300word min

11 Public Policy Associated Press/David Coates Learning Objectives By the end of this chapter, you should be able to• Define public policy, and describe the tension among its various goals.

• Discuss agenda setting as part of the policymaking process.

• Examine the politics surrounding the public policymaking process.

• Explain how ideology shapes the policymaking process in the United States.

• Describe how the tools of U.S. economic policy are used to maintain a stable economy.

• Trace the background of social policy in the United States.

• Trace the evolution of American foreign and defense policy, and describe its limitations given a strong American tradition of isolationism. fin82797_11_c11_255-280.indd 255 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.1 Defining Public Policy On Labor Day 2013, fast food workers around the country staged a one-day strike for a $15.00 per hour minimum wage. They have periodically staged one-day strikes since. Meanwhile, a number of localities around the country, including Los Angeles, San Francisco, and Seattle, have enacted $15.00 per hour minimum wage laws. On one level, these new laws are sim- ple policies requiring employers to pay their workers a minimum of $15.00 per hour. But on another level, they are the culmination of a policymaking process that says much about American politics and the interplay among competing American values, interest groups, and, ultimately, money.

At first glance, paying workers so they can support themselves should be a matter of eco - nomic security. Moreover, it should be a matter of fairness: Is it fair that some earn millions of dollars while others earn so little that they are forced to live in poverty? One possible answer to that question is clear if we consider the American tradition of individualism, upon which the American political system rests and which animates much of American politics. According to this view, individuals are free to make choices for themselves, and they are entitled to reap the rewards of their efforts. In other words, one who invests in obtaining the education and skills necessary to command a high income is entitled to that income. One who has chosen not to is not entitled to any more than he or she is worth. Of course, this is an oversimplification of a very complex issue: Income is not only a matter of the choices that people may have been free to make. Those born into poor families do not necessarily enjoy the same opportunities as those born into wealthier families, in which case individualism may be a convenient ratio - nalization for inequality. Moreover, all people are not the same because not everyone is born with the same natural endowments.

Therefore, when approaching a particular policy, it is necessary to understand that while the policy may result in security for some and greater equity, it may also infringe upon the lib - erty of others. Employers forced to pay higher wages will argue that if they are required to pay a minimum wage, their liberty to contract for less, and even the liberty of workers to work for less, is being infringed upon. Those same employers will argue that the efficiency of the marketplace is also being undermined, which in turn may threaten the economic secu - rity of others. The minimum wage, like any policy issue, involves tradeoffs, compromise, and the building of consensus. To a large extent, the consensus necessary to enact policy in the United States is typical of the consensus needed to do anything within the U.S. political system because of the fragmentation underpinning it.

11.1 Defining Public Policy Public policy can be defined as a plan of action that reflects the collective will of the political community. Political scientist Deborah Stone (2002) has defined public policy as communi - ties trying to achieve something as communities. In this vein, public policy represents the collective will of communities and, as such, is very democratic. Stone offers two models: the polis and the market. © Toby Talbot/AP/Corbis Town hall meetings are examples of a polis, a political community that gathers to make decisions based on the collective will of the people. fin82797_11_c11_255-280.indd 256 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.1 Defining Public Policy The polis, a term that comes from ancient Athenian democracy, is the political community, and it assumes both collective will and collec- tive effort. The market, however, is an arena in which individuals pursue their objectives and make exchanges. The market begins with individuals and assumes no goals, preferences, or intentions other than those held by individu - als. Social and economic rights, as well as political ones, are defined by membership in a community.

What makes a collection of individ- uals a community is not only a mat - ter of specifying who is in and who is out, but also a matter of mutual understanding among members. It is the sharing of burdens and bounty that holds people together. The objective in the polis is to pursue the public interest, but how the public inter- est is defined is often a matter of politics. One approach is to define the public interest as the summation of individual interests, which may be consistent with a traditional understanding of liberalism, defined in Chapter 1. Another approach is to say that there is a transcendent public interest, which is more consistent with republicanism, also discussed in Chapter 1. In the polis, there must be cooperation. The polis is therefore defined in the following way: a community—maybe even multiple communities—with ideas, images, will, and effort quite apart from individual goals and behavior. There is indeed a public interest. What typically makes an issue a policy issue rather than an individual one is that it seeks to address common problems. Goals of Public Policy On the basis of this definition of public policy, the goals of policy would be whatever the com - munity seeks to achieve, so long as it is arrived at in a democratic fashion. Stone, for instance, has suggested that policy in the United States is guided by four basic goals: equity, efficiency, security, and liberty.

Equity Equity can be a difficult term to define because it is often relative. If goods are to be distrib - uted, it should be on the basis of needs, rather than with each person receiving the exact same benefit. A larger family, then, should receive more public assistance than a family of two. In this vein, equity has more to do with fairness than with equality. To achieve equal - ity, each would receive the exact same share regardless of need. If those in less need should receive something while those in greater need do not receive enough, that would strike many as being unfair. On Labor Day 2013, fast food workers around the country staged a one-day strike for a $15.00 per hour minimum wage. They have periodically staged one-day strikes since. Meanwhile, a number of localities around the country, including Los Angeles, San Francisco, and Seattle, have enacted $15.00 per hour minimum wage laws. On one level, these new laws are sim - ple policies requiring employers to pay their workers a minimum of $15.00 per hour. But on another level, they are the culmination of a policymaking process that says much about American politics and the interplay among competing American values, interest groups, and, ultimately, money.

