Chapter 2305- Chapter 16

What challenges did the United States face after World War II?

-more than ten million servicemen and women needed to be reintegrated into the workforce, and many lacked appreciable work skills. -the United States' success in its new conflict with the Soviet Union depended on the rapid development of a new, highly technical military-industrial complex.

Deficit

A deficiency or lack of something

What are public goods?

A necessary and beneficial commodity that the private sector will not supply because there is NO incentive to provide them.

What are redistributive policies?

A policy used to redistribute money from the wealthy to the poor through taxation

What is the AARP?

American Association of Retired Persons

Mandatory expenditure

Bills that must be paid by law.

policy implementation

Carrying out a policy through government agencies and courts

policy enactment

Congress passes a law that authorizes a specific governmental response to the problem.

Arthur Laffer

Conservative economist who believed that tax cuts would increase government revenues.

excise tax

Consumer tax on a specific kind of merchandise, tobacco.

Why is Social Security potentially facing a financial crisis?

Due to demographic change there is a risk that the system will run short of money because less will be paid in than is paid out.

Who sets monetary policy?

Federal Reserve

toll goods

Goods consumed by the public as a group, but people can be excluded from using them. costs money to use (ex: private schooling)

debt

Money owed

What are examples of agencies that regulate business?

OSHA (Occupational Safety and Health Administration) and FDA (Food and Drug administration)

What are the different types of goods?

Private, public, quasi-public, open-access

What is supply-side economics?

Reagan's theory that tax reductions for the wealthy would stimulate the economy

What event undermined laisse-faire economics?

The Great Depression

Why is public policy contentious?

The idea of public policy is by its very nature a politically contentious one. differences between liberals and conservatives are the policy preferences prevalent in each group.

How is the Federal Reserve Board chosen?

The seven members of the Board are appointed by the President for staggered 14-year terms.

Tragedy of the Commons

The situation in which individuals exhaust a common resource by acting in their own immediate self-interest

Why was the Federal Reserve created?

To address the issues of consumers and businesses needing greater access to funds, to encourage business expansion and that banks needed a source of emergency cash to prevent depositor panics that resulted in bank runs. created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.

How is public policy developed?

What may have seemed like a policy developed over a period of months was in fact formed after years of analysis, reflection upon existing policy, and even trial implementation of similar types of programs at the state level.

sin tax

a high tax designed to raise revenue and reduce consumption of a socially undesirable product, liquor or tobacco

rationale

a reason for doing something

regressive tax system

a tax whose average tax rate decreases as the taxpayer's income increases and increases as the taxpayer's income decreases

progressive tax system

a tax whose average tax rate increases as the taxpayer's income increases and decreases as the taxpayer's income decreases

What are the two broad questions policymakers must consider?

a) who pays the costs of creating and maintaining the goods? b) who receives the benefits of the goods?

What are the four stages of the policy process?

agenda building, problem identification, alternative specification, policy enactment

What are the two largest recipients of government aid to business?

agriculture and energy

What are the problems with the free market?

certain members of society will not be able to work, such as the elderly, children, or others who are unemployed because their skills are not marketable. They will be left behind by the economy at large and, without any income, will fall into poverty.

alternative specification

considers solutions to fix the difficulty raised in problem identification

What is Keynesian economics?

created by john maynard keynes, large scale government spending to stimulate the economy.

problem identification

define the problem as clearly and precisely as possible

bottom-up implementation strategy

federal government allows local areas some flexibility in how they implement policy

top-down implementation strategy

federal government dictates strict public policy, each state implements it the same exact way

What sort of tax is the payroll tax that funds Social Security and Medicare?

federal payroll taxes levied on wages are known as Federal Insurance Contributions Act (FICA) taxes

where does social security money come from?

funded by a dedicated payroll tax, which workers pay into as they earn income. Social Security is a pay-as-you-go system.

common goods

goods that all people may use but that are of limited supply

What are entitlement programs?

government programs that guaranteed benefits to certain groups. examples: Social Security, Medicare, and Medicaid.

What is the safety net?

government programs that protect people who face unfavorable economic conditions

tax policy

government's actions with respect to its tax system

Laissez-faire economics

hands off approach to government; the government should not interfere in the economy

What is Medicaid?

health insurance for poor people

What is the largest source of federal tax revenue?

income tax

progressive tax example

income tax

What is Medicare?

insurance for elderly persons or persons with permanent disabilities

What are the characteristics of public policy?

it is more than just the actions of government; it also includes the behaviors or outcomes that government action creates.

What do libertarians believe about the role of government?

libertarians believe government almost always operates less efficiently than the private sector and government actions should be kept to a minimum.

What are some social problems that cannot be solved by private ownership?

not all goods can be classified as strictly private. Air is a difficult good to privatize because it is not excludable—everyone can get access to it at all times—and no matter how much of it you breathe, there is still plenty to go around.

policy advocates

people who work to propose or maintain public policy

Recession

period of reduced economic activity

distributive policies

policies designed to confer a benefit on a particular institution or group

policy evaluation

process of determining if a course of action is achieving its intended goals.

What are means-tested programs?

programs providing benefits only to individuals who qualify based on specific needs

What are private goods?

rival in consumption and exclusive - meaning that if one person buys it, it is gone and people who don't pay can be excluded ex: backpack, waterbottle

What are regulatory policies?

setting guidelines

What are the largest spending items in the budget?

social security

regressive tax example

social security, sales taxes

What is the purpose of Social Security?

supplemental income for people over the age of 65.

What is agenda setting?

the ability of the media to influence public opinion about which issues the government should address

What is public policy?

the course of action the government takes in response to an issue or problem

How does the federal government support higher education?

the government's education money is spent on student loans, grants, and work-study programs.

What are the basic principles of free-market economics?

the market forces of supply and demand, working without any government involvement, are the most effective way for markets to operate.

What are goods?

the range of commodities, services, and systems that help us satisfy our wants or needs.

policy analysts

they evaluate the effectiveness of current policies and determine the merit of proposed policies

Discretionary Spending

those areas of the budget that the Congress can change year to year an includes the 13 appropriation bills that fund the various agencies of the federal government. makes up around 35% of the total budget (military)

Mandatory Spending

those areas of the federal budget that must be enacted each year by law and are not dependent on annual review by the appropriations committees of Congress. programs include entitlement programs such as Social Security and Medicare and make up over 65% of the federal budget

purpose of AARP

to convince the government to provide more public resources and services to senior citizens, often through regulatory or redistributive politics.