Public Policy Process & Economic Policy

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April 6, 2010 : 

April 6, 2010 Objective: Students will identify the public policy process in order to show how economic policies affect Americans. Warm Up: 1. Write down on a scrap piece of paper what you think is the most important public policy problem facing the USA. 2. AP Review: What is a filibuster and how can they be stopped? Upcoming Assignments: - Economics Quiz (Chapter 16) = Friday! - Public Policy Presentations begin Monday! - Content Review Questions = April 22nd - AP Exam = May 3rd @ 8am!

Public Policy : 

Public Policy

Public Policy-Making Process : 

Public Policy-Making Process

The Policymaking System : 

The Policymaking System Public Policy = how to solve a “public” problem The process by which policy comes into being and evolves over time.

Making Public Policy in 5 Steps : 

Making Public Policy in 5 Steps 1. The National Agenda - getting on the radar 2. Policy Formulation - determining the remedy 3. Policy Adoption - choosing the remedy 4. Policy Implementation - regulating the policy 5. Policy Evaluation - assessing policy

Setting the Political Agenda : 

Setting the Political Agenda The political agenda: something that is important to lots of people Healthcare for all? Getting on the agenda: - major event occurs - Trend in statistics - interest group awareness - media awareness Should policy be made radically or incrementally?

The Influence of Institutions on Public Policy : 

The Influence of Institutions on Public Policy Congress makes laws; President enforces laws Both help decide policy agenda Court decisions require enforcement assistance school desegregation, abortion Often tackle issues ignored by legislature/executive The bureaucracy is a source of innovation and forms alliances with senators and staff Iron Triangles Issue Networks

Other Influences : 

Other Influences Groups may react if their issues are being ignored Current ex’s: Tea Party, Immigration Reform States are laboratories for future national policies Federalism Block Grants

April 7, 2010 : 

April 7, 2010 Objective: Students will identify the public policy process in order to show how economic policies affect Americans. Warm Up: 1. If you were trying to convince a public official that a issue needs to be placed at the top of the political agenda, what strategies would you use to convince them? 2. AP Review: Describe the pros & cons of pork barrel spending projects. Upcoming Assignments: - Economics Quiz (Chapter 16) = Friday! - Public Policy Presentations begin Monday! - Content Review Questions = April 22nd - AP Exam = May 3rd @ 8am!

Costs, Benefits, Politics Effect on Policy : 

Costs, Benefits, Politics Effect on Policy * In order to make a policy decision, policymakers must assess the following items: Cost: any burden, monetary or non-monetary, that affect a group/people by a policy Benefit: any satisfaction, monetary or non-monetary, that affect a group/people by a policy Politics = who actually benefits/pays and who ought to benefit/pay getting items on the policy agenda helping one group over another group

Classifying and Explaining the Politics of Different Policy Issues : 

Classifying and Explaining the Politics of Different Policy Issues

The POLITICS of Making Public Policy : 

The POLITICS of Making Public Policy Majoritarian politics: benefits for all & costs for all Ex: Military spending Interest group politics: benefits for a few & costs for a few Ex: labor unions wants vs. business wants Client politics: benefits for a few & costs for all Pork-Barrel Projects  “Earmarks” Ex: “Bridge to Nowhere” in Alaska Entrepreneurial politics: Benefits for all & costs for a few Ex: food safety, environment safety

Economic Policy : 

Economic Policy

Review: What is a Mixed Economy? : 

Review: What is a Mixed Economy? Mixed Economy: * Combination of: Market Economy & Command Economy **We have economic choices (market), with some govt. regulation and monitoring (command)

The Government’s Goals of the US Economy : 

15 The Government’s Goals of the US Economy 1. Economic Growth = production increases 2. Price Stability = prices don’t change radically 3. Full Employment = everyone has a job

Measuring the Economy : 

16 Measuring the Economy * In Sports we have different statistics that tell us how well a player or team is performing. Based upon this data, we as fans are able to judge if a player or team is excelling or struggling. * In economics, we have statistics that tell us how well the country’s economy is performing. These statistics include: GDP, CPI, and the Unemployment rate. Based upon these statistics, the Congress & President are able to take actions (fiscal policy) to keep the economy stable.