11.1 Defining Public Policy Public policy can be defined as a plan of action that reflects the collective will of the political community. Political scientist Deborah Stone (2002) has defined public policy as communi - ties trying to achieve something as communities. In this vein, public policy represents the collective will of communities and, as such, is very democratic. Stone offers two models: the polis and the market. © Toby Talbot/AP/Corbis Town hall meetings are examples of a polis, a political community that gathers to make decisions based on the collective will of the people. fin82797_11_c11_255-280.indd 257 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.1 Defining Public Policy Efficiency Efficiency is often defined as getting more output for fewer inputs. In the marketplace, it often amounts to maximizing profits while minimizing costs. Markets are often presumed to be more efficient than the polis because transactions are based on price. A policy that distributes goods to a group of people, even for noble reasons, may be deemed inefficient if it raises the costs of goods and services in the marketplace through the imposition of a tax. At issue for policy is the most efficient distribution or allocation of resources. Here, the question is how the most can be distributed at the least cost.

Security Security often refers to feeling secure in one’s person. At a minimum, it entails physical security, which is to be free from bodily harm. Since the government became more active, beginning in the 1930s in the wake of the Great Depression, the defini - tion of security has been broadened to include economic security.

Liberty Liberty is a term used often in the United States because it represents a core American value. In American public policy, there is a presump- tion in favor of individuals’ liberty unless the exercise of that liberty would cause harm to one’s self or to others. Recall from Chapter 1 John Stuart Mill’s famous definition of liberty and the ensuing “harm” principle in On Liberty (1859/1956):

The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number is self-protec - tion. . . . The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.

Mill’s harm principle has been the basis for governmental intervention. Because there is a presumption in favor of individual liberty, the result has often been reactive public pol- icy—policy in response to a specific problem—rather than proactive public policy—policy intended to prevent problems in the future. Policy Process The public policy process in the United States could be thought of in very linear terms, as described in Figure 11.1. However, constructing policy in response to a problem is not like Rolls Press/Popperfoto/Getty Images During the Great Depression of the 1930s, the home- less and unemployed could receive free meals from soup kitchens. fin82797_11_c11_255-280.indd 258 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.1 Defining Public Policy following the owner’s manual for a car. It is not a matter of simply following the flow chart.

Each step in the process is a political process unto itself. For each group whose interests are served by defining goals in response to a problem, there will be another group whose inter- ests are served by not defining a problem at all. Because not all people may agree that a prob - lem exists or on what the goals ought to be, political contests emerge between different groups and interests in every step of the process.

Figure 11.1: Policy process flow chart The process for public policy can be difficult to define due to the various interest groups in the United States. However, many of the steps in the linear flow chart could aid in the construction of a policy process for any group. fin82797_11_c11_255-280.indd 259 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.1 Defining Public Policy Even constructing a policy around the goals of equity, efficiency, security, and liberty often entails balancing the tradeoffs between them, and this balancing is political. On one level, all policy seeks to attain at least one, if not all, of these goals. However, each goal in and of itself is difficult to achieve because not everyone in a political community, especially one as large and diverse as the United States, may be in agreement over how these concepts are defined. In fact, defining and taking ownership of these terms shapes American politics. Moreover, defi- nition affects the distribution of power, which itself is at the core of politics. Policy outcomes often show who received something and what this person or group received, which, in turn, says something about the power of individuals and groups relative to others.

Agenda Setting Because public policy is an inherently political process, the key question is how what might appear to be a problem for one or some becomes what we would otherwise define as a policy problem. What is a problem for Group A may not be a problem for Group B. For legislators to even address an issue, it has to be on the public agenda for discussion, but agenda setting is not an easy process. If a group can succeed in getting an issue on the agenda for public discus - sion, that group might be said to have power. The group that thinks a problem exists for policy discussion seeks to get it onto the agenda. The group that does not think a problem exists seeks to keep the issue off of the agenda. Still, at the heart of agenda setting is first defining a problem, and second who defines the problem. Problem definition is also critical because it ultimately determines the scope of policy, if there is to be policy at all.

Consider for a moment that a manu- facturing plant in upstate New York is about to close. Is the plant clos- ing necessarily a problem? Surely it may be a problem for those who are about to lose their jobs. For those who believe in free markets, how - ever, there is no problem because this is simply the marketplace run - ning its natural course. Still, a ques - tion remains: How do those who see it as a problem convince others that it should then be placed on the public policy agenda?

A common way to define a policy problem is to measure it. Numbers move something from singular to plural. As an example, to convey a problem of poverty, someone try - ing to get the issue on the agenda may want to begin with a story of one family living in poverty so that people can relate. But one family in poverty is not enough to constitute a problem. This person needs to show that there are millions of families like this one to convey a sense of crisis. It is not enough to show that this plant closing in upstate New York is a problem; rather, it needs to be apparent that Associated Press/Paul Sancya Detroit, Michigan, once a thriving industrial city, expe- rienced social problems associated with the decline of the automobile industry in the early 2000s. Its economy was affected by this decline, illustrated in this image of a padlocked chain-link fence in front of the former General Motors engine plant. fin82797_11_c11_255-280.indd 260 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.2 Policy Politics plants like it throughout the country are closing, affecting millions of workers and others.

Still, measurement is subject to interpretation, and hence manipulation. To say that millions are affected suggests that the impact is large. But in a country with more than 300 million people, a few million—perhaps 6 million—is a problem for only 2% of the nation. For those who seek to keep the issue off of the agenda, thinking of only 2% rather than 6 million serves their purpose well: Now the problem is not nearly as large as it appears, and talking in terms of percentages depersonalizes the issue. Percentages do not have human faces; people do.

In defining a problem, it is necessary to mobilize bias—that is, get people to join the conflict.

E. E. Schattschneider (1975) defined politics as conflict consisting of two sides: actors, who are actively involved in the conflict, and spectators. Those who want to put the issue on the agenda will mobilize bias—essentially, sell their position to others—and try to socialize the conflict. They will turn those spectators into actors. Those who seek to keep the issue off of the agenda will seek to localize the conflict by attempting to keep the number of actors small and the spectators removed from the conflict. In addition to manipulating numbers, both sides will rely on studies by think tanks and universities and will use the media to their best advantage. At the end of the day, how the agenda is set and by whom says much about who gets what, when, and how (Lasswell, 1936).

