Chapter 14

Making Public Policy


Public Policies (G388)-Governments response to problems and issues brought up by the political system.  These issues are addressed in 6 elaborate stage process.


  1. Issue Identification (G389)- Someone or some group recognizes a problem needing government action.
  2. Agenda Setting (G389)- The policymaking institution seriously considers whether or not to address the issue.
  3. Policy Formulation (G390)- A program or proposal is developed, which may take years, addressing the issue along with the pros and cons.
  4. Policy Adoption (G390)- Also taking years, process of bargaining and compromise, often altering its intent, to gain enough support to implement the new government policy or program. 
  5.  Policy Implementation (G391)- Requiring everyone’s help to actually implement the policy mandates through public programs and actions.
  6. Policy Evaluation (G391)- Evaluating the programs success and worth, to decide where or whether change is needed.


Decision Making (G392)-

            Policymakers must know the outcome of each decision before it is implemented.  Unfortunately, rarely enough information is provided for this, always leaving future doubts.


Rational Model of Decision Making (G392)- The ideal process, where everyone has “all” the information and an obvious objective, leading to a logical solution.


Incremental Model of Decision Making (G392)- A more practical process, where little by little, decisions add or subtract from existing policies.


Elite Model of Decision Making (G393)- The theory of certain groups or influential leaders proposing a policy that satisfies their common interests and goals.


Pluralist Model of Decision Making (G393)- The theory that recognizes policies where interest groups are involved, end up benefiting their goals.


1.What are public policies?

2. Name the 6 steps.

3. What stage do you need to “gain support?”

4. What stage do you “recognize a problem?”

5. What happens at the “policy evaluation stage?”

6. What happens at the “agenda setting stage?”

7. What stage do you need to “develop a proposal?”

8.  What happens at the “policy implementation stage?”

9. Which model of decision making is ideal?

10. The pluralist model of decision making is done by and benefits whom?

11. Which model of decision making do you little by little add and subtract from existing programs?

12. The elite model of decision making is done by and benefits whom?


Economic Policy (G393)

With the Great Depression now behind us, how is the government able to manage our economy?

Monetary Policy (G395)- The manipulation of the money supply by the “Fed,” to control the economy.

            Tight Money Supply (G395)- Money demand is high compared to circulation. 

So, interests rates are high, and costs of goods and services are low.

Loose Money Supply (G395)- Money demand is low compared to circulation. 

So, interests rates are low, and costs of goods and services are high.

Federal Reserve System (G394)- It consists of 12 regional banks and a Federal Reserve Board, which has the power to regulate the money circulation in the U.S. economy. Alan Green Span is the current chair.


Fiscal Policy (G396)- An economic policy theory, where the government stimulates the economy by purchasing goods (indirectly putting money into circulation) and/or adjusting taxes (directly affecting consumers).


Keynesians (G396)- Are economist John Maynard Keynes followers.  His theory was when the economy was bad the government should spend, spend, spend, to revive the economy, even if it means occurring a deficit.


Monetarists (G398)- A group of economists led by Milton Friedman, reject the idea that the governments constants monitoring of the economy will maintain its stability.


National Debt (G399)- The amount of money the government owes.

Budget Surplus (G399)- The result when the government has more money coming in than it owes (more revenue than expenses).


Budget Deficit (G399)- The result when the government owes more money than it has coming in (more expenses than revenue).


Infrastructure Projects (G400)- Expensive projects, like highways or schools, which are important for national economic health but barely pay for themselves.


Entitlement Programs (G400)- Uncontrollable mandatory government spending on programs like social security or unemployment that funds anyone who qualifies.


Reasons For the National Debt (400)-

1.      National emergencies like World War II and the great depression.

2.      Infrastructure Projects

3.      Entitlement Programs

Balanced Budget Amendment (G402)- A constitutional amendment forcing congress to deal with the national debt and balance the budget.


Economic Development Policies (G403)- Policies (like westward expansion) adapted to promote and protect American businesses therefore supporting the economy. 

As a result we have Tariffs (G403)- Taxes on goods imported to the U.S. from abroad; intended to protect growing U.S. industries from foreign competitors.


Free Trade (G403)- The abolition of tariffs and other trade barriers, now makes it possible for goods and services to be traded freely.


Balance of Trade (G403)- The net difference in value between the value of what America buy and sell overseas.


Smokestack Chasing (404)- Was a program to attract jobs to a specific area as a means to protect local businesses.  It provided tax breaks, subsidies, and employment programs to bring major corporations local.  It was more commonly in the south from the 30’s  thru the 70’s but now is found all over.


NAFTA (G405)- North American Free Trade Agreement was passes in 1993, remaining a controversial policy.


Industrial Policy (G406)- A strategy to use government policies to restructure the nation’s economy. They would do this by abandoning industries where labor costs are to high to compete with other nations and instead concentrate on other industries making them competitive in the world market.


Supply-side Economics (G406)- A strategy advocating increased production of goods by giving incentives to private producers.  Incentives such as cutting taxes to encourage investment, lifting marketplace regulations, and reducing other government restraints on private business initiatives.