Measuring the Health of our Economy : 

Measuring the Health of our Economy 1. Gross Domestic Product (GDP) = measures value of all new goods & services produced in the USA * The LARGER the GDP = a healthier economy

Global GDP Leaders : 

Global GDP Leaders

Measuring the Health of our Economy : 

Measuring the Health of our Economy 2. Consumer Price Index (CPI)= measures how much money people spend on consumer goods - Measures changes in inflation (increase in the price of goods) - Too much money in circulation can lead to HIGH levels of inflation look at Zimbabwe 

How Inflation Works? : 

How Inflation Works? ~* On December 15, 2000, you could purchase an A in Mr. Shulman’s class for 1 piece of candy ~* On December 15, 2009, you could purchase an A in Mr. Shulman’s class for 5 pieces of candy 1. Did you have to spend more or less over time to get the same goods? 2. Did the candy gain or lose purchasing power over time?

Measuring the Health of our Economy : 

Measuring the Health of our Economy 3. Unemployment Rate: measures the percentage of people who want a job, but can’t find one

The Business Cycle: Label the 3 Parts : 

The Business Cycle: Label the 3 Parts * Business Cycle: measures long term changes in country’s economy

National Business Activity, 1880-Present : 

National Business Activity, 1880-Present

Slide 24: 

Really LOW demand (high unemployment) Really LOW Really LOW Economy is in bad shape Depression Slowing labor demand Slowing Down Slowing Economy is slowing Recession BIG labor demand (low unemployment) Steady (balanced) High Economy is booming! Prosperity Employment Data CPI (inflation) Data GDP Data Definition

April 8, 2010 : 

April 8, 2010 Objective: Students will identify the public policy process in order to show how economic policies affect Americans. Warm Up: 1. Why does the government try to keep inflation rates at a stable level? Upcoming Assignments: - Economics Quiz (Chapter 16) = Tomorrow! - Current Event = Monday! - Public Policy Presentations begin Monday! - Content Review Questions = April 22nd - AP Exam = May 3rd @ 8am!

The Politics of Prosperity : 

The Politics of Prosperity Many voters often look at how their own economic situations have changed when they choose candidates retrospective voting Are poor/prosperous economic conditions the result of our elected/unelected politicians? How much affect can the government have on manipulating the economy?

How to Keep the Economy Stable? Fiscal Policy & Monetary Policy : 

How to Keep the Economy Stable? Fiscal Policy & Monetary Policy

Fiscal Policy vs. Monetary Policy : 

Fiscal Policy vs. Monetary Policy Fiscal Policy Def: Taxing & Spending policies Tools Involved: Budget-making (taxing & spending) Who is the boss? Congress & President involved Speed of Policy: Quicker way to affect the economy Monetary Policy Def: Manipulating the money supply of the economy controlling inflation Tools Involved: - Cut/Raise Interest Rates - buy/sell securities  encourage or discourage the borrowing of money Who is the boss? “The Fed” - Independent of Politics Speed of Policy: Slower way to affect the economy

Politicians and the Economy : 

Politicians and the Economy Elected officials are tempted to take a short-term view of the economy and satisfy the self-regarding voter “Politics 101” How can we prevent politicians from making bad long-term economic decisions? Government can’t magically improve the economy Each economic/political ideology has their own theories on helping the economy

Ideology and the Economy : 

Ideology and the Economy Ideology plays large role in shaping policy choices Democrats tend to want the government to play an active role to improve the economy Republicans tend to want the government to play a minimal role to improve the economy BOTH parties desire high GDP, low unemployment, steady inflation

Fiscal Policy : 

* Fiscal Policy = Congress & President use taxing and spending policies to keep economy booming while making voters happy! Fiscal Policy

The Politics of Taxing and Spending : 

The Politics of Taxing and Spending Majoritarian politics yields conflicting recommendations: lower taxes, less debt Meaningful tax cuts are politically difficult Who should get their taxes cut? new programs tend to be more popular with politicians how will they be funded? Different Fiscal Policy philosophies exist…

Fiscal Policy Theories… : 

Fiscal Policy Theories… Keynesianism: When demand in the economy is too low, the government should pump money into the economy by spending more than it collects in taxes running a deficit Democrats often favor this approach Republicans often dislike this approach

Fiscal Policy Theories… : 

Fiscal Policy Theories… Supply-Side Tax Cuts: the economy will improve with less govt. interference, therefore the govt. should lower taxes & regulations Lower taxes would create incentives for private investment and purchasing Greater economic productivity will then produce more tax revenue Voodoo Economics?