11.2 Policy Politics Political scientist James Q. Wilson (1992) described four types of politics surrounding public policy: majoritarian politics, entrepreneurial politics, client politics, and interest-group politics .

In each of these types of politics, there are perceived benefits and perceived costs.

Majoritarian Politics Majoritarian politics involves both distributed benefits and distributed costs, which means that the benefits are enjoyed broadly and the costs are widely shared. It often involves making appeals to large blocs of voters and their representatives with the intent of securing a major- ity. Because the appeal is to the majority, interest groups tend to be absent. Although majori - tarian politics can be controversial, controversies tend to be over matters of cost or ideology.

Interest-Group Politics Interest-group politics entails concentrated benefits and concentrated costs. Here, interest groups are heavily involved in the policy process, and the policy that is adopted very much reflects the power of respective interest groups. Plants close all the time, costing many Amer - icans their jobs. Congress passed the Worker Adjustment and Retraining Notification Act (WARN) in the summer of 1988, which mandated that firms employing more than 100 work - ers give their workers 60 days’ prior notice of intent to close. The benefits are concentrated among those who work for these plants, while the costs are concentrated among their employ - ers. Issues like these are fought out by organized interest groups. Workers’ groups and unions support the interest groups because they will derive benefit, while business groups who will pay the costs oppose them. Each side will also seek ways to mobilize bias. fin82797_11_c11_255-280.indd 261 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.2 Policy Politics Client Politics Client politics involves concentrated benefits and distributed costs, which is to say a few derive the benefits while many in fact pay. Because the benefits are concentrated, the group that is expected to receive them now has an incentive to organize and work toward them. At the same time, the costs are so widely distributed that on a per-capita basis they are so small that most individuals will either miss them or be indifferent to them.

Agricultural price supports are a good example of client politics at work. Since the New Deal, the fed- eral government has been paying farmers to plant less as a way of driving up prices. During the Great Depression, when prices were depressed, this was very impor - tant. Even after the Great Depres - sion, the government continued these subsidies because politicians from farm states lobbied for them, and being able to deliver them to farmers ensured that the farmers would vote for them. Meanwhile, the average consumer has often been unaware of how these subsi- dies affect food costs.

Client politics, which is effectively a way of shoring up political support, could be said to fall into the broad category of pork barrel projects discussed in Chapter 4, in which politicians use earmarks to provide funding for projects in their district. But it is also an example of what economists refer to as rent-seeking , whereby actors in the marketplace seek benefits. Here, political actors are seeking benefits, or constituent support, by delivering something of value to constituents, such as a policy.

Entrepreneurial Politics Entrepreneurial politics involves distributed benefits and concentrated costs. Here, the benefits are expected to be widespread, while costs are expected to be concentrated. Cer - tain types of environmental protections might be a good example. Anti-pollution laws are proposed as ways to improve the health and well-being of all people at the expense of a few:

those who pollute, who may be mainly corporations.

These types of policies are often led by policy entrepreneurs—people both inside and out- side government who are able to cobble together coalitions of support to attain a legislative majority. Policy entrepreneurs may or may not accurately represent the interests and wishes of the public at large, but they are often able to galvanize the public through the mobilization of bias, if for no other reason than that their arguments appear to be reasonable. Spaces Images/SuperStock One of the provisions of the Agricultural Act of 2014 enacted by Congress is the ending of direct payment subsidies that allowed farmers to be paid whether they produced crops or not. fin82797_11_c11_255-280.indd 262 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.3 Policy Based on Ideology Lowi’s Typology Chapter 1 explored political scientist Theodore Lowi’s (1964) identification of three types of politics: regulatory, redistributive, and distributive. This typology applies to policy as well.

With regulatory policy, government is regulating the activities of some in order to protect the interests of others. It is not hard to see how this model is consistent with Wilson’s model of interest-group politics. In redistributive policy, a group receives certain goods, which another group pays for. This can fit into interest-group politics or even entrepreneurial politics if, for example, the wealthy are being overtaxed for the benefit of the broader middle class. And in distributive policy, all groups are getting something as part of the politicians’ desire to seek political rent. This then is consistent with both majoritarian and client politics. Wilson’s types of politics can be easily classified in a grid, as shown in Table 11.1.

Table 11.1: Wilson’s types of politics Perceived costs Distributed Concentrated Perceived benefits Distributed Majoritarian politics Entrepreneurial politics Concentrated Client politics Interest-group politics 11.3 Policy Based on Ideology Policy in the United States often reflects a particular worldview and tends to be highly ideo - logical. These worldviews certainly reflect a position with regards to the role of government in society. Indeed, the nature of policy—what the response to a problem is, if there is any— makes an effective statement about the appropriate role of government in society. Contempo - rary American politics and policy might be said to revolve around three different but compet - ing ideological positions: conservative, liberal, and libertarian.

Conservatism Conservatives in the United States place great emphasis on conserving the traditions of the past. They believe that individuals should be free to pursue their interests consis - tent with their human agency, and that with individual freedom of choice comes personal responsibility. Therefore, when it comes to the marketplace, they do not see much of a role for government, and by extension public policy. Rather, the appropriate role for gov - ernment is to regulate behavior that is considered harmful. There is no need for policy to assist the poor because the poor are considered to be responsible for their own fate.

Their poverty is believed to be due to their own moral defects, not lack of opportunity. fin82797_11_c11_255-280.indd 263 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.4 Economic Policy Because conservatives believe in moral order, they believe that there is a role for government to regulate individual behav- ior when it comes to matters that are seen as affecting the traditional family, such as who can get married, and abortion. Other - wise, they believe the role for public pol - icy should be a limited one. Conservatives may see a need for negative public policy from time to time, but never for positive public policy.

