economic policy. economic policy president & congress held responsible for economic “health”...
TRANSCRIPT
ECONOMIC POLICY
• President & Congress held responsible for economic “health” of nation
• Policy involves improving overall economic health of nation through gov’t spending & taxation policies
Raising Revenue
• Gov’t raises revenue through collection of taxes (federal gov’t collects individual income taxes, corporate income taxes, social insurance taxes, excise taxes, customs duties, & estate & gift taxes)
• Gov’t also raises revenue through sale of gov’t securities by Fed Reserve & through collection of fees for services provided (e.g. patent fees)
Government Spending
• May be discretionary or mandatory– Discretionary – spending about which gov’t
planners may make choices– Mandatory – required by existing laws for current
programs• Recently, mandatory has grown while
discretionary has decreased
Government Spending
• Discretionary includes defense spending, education, student loans, scientific research, environmental cleanup, law enforcement, disaster aid, & foreign aid
• Mandatory includes interest on national debt & social welfare programs (Social Security, Medicare, Medicaid, veterans’ pensions, & unemployment insurance)
Historical View
Monetary policy:
• Role of the Federal Reserve
– Purpose & structure
–Methods of control
– Independence …
How to Control the Economy?
Fiscal policy
• Keynesian policy
• Supply-side policy
Why is the economy hard to control??
How to Control the Economy?
• Political differences in groups interested in policymaking–Most want benefits, protections from
economic hardship
• 3 main players:–Businesses–Consumers–Labor
Players in Econ Policy Game
Econ Policy & Business• Began with antitrust policy in 1890
– Sherman Act 1890 – “trust-busting”
– 1914 Clayton Anti-trust Act
• Political differences in regulation of market consolidation
– ex: Bush vs. Obama administrations
Econ Policy & Business• Role of the SEC
• Late 90s thru 2000s – corporate scandals and frauds
– Ex: Enron, Goldman Sachs
• Starting in 08: TARP used to protect market & prevent business bankruptcy
• Consumer protection policy begins with 1906 Food & Drug Act
– Created FDA
• Today, FDA regulates manufacturing, contents, marketing, & labeling
• 60s/70s: rise in focus on consumer issues
– CPSC: hazardous products
– FTC: truth in advertising & labeling
Econ Policy & Consumers
Econ Policy & Labor• Issues: wages & hours,
contracts/collective bargaining, child labor, safety
• Until 1914 Clayton Act, gov’t involved in disrupting unions
• 1935 National Labor Relations Act/Wagner Act
– Created Natl Labor Relations Board
– Collective bargaining, unionizing protection
Econ Policy & Labor• 1947 Taft-Hartley Act: some
restrictions on union behavior
– Prez can halt major strikes thru injunction
– Allowed for “right-to-work” states
• 2 major labor successes:
– Unemployment $
–Minimum wage
• Partisan differences in views of regulation
• Two types of regulatory agencies:
– Independent regulatory commissions
– Independent (executive) agencies
Regulating the Economy
Regulation: the Environment• 1970s, Clear Air & Water Acts: limited
pollution; regulated many corporate behaviors regarding environmental treatment–Created the EPA to enforce
• Environmental impact statements: controversial requirement for projects using federal funds –Pros & Cons …