policy and the Business Cycle

  • The business cycle means the economy goes through ups and downs.

During a Recession

  • Government may:

  • increase spending

  • cut taxes

  • stimulate the economy

During High Inflation

  • Government may:

  • reduce spending

  • raise taxes

  • slow the economy down

Taxes

Purpose of Taxes

  • Taxes help government:

  • raise revenue

  • fund programs

  • redistribute income

  • encourage certain behaviors

Types of Taxes

Income Tax

  • tax on personal or business income

  • largest source of federal revenue

Excise Tax

  • tax on specific goods

  • examples:

    • tobacco

    • alcohol

Tariff

  • tax on imported goods

Social Insurance Taxes

  • fund Social Security and Medicare

Progressive and Regressive Taxes

Progressive Tax

  • people with higher incomes pay a higher percentage of their income.

Example

  • federal income tax

Regressive Tax

  • people with lower incomes pay a higher share of their income than wealthier people.

Example

  • Social Security tax can be regressive because income above a certain limit is not taxed.

Tax Expenditures

What Are Tax Expenditures?

  • Tax expenditures are tax breaks.

  • They include:

    • deductions

    • credits

    • lower tax rates

Examples

  • mortgage interest deduction

  • lower taxes on capital gains

  • clean energy tax credits

Main Point

  • Government uses tax breaks to encourage certain behavior.

Spending and Budgeting

Federal Spending

  • Government spending is a major economic tool.

  • It affects:

    • jobs

    • income distribution

    • infrastructure

    • education

    • health care

    • transportation

Budget Deficit

  • A budget deficit happens when government spends more than it collects in revenue.

Government Covers Deficits By

  • borrowing money

  • selling government bonds

National Debt

  • National debt = total amount the federal government has borrowed over time.

Stimulus Spending

  • Government may intentionally run deficits during recessions to stimulate the economy.

Examples

  • Great Recession stimulus

  • CARES Act

  • American Rescue Plan

Subsidies and Contracts

Subsidies

  • Government grants money or support to specific industries or groups.

Examples

  • agriculture

  • energy

  • transportation

  • defense

Government Contracts

  • Government buys goods and services from private companies.

  • Contracts can influence business behavior.

Example

  • federal contractors required to pay a $15 minimum wage under Biden

Budget Institutions

Office of Management and Budget / OMB

  • Part of the president’s executive office.

  • Prepares the president’s budget.

  • Estimates costs of policies.

  • Shows the president’s spending priorities.

Congressional Budget Office / CBO

  • Created in 1974.

  • Gives Congress budget information.

  • Estimates costs and economic effects of proposed laws.

Mandatory Spending

  • Spending required by existing law.

  • Congress cannot easily change it each year.

Examples

  • Social Security

  • Medicare

  • interest on national debt

  • unemployment benefits

  • federal retirement

Discretionary Spending

  • Spending Congress controls annually.

  • Must be approved each year.

Examples

  • defense

  • education

  • transportation

  • environmental programs

  • many domestic programs

Monetary Policy

Definition

  • Monetary policy controls the supply of money and credit.

  • Mainly controlled by the Federal Reserve.

Federal Reserve

  • Created in 1913.

  • Central bank of the United States.

  • Made up of 12 regional Federal Reserve banks.

The Fed’s Main Goals

  • price stability

  • maximum sustainable employment

Federal Reserve Board

  • 7 members

  • appointed by the president

  • confirmed by the Senate

  • serve 14-year terms

Fed Chair

  • selected by the president

  • serves 4-year term

Federal Funds Rate

  • The interest rate banks charge each other for short-term loans.

If the Fed Lowers Rates

  • borrowing becomes cheaper

  • businesses and consumers borrow more

  • economy speeds up

If the Fed Raises Rates

  • borrowing becomes more expensive

  • spending slows

  • economy cools down

  • inflation may fall

The Fed and Inflation

  • The Fed often raises interest rates to fight inflation.

  • Paul Volcker raised rates aggressively in the late 1970s and early 1980s.

  • Jerome Powell kept rates low during COVID, then raised rates when inflation increased.

Encouraging Investment

Federal Deposit Insurance Corporation / FDIC

  • Insures bank deposits up to $250,000.

  • Encourages people to trust banks.

  • Helps stabilize the financial system.