Liberalism Contemporary liberals in the United States recognize that there are forces beyond individuals’ control that result in poverty and inequality. Markets, in other words, are not always perfect, and they often fail. Lib - erals see a need for greater public policy, especially positive public policy, in order to remove barriers caused by discrimination and generations of poverty, which have put some at an unfair advanwtage. There - fore they believe policy is needed to level the playing field in order to ensure equal opportunity for all.

Libertarianism Libertarians in many respects represent an extreme form of liberalism married to extreme conservatism. Individual liberty is considered to be sacred, and therefore the government should be limited in its function to no more than protecting individuals from bodily harm, maintaining law and order, protecting private property, and enforcing contracts, which are considered essential to the operations of a free market economy. The ideal state is the night- watchman state. Other than minimal regulation, there is absolutely no role for positive public policy for the libertarian. Public policy, especially positive public policy, is seen as interfering with individual liberty. The libertarian certainly believes in the conservative’s view of per- sonal responsibility. But the libertarian also shares the liberal’s view of human agency.

11.4 Economic Policy Economic policy might strike some as being ambiguous because it is not clear to all just what it is. From the standpoint of the tensions that exist in American political culture, there is the larger question of whether there should even be a role for economic policy in American society. Still, economic policy has amounted to managing the economy. Government attempts to promote Jim West/SuperStock People are protesting legislation that Michi- gan passed that would drop more than 12,000 families from welfare rolls. A public policy conservative may approve of this measure, while a policy liberal may disagree. fin82797_11_c11_255-280.indd 264 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.4 Economic Policy economic growth and stability with low inflation and unemployment rates.

Full employment has traditionally been defined as containing a cer- tain percentage of those in the labor force not working. These people might be retraining, in school, tak- ing time off to raise children or care for sick parents, or simply between jobs. In other words, there will always be a certain number of peo - ple out of work for whatever rea- son. Still, there are issues with the official definition of unemploy - ment. To be considered officially unemployed, one has to have been looking for work within the previ- ous 4 weeks. A person is categorized as unemployed when he or she officially files for unem- ployment insurance (UI), but these benefits are typically available for no more than 6 months in most states. Therefore, one could exhaust one’s benefits and no longer be consid - ered officially unemployed, or simply give up and drop out of the labor market. Such a person is neither employed nor unemployed, but technically jobless. Similarly, those who take part- time work because that is all that is available but are still seeking full-time employment are not counted among the unemployed either; they are considered underemployed.

Since the Employment Act of 1946 was enacted, it has been the official policy of the United States to ensure as high a level of employment as would be “practicable.” This act created in the White House the Council of Economic Advisors , whose job it is to monitor the econ- omy and prepare an annual report on it. The president is then responsible for transmitting the annual reports to Congress, with recommendations for how to achieve as high a level of employment as practicable. To this end, government pursues two basic approaches: fiscal policy and monetary policy . Both of these approaches involve pumping more money into the economy during a recession to spur investment, and contracting money during inflation in order to lower prices. Fiscal Policy Fiscal policy involves enabling individuals to purchase more by lowering tax rates during a recession and increasing taxes during inflation. Inflation occurs when prices for goods and ser - vices increase and, as a result, individuals can buy less with the money they have. By lowering taxes, the government essentially gives individuals more to spend, and they can thus demand more goods and services. Then, during inflation, the government may raise taxes, which will lead to less demand for goods and services because individuals will have even less money to spend. The basic problem with fiscal policy, however, is that it generally requires congressional action. While lowering taxes will always be politically popular, raising taxes will never be and may cost members of Congress reelection. Still, there are policies within the fiscal family that Associated Press/Paul Sakuma Unemployment rates reached more than 10% after the Great Recession of 2008 and 2009. People could file for unemployment insurance and receive benefits for 6 months. fin82797_11_c11_255-280.indd 265 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.4 Economic Policy Congress often pursues. Often, they are labeled “stimulus” plans because the objective is to stimulate demand for goods and services by increasing the purchasing power of individuals.

Monetary Policy Monetary policy involves making money more available, usually by lowering interest rates, which makes it easier for individuals to obtain money to purchase big-ticket items such as cars and houses and for firms to obtain money to invest, which may create jobs. Then, during inflation, interest rates are raised in order to make money more expensive and more difficult to obtain, thereby leading to less spending and ultimately the lowering of prices.

As a policy tool, monetary policy is usually inferred from the language of the Employment Act of 1946, but it is usually administered by the Board of the Federal Reserve System, often referred to as the Fed. The Fed has two principal tools in its policy toolbox. The first are the reserve requirements, the amount of money that member banks are required to keep on hand. The more banks are required to maintain, the less they have to loan, which results in a higher interest rate, thereby making money more expensive. The second are the discount rates, which are the interest rates the Fed charges to its favorite member banks. The lower the discount rate, the lower overall interest rates will be, thereby making money more avail - able because it is cheaper to obtain. Monetary policy, however, usually involves a tradeoff between employment and inflation. By pumping money into the economy in order to create jobs—raise employment—the inevitable result is usually inflation. But by controlling for the effects of inflation by contracting the money supply, the inevitable result is a slowdown in the economy, thereby leading to higher unemployment.

Theories of Economic Management With the tools of fiscal and monetary policy at the government’s disposal, is there an ideal way for it to manage the economy? Various economic theories offer prescriptions that the government can espouse to maintain stable economic growth. The two main approaches can be described as Keynesian economics and supply-side economics.

