Economic Policy

1
Economic Policy

• Chapter 18

2
Roots of Economic Policy

• The early years of our nation were marked by a
  _____________ economic policy.
• Interstate Commerce Commission (ICC)- 1st attempt
  at govt _______________ in 1887.

3
Consumer Protection(Progressive Era)

• Sherman Anti-Trust Act of 1890
• ______________________ Act (1906)
• Federal Reserve Act (1913)

4
Great Depression/ New Deal

• The economy collapsed in _________
• FDRs New Deal created programs that were
  supposed to safeguard our _________.
• Laissez faire replaced with interventionism-
  govt having an ______ role in the economy

5
Government Regulation

• The decades of the 1930s thru the 1970s were
  marked by economic and social _________________.
• Social activism combined with _____________
  politicians led the way for government regulation.

6
Deregulation

• A reduction in market ________ in favor of market
  based competition began in the mid 1970s.
• Starting with Jimmy Carter, most presidents have
  continued to ____________ industries with mixed
  results.

7
Fiscal Policy

• Congress controls Fiscal policy- government
  _________________, revenues, and debt
• It is conducted through the federal budget
  process.

8
The Budget

• The Budget Account Act of 1921
• This created the OMB and delegated budget power
  to the President.
• The ___________________ Budget Act of 1974
• This created new procedures for the budget.
  First, the President submits the budget. Then,
  the House and Senate budget committees analyze
  the budget with the Congressional Budget Office
  (CBO).
• 2/3 of spending is on entitlements A government
  program that guarantees and provides benefits to
  a particular group. This is uncontrollable
  spending.

9
Budget

• The primary purpose of the budget is to _________
  government programs.
• Most spending goes toward national defense and
  human resource spending.
• Mandatory vs ________________ spending

10
Entitlements

• _________________ programs are benefits paid to
  American citizens who meet criteria set by the
  government.
• Examples _______________, medicaid, food
  stamps, etc.

11
Social Security

• Insurance for the unemployed and _______
• insurance program- created for the unemployed and
  the elderly
• Everybody would be taxed and all would be
  eligible for insurance
• Assistance program- created for the blind,
  dependent children, and aged
• Only poor ( by the ________ test) are considered
  for assistance

12
Problems with social security

• 1) baby boomers reaching retirement age
• 2) not as many ____________ as recipients
• 3) payouts not progressing with cost of living
  increases
• Surplus projected to _____________ in next few
  years.

13
Deficits/Debt

• Deficit- expenditures gt revenues
• Debt- collection of yearly deficits
• Most our our ________ is owned by China

14
Monetary Policy

• The Federal Reserve System (the Fed) manages
  monetary policy
• They control the money __________ and interest
  rates.

15
Machinery of Economic Policy Making

• There is fragmented policy-making that is not
  under the presidents full control because within
  the __________________________, numerous
  organizations influence policy.
• Congress is most important in __________ policy
  making. It approves all taxes and most ________.
  It consents to wage and price controls. It can
  influence the Fed by threatening to reduce it
  powers.

16
Path to Reducing Spending

• The Gramm-Rudman Balanced Budget Act of 1985 was
  __________________.
• New Strategy of 1990
• If entitlements increase, then taxes have to
  increase

17
Levying Taxes

• Policies on Taxing
• The tax burden is too low on citizens, however,
  there are loopholes for industry (client
  politics).
• The rise of Income tax
• The __________ amendment (1913)
• Usually, taxes increase during ____________ and
  decrease during peace.