Federal Mortgage Insurance

  • Government helps guarantee mortgages.

  • Reduces risk for banks.

  • Helps make home loans more affordable.

Regulation and Antitrust Policy

Regulation

  • Government sets rules for businesses.

  • The goal is to protect the public from harm or abuse.

Economic Regulation

  • rules for how businesses operate

  • designed to protect competition and prevent abuse

Examples

  • financial disclosure

  • banking rules

  • railroad regulation

  • stock market regulation

Social Regulation

  • rules meant to protect:

    • workers

    • consumers

    • environment

    • public health

Examples

  • OSHA

  • EPA

  • CPSC

  • FDA

Monopoly

  • A monopoly happens when one company controls a market.

  • This can harm consumers by reducing competition.

Antitrust Policy

  • Government policy used to prevent monopolies and unfair business practices.

  • Government can break up companies or stop mergers.

Important Laws

  • Interstate Commerce Act of 1887

  • Sherman Antitrust Act of 1890

  • Clayton Antitrust Act of 1914

Securities and Exchange Commission / SEC

  • Created after the 1929 stock market crash.

  • Regulates financial markets.

  • Requires companies to disclose information.

  • Protects investors from fraud.

Deregulation

What Is Deregulation?

  • Deregulation means reducing government rules on business.

Arguments for Deregulation

  • regulation can be costly

  • too many rules may slow economic growth

  • businesses need flexibility

Arguments Against Deregulation

  • fewer rules may harm workers

  • consumers may be less protected

  • environment may suffer

  • financial risk may increase

Examples

Reagan

  • gave OMB more power to review regulations

  • reduced number of federal regulations

Trump

  • ordered that two significant regulations be removed for every new one added

Trade Policy

Definition

  • Trade policy controls economic exchange with other countries.

Government Can

  • create tariffs

  • reduce tariffs

  • negotiate trade agreements

  • join international trade institutions

Tariffs

  • tariffs are taxes on imported goods.

  • they make foreign goods more expensive.

Purpose

  • protect domestic industries

  • discourage foreign competition

Free Trade

  • trade without barriers like tariffs or quotas.

Benefits

  • lower prices

  • more product choices

  • larger markets for producers

  • economic growth

Costs

  • some industries may lose jobs

  • workers may face foreign competition

  • some sectors may decline

Protectionism

  • protectionism means limiting trade to protect domestic industries.

Example

  • tariffs on foreign washing machines to protect U.S. companies

Trade Agreements

NAFTA

  • trade agreement between U.S., Mexico, and Canada

  • started in 1994

USMCA

  • replaced NAFTA under the Trump administration

TPP

  • Trans-Pacific Partnership

  • negotiated under Obama

  • Trump withdrew U.S. participation

Politics of Economic Policy

Why Economic Policy Is Political

  • Voters care strongly about the economy.

  • Presidents are often blamed for bad economic conditions.

Examples

  • Herbert Hoover → Great Depression

  • Jimmy Carter → high inflation

  • Joe Biden → post-pandemic inflation

Main Party Divide

Republicans Often Emphasize

  • lower taxes

  • less regulation

  • smaller government

  • freer markets

  • business growth

Democrats Often Emphasize

  • government intervention

  • worker protections

  • consumer protections

  • social programs

  • regulation

  • public investment

Laissez-Faire Capitalism

Definition

  • Laissez-faire capitalism means government should interfere as little as possible in the economy.

Adam Smith

  • believed free competition promotes economic growth.

  • supported the “invisible hand” of the market.

Invisible Hand

  • individual self-interest can create overall economic benefit through market competition.

Limited Role of Government

  • Adam Smith believed government should mainly:

  • provide national defense

  • protect law and order

  • protect private property

  • provide basic public goods

Great Depression and the New Deal

Why the Great Depression Changed Views

  • Before 1929, many Americans believed the economy could regulate itself.

  • The Great Depression challenged that belief.

Problems

  • mass unemployment

  • bank failures

  • business closures

  • poverty

  • loss of savings

New Deal

  • Franklin D. Roosevelt created programs to fight the Depression.

  • The New Deal expanded federal involvement in the economy.

New Deal Programs Aimed To

  • provide jobs

  • provide relief

  • stabilize banks

  • create economic security

Keynesianism

Definition

  • Keynesianism argues government can stabilize the economy through spending and tax policy.