Keynesian Economics John Maynard Keynes (1964) was a British economist in the early part of the 20 th century who maintained that unemployment is caused by the absence of demand for goods and services in the aggregate. Keynesian economics suggests that by creating programs that enhance pur - chasing power, government could stimulate demand for goods and services, thereby leading to an economic recovery. The Keynesian approach embraces the use of fiscal policy and gov - ernment spending, and critics, including economist Milton Friedman, argued that using mon - etary policy was a better way of ensuring stability. Using monetary policy may be more desir - able because it may be politically neutral, whereby the government is not choosing to spend on one person’s good over another’s. Furthermore, monetary policy is administered by the Fed, which is politically independent: In other words, the Fed is not subject to the political pressures of Congress and can therefore make hard and otherwise unpopular choices. © Bettmann/Corbis/AP Images British economist John Maynard Keynes theo- rized that, in times of recession, the govern- ment should run deficits to boost the economy.

His theories were vital to the U.S. economy when it was trying to come out of the Great Depression and all the economic problems that it produced. fin82797_11_c11_255-280.indd 266 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.4 Economic Policy Supply-Side Economics There is another approach to economic man- agement known as supply-side economics , which is the idea that big tax cuts should go to the rich because they will invest respon- sibly, thereby creating jobs for those down the income distribution. This is the notion that the benefits filter down from the top to the bottom. Rather than creating large-scale government programs, the goal is to unleash the marketplace by allowing investors to have more of their money to invest. Supply- side economics are often criticized by liber - als who maintain that large tax cuts to the wealthy are unfair, as there is no guarantee that those at the bottom will derive any ben- efit. There is also no guarantee that these investors will invest in new plants and equip - ment that might create jobs; they may simply invest more in stocks and bonds, which only enhance investors’ portfolios without filter - ing down to those at the bottom. Further, as less revenue is coming into the treasury, it has the potential to expand the deficit.

Globalization and Rising Economic Inequality Increasingly, economic policy in the United States is forced to grapple with globalization , which is the process of increasing interdependence between nations. In the globalized world, economic crises in other countries have an impact on the economic health of the United States.

Supporters of globalization tout it as a sign of progress and often support free trade, reduced government spending, and lower taxes so that the United States can compete better in the global marketplace. Opponents of globalization often want to erect trade barriers in order to protect the domestic economy. Often, in a global economy where goods and capital can easily move across national borders, many U.S. companies flee the United States, where wages are higher, particularly in manufacturing, and relocate to developing nations where wage rates are considerably lower. As a result of globalization, the United States finds itself with a two- tiered economy where at the top of the income distribution are highly educated (skilled) and highly paid workers and at the bottom are poorly educated (unskilled) and poorly paid work - ers. In between, the middle class that used to exist is no longer.

This has led to another issue very much alive in the current political debate, which is eco- nomic inequality and the widening gap between the top and the bottom classes. This drives discussions on the types of policies that ought to be pursued. Should government be spending more on education and training programs so that workers will be better prepared for the new Congress often pursues. Often, they are labeled “stimulus” plans because the objective is to stimulate demand for goods and services by increasing the purchasing power of individuals.

Keynesian Economics John Maynard Keynes (1964) was a British economist in the early part of the 20 th century who maintained that unemployment is caused by the absence of demand for goods and services in the aggregate. Keynesian economics suggests that by creating programs that enhance pur - chasing power, government could stimulate demand for goods and services, thereby leading to an economic recovery. The Keynesian approach embraces the use of fiscal policy and gov - ernment spending, and critics, including economist Milton Friedman, argued that using mon - etary policy was a better way of ensuring stability. Using monetary policy may be more desir - able because it may be politically neutral, whereby the government is not choosing to spend on one person’s good over another’s. Furthermore, monetary policy is administered by the Fed, which is politically independent: In other words, the Fed is not subject to the political pressures of Congress and can therefore make hard and otherwise unpopular choices. © Bettmann/Bettmann /Getty Images British economist John Maynard Keynes theo- rized that, in times of recession, the govern- ment should run deficits to boost the economy.

11.5 Social Policy Social policy in the United States often revolves around issues of welfare, including education, health care, and retirement security. It is not always clear what is meant by “welfare,” though, which makes social policy controversial. The preamble to the U.S. Constitution mentions forming a “more perfect union” to promote the general welfare. Yet welfare brings with it multiple meanings tied to physical security, health, and economic security, and different defi- nitions result in different policy approaches. It is often around welfare issues that we see glaring differences among conservatives, liberals, and libertarians.

Background Many of the nation’s social poli - cies are centered on preventing individuals from falling below the poverty level by ensuring that they have income. They include Social Security, unemployment insurance, Medicaid, and other social insur - ance programs, through which the government protects individu- als from economic concerns and risks. In the United States, poverty is defined in terms of an official poverty line developed by the U.S.

Department of Agriculture; it is intended to be the minimum level of income a family would need in order to subsist. Consequently, a poor person may live above the poverty line. Individuals lacking job skills will more likely be employed in the low-wage labor market, where wages are insufficient to lift them above the poverty line.

The American welfare state is essentially a bifurcated one whereby insurance is provided to the middle class and public assistance is provided to the poor. The Social Security Act of 1935 contained two essential components: retirement savings for the elderly, which they were entitled to because they paid into it, and public assistance for the poor through Aid to Depen - dent Children (ADC). Recall from Chapter 3 that ADC was a children’s program, with assis- tance going to their mothers. During the 1960s, ADC was expanded into what became known as Aid to Families with Dependent Children (AFDC). This bifurcated state essentially reflected Associated Press/Bill Clark People hold signs in support of food stamp funding.

The Farm Bill’s Supplemental Nutrition Assistance Pro- gram (SNAP) is one type of national welfare program that was instituted by the federal government. fin82797_11_c11_255-280.indd 268 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.5 Social Policy a traditional distinction between “worthy” and “unworthy” poor: One school of thought held that poverty is a function of market failure. Poor people have insufficient income because the market failed to provide enough jobs that would enable them to live out of poverty. If one is poor, it is through no fault of one’s own. Another school of thought held that poverty is a func- tion of individual moral character and behavior. People are poor because of a moral defect.

