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Business and Government Week 3

by: Aubrey Kenderdine

Business and Government Week 3 POLS 2340

Marketplace > Northeastern University > Political Science > POLS 2340 > Business and Government Week 3
Aubrey Kenderdine
Northeastern University

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About this Document

Lecture notes from Topic 1 and 2 during the week of Sept 18th-24th
Business and Government
William D. Kay
Class Notes
Federal Government Role, American Government, Government, Politics, Friedman, Econ, Economics, McKinley
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This 6 page Class Notes was uploaded by Aubrey Kenderdine on Sunday September 25, 2016. The Class Notes belongs to POLS 2340 at Northeastern University taught by William D. Kay in Fall 2016. Since its upload, it has received 7 views. For similar materials see Business and Government in Political Science at Northeastern University.

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Date Created: 09/25/16
Business and Government Week 3 September 18  to 24  th th Topic 1 Critiques of Government Economic Intervention Increased cost due to business regulation; public sector less efficient than private sector Tax equity Progressive tax­ raised percent tax rates in higher income brackets Regressive tax­ more taxes paid by lower income brackets (food tax banned) Fiscal Policy (taxes) Corporate income tax­ usually pass down tax to consumers (taxed twice) General sales tax­ Tax on consumption; largest revenue for states (except NH) Excise tax­ federal tax on certain products, on top of sales tax (not very productive) Aimed to affect behavior (sin tax) ­ cigarettes, alcohol, legalized drugs, gambling Phone bill tax­ started in WWI for temporary revenue but is still around today  Property tax Reevaluation of land could raise property taxes Equity problem­ richer neighborhoods pay more to fund local education Estate tax­ also known as the inheritance tax or death tax Everything after 2 million is taxed; only applies to 2% of Americans  Argument that it is un­American to have dynasties Problematic with less liquid assets like ranches and businesses Capital gains tax­ tax on investing in the stock market Goals of Raising and Lowering Source of revenue Economic adjustment Lower taxes during depression to jumpstart the economy Raise taxes during expansion to prevent inflation Encourage or discourage behavior Promote specific business or industry (low sales tax on internet encourages e­commerce) Taxes as user fees Admission fee into national parks instead of taxes paid by everyone Gasoline and toll taxes to pay for roads, paid only by drivers who use those roads Spending­ Annual budget; appropriations (outlays) Revenues (taxes) – outlays =  Negative – deficit / debt Positive – surplus Fiscal policy­ taxation and spending; budget (deficit or surplus) Monetary policy­ Federal Reserve Prime interest rate (cost of borrowing) Lowering rate would incentivize more investment Raising rate would discourage investment Discount rate­ federal banks (and some state banks) can borrow at lower rate Milton Friedman­  nd 2  Great Depression caused by the Fed raising interest rates Prematurely worried about inflation and, it backfired Bank oversight­ keep banks sound and looking sound Open market operations­ Treasury bond market Quantitative easing Putting money in or taking money out of the system How money supply is controlled, instead of printing money Topic 2 (Business as a Political Actor) Charles Lindblom: Politics and Markets, 1981 “privileged position of business” What is Business? Sector/industry or a specific firm Market composition/competition World Trade Organization­ free trade international agreement  Except for safety and regulatory concerns; not meant to protect industries  U.S. Trade Rep (cabinet member) Case: Clinton and the Banana war in the 1990s EU refused to open borders to Dole and Chiquita Case hearing in favor of Dole and Chiquita; EU did not comply Clinton imposed 100% tariff on EU companies selling any products in the U.S. EU complied  Case: Bush and Steel 2002 U.S. Steel­ not as competitive as foreign steel companies Bush put tariffs on foreign steel; Bush lost case with WTO but kept tariffs in place Foreign countries got together and imposed tariffs on U.S. products Bush dropped tariffs the day before the tariffs on U.S. were imposed Affected industries like construction and car manufacturers (steel was more expensive)   Types of action by business as a political actor Electioneering­ helping fund elections  Lobbying­ special interests communicating with people in government Grassroots lobbying­ “write to your Congressman…” getting the public to communicate Lobbying Passing along information, not bribery Spending time with people other than direct representative 3 groups Peak Associations (leadership) ­ represent business community as a whole U.S. Chamber of Commerce (on broad issues) National Association of Manufacturers  15­20 nationwide Industry/Professional Associations  National Association of Realtors American Medical Association 7600+ nationwide Specific industries/businesses General Electric Also there are lobbying companies in the business of lobbying Roles and functions Information transfer to public officials and to clients (both ways) Not just businesses (National Rifle Association, environmental groups) Federalist Papers Madison and Hamilton ­ mentioned “mischief of factions”  th Factions = 18  century interest group Others view lobbying as beneficial pluralism Iron triangle ­ Congress, interest groups, bureaucracy Issue network 10,405 lobbyists in 1998; 14,153 in 2008; 10,498 in 2016 Peak effectiveness (too many lobbyists just cancel each other out) Total spending $1.45 billion in 1998; $3.3 in 2008; $1.6 in 2016 Electioneering Participation in election campaign Support/oppose specific candidate/party Frame electorate perception of an issue Johnson Amendment­ tax­exempt orgs not allowed to campaign or endorse Direct contributions or to a Political Action Committee (PAC) Provide volunteers Fundraising Opposition research Ex. Dukakis Swarthmore newspaper in the library  History 1788­1824 no campaigning 1828­1883 spoils system (Andrew Jackson, opposition research) Support campaign = get a job; do not support reelection = lose a job Political loyalty instead of merit Jackson­ 1  assassination attempt, 1  President to have killed men in duels Pendleton Act 1883 ends spoils system (Garfield shot by Charles Guiteau) After 1883 William McKinley 1896­ 1  election of which corporations came into play 1901­ Law prohibits corporations from funding­ rise of PACs 1972 election (Watergate) – led to campaign reform Federal Election Commission (FEC) – record contributions Buckley vs. Valejo  Decided money = speech Limited contributions limits speech


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