During Recessions

  • government should increase spending or cut taxes

During Inflation

  • government may reduce spending or raise taxes

Supply-Side Economics

Definition

  • Supply-side economics argues that lower taxes encourage productivity, work, investment, and economic growth.

Main Idea

  • if people and businesses keep more of their money, they will invest and produce more

Republican Tax Policy

  • Republicans often support tax cuts.

  • They argue tax cuts:

    • encourage investment

    • encourage work

    • stimulate growth

Democratic Tax Policy

  • Democrats often support higher taxes on wealthy people and corporations.

  • They argue this:

    • funds government programs

    • reduces inequality

    • supports public investment

Government Spending Debate

Republican View

  • government spending is often too high

  • large deficits can hurt the economy

  • government programs may be wasteful

  • government should be smaller

Democratic View

  • government spending can create opportunity

  • public programs support education, health care, infrastructure, and families

  • cutting programs can hurt economic mobility

“Starve the Beast”

  • Strategy of cutting taxes to force future spending cuts.

  • The idea is that lower revenue creates pressure to shrink government.

Regulation Debate

Republican View

  • too much regulation limits business freedom

  • regulation can reduce growth

  • businesses need flexibility

Democratic View

  • regulation protects:

    • workers

    • consumers

    • environment

    • financial stability

Minimum Wage Debate

  • Democrats usually support raising the minimum wage.

  • Republicans are more likely to oppose large increases.

$15 Minimum Wage

  • became a major issue in Bernie Sanders’ campaigns

  • Biden required federal contractors to pay $15/hour

  • many states and cities have minimum wages above the federal rate

Interest Groups and Economic Policy

Labor Unions

  • Once represented about 35% of workers in the 1950s.

  • Today represent around 10%.

  • Still important in Democratic politics.

Union Goals

  • higher wages

  • better benefits

  • safer working conditions

  • stronger worker rights

Right-to-Work Laws

  • Workers cannot be required to join a union or pay union dues as a condition of employment.

Supporters Say

  • protects worker freedom

Opponents Say

  • weakens unions

  • makes it harder to fund collective bargaining

Business Groups

  • Business organizations are very powerful in economic policy.

Examples

  • U.S. Chamber of Commerce

  • Business Roundtable

  • National Association of Manufacturers

Business Groups Often Support

  • lower regulation

  • lower taxes

  • trade policies beneficial to their industry

  • subsidies for specific industries

Case Study 1: Great Recession of 2008

Cause

  • Housing market collapse

  • risky mortgages

  • adjustable interest rates

  • foreclosures

  • banks stopped lending

  • unemployment increased

Government Response

Fiscal Policy

  • TARP: $700 billion bank rescue

  • auto industry rescue

  • 2009 stimulus: $787 billion

Monetary Policy

  • Federal Reserve gave emergency loans to banks

  • kept credit flowing

Regulation

  • Dodd-Frank Act of 2010

  • created Consumer Financial Protection Bureau / CFPB

  • aimed to prevent risky financial behavior

Political Debate

  • Critics said bailouts helped Wall Street more than ordinary people.

  • Democrats generally supported stronger regulation.

  • Republicans generally criticized too much spending and regulation.

Case Study 2: Post-Pandemic Inflation

COVID Economic Collapse

  • In 2020, COVID caused major economic disruption.

  • Unemployment reached 14.7% in April 2020.

Government Response

Fiscal Policy

  • CARES Act

  • Families First Coronavirus Response Act

  • American Rescue Plan

Goal

  • help individuals

  • help businesses

  • support state and local governments

  • prevent deeper recession

Inflation After COVID

  • Stimulus increased demand.

  • Supply chains were still disrupted.

  • Demand rose faster than supply.

  • Prices increased.

Government Response to Inflation

Federal Reserve

  • raised interest rates starting in 2022

  • goal: reduce demand and slow inflation

Inflation Reduction Act

  • included tax changes

  • clean energy credits

  • health care subsidies

  • corporate minimum tax

Biden Administration

  • used antitrust regulation

  • tried to block mergers that could raise prices

  • allowed over-the-counter hearing aids to increase competition

Case Study 3: Environmental Policy

Why Environment Is Economic Policy

  • Environmental regulations affect businesses, jobs, energy costs, and public health.