1. What is monetary policy?

2. When money supply is tight, demand is______, interest rates are ________.

3. When money supply is loose, demand is______, interest rates are ________.

4. How many banks make up the “fed?”

5. Who is chair of the “fed?”

6. What policy does the government stimulate the economy by purchasing goods?

7. Who believed the government should spend to revive the economy at any cost?

8. Are monetarist for or against constant government monitoring the economy?

9. How are infrastructures bad?

10. What program has uncontrollable spending and funds anyone who qualifies?

11. Name 3 things attributing to the governments debt.

12. The balanced budget amendment forced congress to do what?

13. Economic development policies promote and protect what?

14. What are tariffs?

15. What does free trade do to tariff?

16. Smokestack chasing gives what kind of incentive to corporations?

17. Why would the government give corporations incentives?

18. What does NAFTA stand for?

19. How does industrial policy help the American economy?




Economic Regulatory Policies (G407)- A policy where the government monitors and controls critical industries and sectors of the economy.  Criticisms in this area came during the Regan and Carter administration when commission regulations were lowered and Federal Commissions were permitted private ownership.  Critics complained that things were too relaxed and America’s economy would and did suffer.


Interstate Commerce Act of 1887 (G407)- established the first regulatory commission, the Interstate Commerce Commission (ICC), which regulates prices and standards of services for interstate rail companies.


Regulatory Agencies (G407):

FDA- Food and Drug Administration protects consumers from health-threatening problems.

            FTC- Federal Trade Commission protects unfair market place competition.

FCC- Federal Communication Commission regulates the interstate telephone, telegraph, radio, and other telecommunications industries.

SEC- Securities and Exchange Commission oversees the activities of businesses in the securities and investments markets.

FEDRC- Federal Energy Regulatory Commission regulates interstate production and distribution of electric power and natural gas.

NLRB- National Labor Relations Board regulates workplace relations between businesses and their employees who wanted to become a union.


Antitrust Laws (G407)- Intended to protect the publics greater good by promoting economic competition.

Sherman Antitrust Act of 1980 made it illegal for a business to restrain trade or monopolize the market of a product or service.

Clayton Antitrust Act of 1914 outlawed business practices that may reduce competition or promote monopolies in a market.


1. Ragan and Carters administrations did what to regulatory commissions?

2. Antitrust laws did what?


Social Policies (G408) 

The government made its first efforts with social policies after the great depression.  They came up with 2 major types of policies: one providing benefits and services solely to the poor and another that helps meet the needs of the general public. (G409)


Poor Laws (G408)- The British laws making taking care of the poor, sick, and needy the community’s responsibility.


Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (G409)- A reformed government policy aimed explicitly at helping the poor.


The Old Welfare System (G409)

Operated in 3 forms:      

            1. General Assistance- given in cash and food stamps

            2. Work Assistance- offered jobs and job-training programs

            3. Categorical Assistance- aided specific population problems


1. It was too centralized and inflexible- it was impossible guarantee equal access to minimal benefits.

2. It created too much dependence- there were no incentives to get off welfare.

3. It was getting too expensive- because they had to meet anyone’s needs that qualified; there was no way to budget for an unknown expense.


The New 1996 Reform Welfare System (G410)- addressed all its previous criticisms and gave more power to the states.


Temporary Assistance for Needy Families (TANF) (G411)- A block grant, created by 1996 welfare reform, to replace or change previous welfare system.  The program accomplishes 4 basic goals:

1.      Assisting needy families so children may be cared for at home.

2.      Ending dependence by promoting job training, work and marriage.

3.      Reducing out-of-wedlock pregnancies.

4.      Promoting 2 parent families.


1. When did the government first get involved with Social policies?

2. Social policies gave what to the poor?

3. Social policies met the needs of whom?

4.The old welfare system gave what 3 things?

5. 3 criticisms of the old welfare system where?

6. The New 1996 Reform Welfare System gave more power to?

7. Name the 1996 Reform Welfare System block grant.

8. How did TANF make is so children may be cared for at home?

9. How did TANF end dependence?

10. TANF reduced what?

11. TANF promoted what?


The General Publics Needs (G414)- Policies that address all Americans needs, not just the poor.

Social Insurance Programs (G414)- Social programs set up by the SSA to intended to cover losses due to long-term illness, unemployment, retirement, and other interruptions to a persons working life.


Social Security Administration (SSA) (G414)- The money comes from employees and employers earnings.  Once you meet the payment requirements they become eligible for benefits.

Medicare (G415)- Government provided health insurance to the elderly and disabled.


Social Regulation Programs (G417)- A program intended to protect consumers from the hazards of life in a highly industrialized economic system, like bad food or false advertising.


Consumer Protection Policies (G417)- Government programs and laws made to deal with the safety and quality of food and drugs in the marketplace.


FDA (G417)- Food and Drug Administration regulates consumer products like cosmetics, drugs, medical devices and food for safety and quality.  They also investigate complaints and oversee manufacturing.


Worker Protection Programs (G419)- Government installed programs protecting workers rights, occupational safety and health, and against discrimination.


Equal Employment Opportunity (G419-420)- Programs that prohibit workplace discrimination based on race, sex, religion, national origin, or disabilities.  This requires companies to take affirmative action at improving employment opportunities for people who might fall in this group.


OSHA (G420)-Occupational Safety and Health Administration was created to reduce safety and health hazards in the work place.


1. Social security comes from whom?

2. Medicare is ________________ provided to the __________and _____________.

3. What health insurance program has the government done away with?

4. Social regulation programs were intended to _____________from_____________.

5. Who regulates consumer products?

6. Worker protection programs protect who and what against what?

7. Equal employment opportunity programs prohibits?                    

8. Equal employment opportunity programs requires companies to?

9. What does OSHA stand for?