Fiscal Policy Theories… : 

Fiscal Policy Theories… Reaganomics: refers to the ideas promoted by President Reagan in the 1980s A. Deregulation remove laws/rules/regulations that restrain industries B. Increase military spending led to large deficits & the increase in national debt C. Cut tax rates (income & capital gains) D. Lower inflation (technically the Fed’s job) ** Overall Effect: Stimulated economy—unemployment decreased, business activity increased, but deficits increased

Slide 36: 

Congress & President Help the Economy… Government Solutions: 1. Lower Taxes 2. Increase Spending Government Solutions: 1. Increase Taxes 2. Decrease Spending Low Fence High Fence Fiscal Policy Economic Conditions: GDP = Low Inflation = Low Unemployment Rate = High Economic Goal: Economy needs to GROW (needs a boost) Economic Conditions: GDP = High Inflation= High Unemployment Rate = Low Economic Goal: Economy needs to SLOW

Applying Fiscal Policy: : 

Applying Fiscal Policy: 1. The US economy is doing really well. Unemployment rates are at record lows and the GDP is near a record high. Nevertheless, economic advisers warn the President and Congress that inflation is rising too quickly. What should the government do? 2. The US economy is in bad shape. Many people are unemployed and the GDP is on the decline. Congress is worried that prices are so low that businesses are unable to make a profit. What should the government do?

Monetary Policy : 

Monetary Policy

Balancing the Money Supply : 

Balancing the Money Supply *Fact: The amount of money in an economy is important because it affects the level of spending, employment, prices and economic growth. Too much spending can lead to inflation (low value of a dollar) Too little spending can lead to unemployment causing the production of goods to decrease *Therefore: The Government needs tools to keep inflation steady and keep employment high!

Monetary Policy : 

Monetary Policy Definition: manipulating the amount of money in circulation to alter credit markets, employment, and the rate of inflation. Federal Reserve System makes monetary policy Monetary Policy Philosophies: The Fed can either increase/reduce the money supply: Increasing the rate of growth is loose monetary policy Reducing the rate is tight monetary policy

The Federal Reserve : 

The Federal Reserve Members are appointed by the president, confirmed by the Senate serve a nonrenewable fourteen-year term Can be removed for cause Somewhat independent of both the president and Congress Why is this a good thing?

The Fed’s Most Important Power : 

The Fed’s Most Important Power * The Fed announces changes to monetary policy by raising or lowering the federal funds rate, a government-controlled INTEREST RATE for funds that banks borrow from each other: The lower the interest rate more lending is encouraged The higher the interest rate less lending is encouraged Why does the Fed have the power of controlling interest rates versus Congress or the President?

What is the opinion of this cartoonist? : 

What is the opinion of this cartoonist?

Another Power of the Fed : 

Another Power of the Fed * The work of the FOMC (Federal Open Market Committee) buy/sell government securities (Government IOUs) 1. Loose Monetary Policy: if Fed buys securities—puts $$ into circulation more $$ is borrowed & spent; encourages economic growth 2. Tight Monetary Policy: if Fed sells securities—takes $$ out of circulation less $$ is borrowed & spent; encourages lower inflation

April 9, 2010 : 

April 9, 2010 Objective: Students will identify the public policy process in order to show how economic policies affect Americans. Warm Up: 1. If the economy was in a recession or depression, what strategies would a Keynesian believer take to alleviate the economy? What strategies would a “Supply-Side” economist recommend? Upcoming Assignments: - Current Event = Monday! - Public Policy Presentations begin Monday! - Content Review Questions = April 23rd - AP Exam = May 3rd @ 8am!

Monetary vs. Fiscal Policy : 

Monetary vs. Fiscal Policy * Monetary policy is slow, but the Fed can make a policy change more quickly than fiscal policy actions * Monetary policy cannot force people to borrow money in a recession * While monetary policy is more powerful against inflation, fiscal policy is more effective against recessions, because the government does the borrowing itself (rather than hoping private institutions will borrow money)

What Should the FED do? : 

What Should the FED do? The United States economy seems to be slowing. Economic problems around the world are hurting the profits of U.S. businesses because fewer people are buying their products. Companies are laying off workers and consumers are buying less than they did before. What should the Fed Do?

Economic Cause & Effect : 

Economic Cause & Effect If the Economy is in a recession Fiscal Policy Remedies: ↑ or ↓ Taxes and ↑ or ↓ Govt. Spending Monetary Policy Remedies ↑ or ↓ Interest Rates and BUY or sell govt. securities

April 12, 2009 : 

April 12, 2009 Objective: Students will present their projects in order to educate the class about different areas of public policy. Warm Up: 1. Announcements & Updates 2. AP Review Question: Compare the House vs. the Senate 3. Supreme Court NEWS!! Upcoming Assignments: - Public Policy Presentations Continue Tomorrow - Public Policy Unit Work & Exam = Friday - AP Content Review Questions = April 23rd - AP US GoPo Exam = May 3rd at 8am

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