By some measures, the effect of the bifurcated welfare state was to stig- matize the poor. By other measures, however, many of the poor relief programs (food stamps, Medicaid, and so on) reflected the assumption that poor people needed assistance and that their poverty was not their fault. During the 1960s, as the Civil Rights Movement was fighting for political empowerment, a so-called legislative “War on Poverty” would create various programs aimed at providing more opportunities for poor people. For some, the War on Poverty was the next phase of the ongoing Civil Rights Movement, shifting the focus of African Ameri- cans’ struggle from political to eco- nomic empowerment. Eventually, though, a political backlash would emerge demanding welfare reform based on the assump - tion that those collecting public assistance were actually unworthy.

By the 1980s, and into the 1990s, social policy discussions were marked by calls for wel - fare reform. Critics believed that welfare encouraged individuals to have more children out of wedlock just in order to collect more welfare, and many proposals centered on attempting to force people back into the labor market. Some advocated the complete elimination of welfare.

Others argued that welfare recipients should be required to work in exchange for their ben- efits. This was the idea that welfare should be replaced with workfare. Critics of workfare, however, claimed that workfare programs were akin to slavery. To force recipients to work in exchange for their benefits was essentially punishing them for being poor. Such an approach was considered to be all the more punitive if the recipients were just doing “busy work” and not acquiring real, transferable job skills.

In the summer of 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the most dramatic welfare reform since its inception with the Social Security Act of 1935. The new welfare program imposed cumulative time limits, required recipients to participate in work programs, called for reduced funding for food stamps by $28 billion over a 6-year period, and denied assistance to legal immigrants for at least 5 years. The new law’s most radical aspect was that it put an end to welfare’s entitle - ment status and its guarantee of national funding and subjected it to the annual appropria - tions process. Associated Press President Franklin D. Roosevelt signed the Social Secu- rity Act into effect in 1935. The Act provided the elderly with retirement savings and gave public assistance to the poor. fin82797_11_c11_255-280.indd 269 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.5 Social Policy Health Care In recent years, social policy has been expanded to include health care. Health policy is an issue that has evoked a great deal of emotion in many people. It has certainly been an issue that has affected the key policy goals listed at the beginning of the chapter. The key issues in health care have been access and cost. Until the Affordable Care Act was passed in 2010, the United States did not really have a health care policy like those of many other industrial coun- tries. Britain, for example, has socialized medicine, whereby hospitals are run by the govern - ment and doctors and nurses are government employees. Canada, on the other hand, has a single-payer system, whereby every citizen is covered by the state insurance system. Doctors are in private practice, as they are in the United States, and hospitals are also private.

The United States has traditionally had what can be referred to as a health care regime, which is effectively an arrangement between public and private actors for the provision of some com - mon goods. Most Americans get their insurance from their employers. Medicare is government- sponsored health insurance for the elderly, and Medicaid is government-sponsored insurance for the poor. Those who have not received insurance from their employers have often gone uninsured, and the costs of purchasing insurance have been prohibitive. The issue of the unin - sured becomes even more acute during a recession, when many lose their insurance when they lose their jobs. Therefore, the limited access becomes a matter of personal economic security. It also becomes a matter of efficiency because when uninsured people get sick and have to go to the hospital, the cost is ultimately picked up by the broader population, especially those who are insured. An increasing number of uninsured people means that those who are insured will be paying higher premiums.

When Medicare was enacted in 1965, it was viewed by many as the first step toward universal health insurance. But there was intense opposition from many groups, including insurance companies, businesses, and the American Med- ical Association. The result was that Medicare remained a health care program for the elderly. Bill Clinton was elected in 1992 on a platform of health care reform, but his pro- posal for managed care, which still relied heavily on employers to pro- vide health insurance, went down to defeat. He had convened a panel chaired by his wife, Hillary Rodham Clinton, to draw up a plan. What it produced was 2,000 pages of fed- eral regulation, and it created ample opportunity for those opposed to mount a public relations campaign against it. What resonated with the public was the idea that it would not only limit their free - dom of choice, but also result in the rationing of care. Associated Press/Evan Vucci Kathleen Sebelius, U.S. Secretary of Health and Human Services, testified before the House Energy and Com- merce Committee in October 2013. There were failures with the government website created for Affordable Care Act implementation. As a consquence, Americans initially had trouble signing up for government health care. Sebelius resigned in 2014. fin82797_11_c11_255-280.indd 270 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.5 Social Policy Still, the issue of affordable health care did not disappear, and costs continued to rise. Finally, in 2010, Congress passed, and President Obama signed, the Affordable Care Act (ACA). While the ACA may have increased access to insurance, its rollout was not without problems. First, the government websites were not working, and people could not sign up. Then, many people who had had affordable insurance received cancellation notices from their insurance compa- nies because their policies no longer met federal minimum requirements. With insurance canceled, they were now forced to purchase more expensive insurance. Companies that pro - vided what was referred to as “Cadillac” insurance were to be subject to a tax, all but ensuring their employees would be forced into cheaper plans of less quality. In particular, the individ - ual mandate was challenged in the Supreme Court: Could the government require individuals to purchase something, or was the mandate tantamount to a tax? The Obama administration had always maintained that it was not a tax. In 2012, the Supreme Court held that it was, on the grounds that the penalty for not purchasing insurance was a tax and Congress had the authority to impose taxes.

Three years later, the ACA was again before the U.S. Supreme Court on the basis of more technical if not overly arcane arguments. When Congress set up the law, it had pro- vided for subsidies to be available to qualified individuals who signed up through state exchanges. Many states opposed to the ACA refused to set up these exchanges, so the federal government made these subsidies available to those signed up through the federal exchange.

The ACA, however, stipulated that these subsidies were to be available through “state” exchanges and did not mention the federal exchange.