  • Climate change can create massive economic costs.

Modern Environmental Movement

  • grew in the 1970s

  • 1969 Cuyahoga River fire symbolized environmental neglect

  • first Earth Day happened in 1970

Climate Change

  • Scientists warned about global warming from carbon emissions.

  • Human activity contributes to greenhouse gas emissions.

Possible Effects

  • melting ice caps

  • extreme weather

  • droughts

  • fires

  • sea level rise

  • disease

  • economic damage

Environmental Regulation

Major Laws

  • National Environmental Policy Act / NEPA

  • Clean Air Act

  • Clean Water Act

  • Safe Drinking Water Act

Environmental Fiscal Policy

  • Government can use spending and tax incentives to support clean energy.

Examples

  • clean energy tax credits

  • alternative energy subsidies

  • energy efficiency programs

  • Inflation Reduction Act climate spending

Cap and Trade

  • A market-based climate policy.

  • Government sets emissions limits.

  • Companies can buy and sell carbon credits.

Goal

  • reduce emissions while giving businesses flexibility.

Political Divide on Environmental Policy

Democrats Often Argue

  • climate change requires government action

  • environmental protection protects public health and the future economy

Republicans Often Argue

  • environmental regulation can hurt jobs and business

  • government should not overregulate energy industries

Key Terms to Know

Public Policy

  • official government goal backed by rewards or punishments

Public Goods

  • goods/services provided to everyone, like roads and law enforcement

GDP

  • value of goods and services produced in a country

Inflation

  • rise in general prices

Tariff

  • tax on imported goods

Fiscal Policy

  • government taxing and spending

Redistribution

  • shifting resources from one group to another through taxes and benefits

Progressive Tax

  • higher-income people pay a larger percentage

Regressive Tax

  • lower-income people pay a larger percentage

Budget Deficit

  • when government spends more than it collects

National Debt

  • total amount government owes

Subsidies

  • government support to businesses or groups

Mandatory Spending

  • spending required by law

Discretionary Spending

  • spending Congress controls yearly

Monetary Policy

  • controlling money supply and credit

Federal Reserve

  • U.S. central bank

Federal Funds Rate

  • interest rate banks charge each other

Monopoly

  • one company controls a market

Antitrust Policy

  • policy to prevent monopolies and promote competition

Deregulation

  • reducing government rules on business

Free Trade

  • trade without major restrictions

Laissez-Faire Capitalism

  • belief that government should interfere minimally in the economy

Keynesianism

  • belief that government spending/taxes can stabilize economy

Supply-Side Economics

  • belief that tax cuts stimulate growth by encouraging production and investment

Big Takeaways

  • Economic policy is how government influences the economy.

  • The government promotes stable markets by protecting property rights, enforcing contracts, creating currency, and providing public goods.

  • Government promotes prosperity through infrastructure, research, innovation, education, and workforce development.

  • Government protects workers through labor laws and protects consumers through safety regulations.

  • Fiscal policy uses taxes and spending.

  • Monetary policy uses money supply and interest rates.

  • Regulation controls business behavior.

  • Trade policy affects imports, exports, tariffs, and trade agreements.

  • Republicans usually favor lower taxes, less regulation, and freer markets.

  • Democrats usually favor more government intervention, worker protections, regulation, and public investment.

  • The Great Depression changed American views about government’s role in the economy.

  • The New Deal made the federal government responsible for helping manage economic crises.

  • Modern economic debates focus on taxes, spending, regulation, inflation, jobs, and the environment.

Test Memory Version

  • Economic policy = government action toward the economy

  • 4 goals = stability, growth, business development, worker/consumer protection

  • GDP = measures economic growth

  • Inflation = prices rise

  • Fiscal policy = taxes + spending

  • Monetary policy = Fed + interest rates

  • Fed lowers rates = economy speeds up

  • Fed raises rates = inflation slows

  • Progressive tax = rich pay higher share

  • Regressive tax = poor pay higher share

  • Deficit = spending > revenue

  • Debt = total borrowing

  • Regulation = rules on business

  • Antitrust = prevent monopolies

  • Free trade = fewer barriers

  • Protectionism = tariffs/barriers

  • Laissez-faire = less government

  • Keynesianism = government should stimulate economy in recessions

  • Supply-side = tax cuts encourage growth