American Public Policy
American Public Policy POLS 2302
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Date Created: 10/22/15
Chapter 7 Economic and Budgetary Policy Importance of Economic Policy Economic Policy is 0 a central concern of government 0 a by product of many other policies impacted by other government policies Goals of Economic Policy Economic Growth 0 increase in production of goods and services each year GDP 0 Benefits tax revenues increase aid or programs the redistribution of resources 0 a zerosum society occurs when little growth no program gains or resources from one taken to give to another redistribution of wealth causes more conflict Full Employment 0 jobs can substitute for social welfare programs 0 unemployment influces budgets 0 unemployment not distributed evenly ex Race and age 0 change in job sectors different jobs more two income households 0 table 71 Low Levels of Inflation 0 an increase in cost of goods and services affects all citizens Positive Balance of Trade 0 typically negative 0 reasons oil import consumption of foreign products weakforeign economics can39t purchase US products cheap labor Managing Deficits and Debt 0 different between deficits and national debt need to pay interest on debt 0 impact of deficits and debt borrowing by gov39t limits supplies of funds increase in interest rates forego other programs 0 debates over balanced budget Interrelationships of Goals attempts to affect one goal can affect another as well for example 0 inflation and unemployment 0 economic growth and inflation 0 deficits and growth Tools of Economic Policy Fiscal Policies 0 decisions concerning taxing and spending 0 president must work with Congress to make any major changes Monetary policy 0 pivotal component of economic policy in the US 0 differs from fiscal polic tries to deal with economic fluctuations by controlling the amount of money in circulation or money supply the Fed implements the policy itself ratherthan responding to initiatives from the president and Congress Fed is independent of the government39s political insitutions Regulation 0 enacted to convey a benefit to society 0 not an explicit economic policy but can affect the economy Incentives Subsidies and Support 0 tax breaks Tax policy process of raising enough revenues to meet expenditures demands choices in Tax Policy collectability scal neutrality if system gives preference to one kidn of revenue or expenditure without a good reason 0 c c buoyancy the ability of the tax to keep up with inflation and economic growth distributive effects the impact of the tax on different groups in the population visibility the extent to which the tax is visible or acceptable to the general public horizontal and vertical equity the degree to which the tax system is fair or equitable Budget Process Agency Budget Development c c OMB Budget Review Assumptions nd Planning BUdQet Budget Congres cnal comm Execution ReVIew Budgetary policy action an and Bush tax cuts 0 focused on the wealthy 0 increased deficits responses to the deficit 0 GrammRudmanHollings Act require progressive reductions in the deficit overfive years to ensure a balanced budget by 1991 Budget Enforcement Act also attempted to reduce deficit added payasyougo that required all tax and spending legislation to be deficit neutral Economic Issues and Challenges maintaining economic growth growth of entitlements challenges for state government more responsiblility 0 Chapter 8 Health Care Policy Background Government activity relatively recent Selected major agencies 0 Food and Drug Administration 0 National Institutes of Health 0 Centers for Disease Control and Prevention Evolution 0 individual and employersponsered policies 1950s 0 federal programs developed in 1960s Medicare and Medicaid 0 attempts to create a national health insurance program ex President Clinton in 1993 passes national health security act Hybrid system 0 public and private providers 0 most younger than 65 are in employersponsored plans 0 reflects or political culture 0 gaps exist Uninsured 0 About 45 million burden on lowincome individuals 0 Receive less care less preventative care and other inequities Strengths 0 Number of physicians 0 Hospital facilities 0 Research centers Weaknesses 0 Health care indicators not great especially for certain populations 0 Cost 0 Unequal access Public Health Programs Medicare 0 Adopted as part ofthe SSA 0 Part A core benefits deducible copays paid for by medicare trust fund 0 Part B supplemental coverage balanced budget act of 1997 pays for 23 of care for elderly uses a fee schedule of reasonable costs that specifies what providers should charge 0 Part C Medicare Choice reaction to rising health care costs disease prevention disease management and personal nurse programs that are intended to improve patient compliance with medical advice HMO health maintenance organizations low enrollment 0 Part D discounts for prescription drugs took effect Jan 1 2006 protect those who enroll against the extremely high costs that come with a serious illness government covers 75 of drug cost rising costs 0 costs going up every year 0 Fraud and abuse concerns charging government for services not performed order tests and procedures that may be unnecessary 0 Future little agreement on how to reform disagreements on role of government in health care bleak because of demands Medicaid 0 Assists poor and disabled through federalstate program of health insurance 0 about 44 million beneficiaries 0 Provision government pays about half the cost costs rise at rapid pace more generous than Medicare program Fraud and Abuse 7 of overall Other Public Health Programs and Policies 0 Veterans health care provides medical care to American veterns VHA operates hospitals and clinics extensive coverage Veterans Health Care Eligibility Act of 1996 0 Health Insurance and Portability Accountability Act HIPAA right to keep insurance between jobs Patients39 Rights Employment Retirement Income Security Act ERISA allows individuals to sue insurance companies ifthey are denied certain medical treatments 39 Problems Rising Costs 0 Soaring costs have increased faster than consumer incomes 0 effects federal and state budgets federal government efforts at reform some state innovations 0 large increases in the cost of prescription drugs Managed Care Organizations a way to combat feeforservice o Includes 0 HMOs 0 preferred provider organizations PPOs promote health services that are most costeffective such as regular physicals and certain medical screening tests limit access to costly services and specialists and negotiate lower fees with health care providers attack on feeforservice medicine provides prepaid care may have lowered quality 0 doctors spend less time with patients 0 below 50 think it makes getting medical care easier Reducing Costs Options Pass more costs on to the consumer Establish personal health accounts Better management of chronic disease Emphasize preventative health care Chapter 9 Social Security and Welfare Policy Povert Poverty line 19850 in 2005 Poverty based on demographics 0 1 in 5 children 0 minorities have higher levels than average Poverty as an income distribution problem Gini coefficient way of explaining income equality Causes of Poverty Conservative 0 Little involuntary poverty 0 Culture of poverty 0 Government programs encourage poverty Liberal 0 Poor lack opportunities education job training etc 0 Discrimination Social Security Largest federal program Entitlement program 0 based on how long you worked an how much you earned Social insurance program Redistribution of funds across generations Payasyougo program Categories of beneficiaries 0 retirement disability family benefits survivor and Medicare Financing Social Security The payroll tax is regressive 765 of paychecks goes to FICA until pay is 90000 in 2005 maximum annual payment of 6885 Changing demographics 0 increasing number of older Americans 0 by approx 2040 each recipient financed by only two workers Problem of the indexing of benefits fixed retirement age Meanstested Programs 39 To qualify an individual must satisfy a means test Associated with income based on need In general benefit the poor Typically welfarecharity programs Public support lower than SS Food stamps Aid to Family with Dependent Children AFDC 0 mainly for women with children and virtually no income 0 issues no expectations from recipients disincentive to work limits on hours worked program stigma Welfare reform options 0 debates between liberals and conservatives liberal not enough support conservatives disincentive to work Led to movement for reform 0 Clinton with Republicans Personal Responsibility and Work Opportunity Reconciliation Act ended AFDC created Temporary Assistance for Needy Families TANF time limits on benefits requirements to work or prepare to work Enforced child support States run their own programs Caseload reduction requirement 50 by 2002 39 primary goal is to link welfare benefits to recipient responsibility SS Reform and Personal Accounts Economic Issues Current system makes safe investments 0 provides large share of income to aged 0 payasyougo to an earmarked system Privatization 0 positives could provide larger returns would encourage savings growth etc 0 negatives market uncertainty or poor decisions need to pay for transition