A group of states challenged the law on the grounds that these subsidies constituted federal overreach. In a 6–3 decision in June 2015, the Court did not quite see it that way. Although the Court acknowledged that Congress had been sloppy in writing the legislation, it also stated that it did not believe that it had been Congress’s intention to deny subsidies to those living in states that failed to create their own exchanges. Now, it was a foregone conclusion that the ACA was here to stay unless a compositional change in Congress and the White House would result in its repeal.

Social Policy and Core American Values?

Given the American political and cultural tradition of individualism, social policy raises a fun- damental question: Do Americans have a right to be taken care of ? Conservatives often main - tain that social insurance and public assistance lead to moral hazard, in which the recipients may be motivated to act differently if they feel protected against harm or loss. Although it is noble to care for the poor, does the receipt of public assistance create a disincentive to work?

If individuals can collect money and do nothing, why would they go to work, especially if it is Associated Press/Andrew Harnik Senators speak in support of the Affordable Care Act, which was enacted by Congress in 2010. fin82797_11_c11_255-280.indd 271 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.6 Foreign and Defense Policy low-wage work? The United States has a tradition of rugged individualism, whereby people rely on themselves and pull themselves up by their own bootstraps. In fact, it is American mythology that if one works hard, one can be self-sufficient and potentially become wealthy.

But liberals believe that if people are poor through no fault of their own, then providing assis- tance and creating opportunities for them can enable them to live their lives with some dig- nity, which in and of itself is a precondition for human agency. Though this is an ongoing debate, it is important that in American politics the poor have always tended to be stigma- tized. In evaluating policy, it is not enough to ask whether it works and whether monetary benefits outweigh monetary costs, but also whether it conforms to American values.

11.6 Foreign and Defense Policy Like all nations, the United States pursues both a foreign policy and a defense policy.

Defense policy often involves the strategic use of military force and decisions about the scale of those forces to defend the nation.

Defense policy is first and foremost about national security and maintaining secure borders. It can also involve the protection of U.S. interests abroad. Foreign policy, however, is much broader and deals with an array of military, diplomatic, economic, and security exchanges that the United States has with other nations. On leaving office, the first president, George Washington, warned his countrymen against getting involved in foreign entanglements. For most of the nation’s history, the United States could be characterized as isolationist , in that it has sought to isolate itself from the rest of the world. That did not mean the United States did not strive to defend its basic interests.

Monroe Doctrine Perhaps the first major statement of foreign policy regarding European nations was given by President James Monroe in 1823. This statement, which came to be known as the Monroe Doctrine, stated that European efforts to colonize land or interfere in states in North, Cen - tral, and South America would be viewed by the United States as acts of aggression requiring U.S. intervention. This particularly applied to Caribbean islands off of U.S. shores. In effect, the United States was making it clear that it would maintain a zone of influence: It would not tolerate European countries’ presence in its backyard, where these countries would then be better positioned to possibly invade the United States. Portrait by William James Hubbard, ca. 1832 The Monroe Doctrine, given by President James Monroe in 1823 during his State of the Union address, emphasized that any coloni- zation efforts by Europe in North, Central, or South America would be viewed by the United States as acts of aggression. fin82797_11_c11_255-280.indd 272 3/24/16 1:48 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.6 Foreign and Defense Policy American Imperialism During the late 1800s into the early 1900s, especially under President Theodore Roosevelt, the United States began to assert itself in Latin American and Caribbean countries. As Euro- pean nations were colonizing land in Africa, the Middle East, and Asia, the United States, in part as an extension of the Monroe Doctrine, sought to colonize some territories close to home. The principal reason for this was a fear that, if it did not, European countries would move in.

Although the United States sought to be politically isolated from European countries and the rest of the world, it certainly wanted to trade around the world in order to grow its economy.

Although the United States did not really enter the imperial realm until 1898 with the Spanish- American War, it was beginning its march to becoming an imperial power in the 1850s.

By the turn of the 20 th century, the United States was becoming a world power. It had inter - ests around the world and was particularly interested in securing its market share in China.

During the presidency of William McKinley, Secretary of State John Hay initiated what would come to be known as the Open Door Policy, which declared that all nations trading with China should have equal privileges and also opposed the partition of China by foreign pow - ers. Essentially, Hay was demanding that China grant the United States most favored nation status , which held that if Country A (such as China) has a special relationship with Country B (such as Great Britain), then the United States should also have a special relationship with Country A because the United States is an ally of Country B.

In 1904, President Theodore Roosevelt issued the corollary to the Monroe Doctrine, which reasserted American opposition to European intervention in the Western Hemisphere. Roos- evelt claimed that the United States had a right to intervene in the domestic affairs of its neighbors if they proved unable to maintain order and national sovereignty on their own.

Ostensibly, the corollary was intended to ensure that other powers would not enter into the region, but it did pave the way for the United States to intervene in a number of Caribbean countries, including Cuba, Haiti, and the Dominican Republic. Moreover, the United States was able to consolidate its dominance in the hemisphere with the opening of the Panama Canal in 1914.

The Road to Being a Superpower When World War I broke out dur - ing the summer of 1914, the United States declared its neutrality. But the United States was eventually pulled into the war in 1917 despite President Woodrow Wilson’s best efforts to keep the nation out of it.

In 1918, with the end of the war, President Wilson went to Versailles to participate in the treaty nego - tiation. Wilson sought to create the © Underwood and Underwood/National Geographic/Corbis When the United States entered World War I in 1917, men were recruited to join the army. fin82797_11_c11_255-280.indd 273 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.6 Foreign and Defense Policy League of Nations in the belief that, through collective security, it would prevent future wars.

The U.S. Senate never ratified the Treaty of Versailles, nor did the United States enter the League of Nations. Rather, the American tradition of isolationism reared its head. Still, the United States emerged from the first world war stronger, as a creditor nation rather than a debtor nation.

Isolationism remained very strong through the next two decades and made it very difficult to get involved in World War II even as Britain and its allies were close to being overrun by the Germans. It was not until the Japanese attacked the United States at Pearl Harbor that the United States finally entered World War II, at the end of 1941. When the war was over, the United States emerged as one of two superpowers, with the Soviet Union emerging as the other. Both the United States and the Soviet Union possessed large nuclear arsenals and could dispatch military forces quickly around the world. In 1947, President Harry Truman issued what came to be known as the Truman Doctrine, which made it clear that it was the inten - tion of the United States to support free peoples who were resisting attempted subjugation by armed minorities or by outside pressures. This doctrine would then inform the U.S. policy of containment, which would represent the United States’ attempt to limit, or contain, Soviet or other Communist influence to where it already existed. Where there was an attempt to spread Communist influence, the United States and its allies, through the North Atlantic Treaty Orga - nization (NATO), would seek to stop it. At the same time, the Soviets also practiced their own version of containment through the Warsaw Pact to stop the spread of Western and demo - cratic values.

The Return to Isolationism The doctrine of containment was also used to justify wars with perceived Soviet surrogates such as North Korea and North Vietnam. However, as the United States continued fighting a seemingly hopeless guerilla war in Vietnam from the 1960s until 1975, Americans essen- tially began to call for a return to isolationism. The death toll of the Vietnam War was being broadcast into American living rooms across the country. When the Selective Service adopted a lottery system for the draft, which meant that the children of the affluent could no longer be excused from military service because of student deferments, massive protests against the war broke out. Aside from the fact that Americans could not see the value of involvement in foreign entanglements, there was no clear sense of victory, as there had been in World War II, where both Germany and Japan surrendered unconditionally. This only created a sense of self-doubt. Unless it was clear that the United States could be absolutely victorious, Ameri- cans preferred that military might be eschewed.

Still, the Cold War continued through the 1980s. The United States and the Soviets still had large stockpiles of nuclear weapons. During the Cold War, U.S. nuclear policy was informed by the principle of mutually assured destruction (MAD) , which presumed that neither super- power would be the first to launch a nuclear attack because such an attack would lead to certain destruction. But the principle of MAD also assumed that nation states were rational actors—that they could calculate what was in their best interests and that nuclear war was not because rational beings sought to live. Did this apply to all countries? Do all nations share Western rationality? Nevertheless, there were attempts during the Cold War to negotiate nuclear arms control and reduction treaties. fin82797_11_c11_255-280.indd 274 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 11.6 Foreign and Defense Policy The New World Order and Terrorism With the collapse of the Soviet Union in 1991, the United States was left as the world’s only superpower with military bases and interests to protect around the world. Among those inter- ests were protecting the flow of oil into the country. When Iraq, under Saddam Hussein, attacked Kuwait in 1990 and was on the doorstep of American ally and major oil producer Saudi Arabia, President George Herbert Walker Bush organized an international coalition to eject Iraq from Kuwait. Coalition forces, however, stopped short of toppling the Saddam Hussein regime.

During the 1990s, U.S. interests around the world fell victim to terrorist attacks, but the country chose to treat these matters as law enforcement issues and not acts of war.

When the U.S.S. Cole was attacked while docked in Yemen and the Khobar Towers in Saudi Arabia were bombed, the United States sent over FBI agents to investigate and talked about bringing the perpetrators to justice through arrest and trial.

When, on September 11, 2001, the twin towers of the World Trade Center and the Pentagon were attacked by terrorists flying airplanes into them, killing more than 3,000 Americans, the United States would no lon- ger treat terrorism as a simple law enforce- ment matter. This was now an act of war.

President George W. Bush declared a war on terror and made it clear that the United States would use force against terrorists and those nations that harbored terrorists.

Because al-Qaeda, the group responsible for the September 11 th attacks, had been train - ing in Afghanistan, the United States felt it was within its rights to declare war on Afghanistan as part of the larger war on ter - ror. Because Saddam Hussein was financing terrorists, even though no link could be established to the September 11 th attacks, the United States decided to go to war in Iraq too. This time, the goal was regime change, where the objec- tive would be a change not only in government, but also in the underlying political culture.

With these twin wars in the Middle East came Bush’s doctrine of preemption, which enunci- ated that the United States would be permitted the use of force to prevent hostile acts (such as those using weapons of mass destruction), even when it was not clear when and where an enemy attack occurred. Moreover, these hostile acts needed to be prevented in order to protect U.S. national interests, which consisted of the constellation of military, economic, and ideological concerns surrounding the nation’s security. It was now deemed to be in the United States’ national interests to engage in nation-building, where the United States would remake other nations, preferably into democracies modeled on the United States. Associated Press/Patrick Sison The World Trade Center, as well as the Penta- gon, were the sites of a terrorist attack on Sep- tember 11, 2001. fin82797_11_c11_255-280.indd 275 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources Summary and Resources Chapter Summary Public policy reflects the collective will of communities attempting to achieve things for them- selves. The policy process in the United States is a very political one, which does not easily follow a linear flow diagram. Because different groups seeking to serve their interests seek to attain different objectives, there will never be a clear definition of what constitutes a pol- icy problem, let alone what the solutions are. Groups see these issues through the prism of not only their respective interests, but also their respective political ideologies. It is through policy that American politics is played out, because the outcome of policy tells us much about who has power, when they have it, and how they have it. The type of policy that the United States pursues as a nation also says something about how Americans define terms such as life, liberty, and the pursuit of happiness from the Declaration of Independence.

Public policy in the United States has fallen into three principal domains: economic, social, and foreign/defense. In economic policy, the government seeks to manage the economy with the goal of maintaining high levels of employment and generating opportunities. It often pumps more money into the economy during periods of recession through fiscal stimulus packages and monetary policy centered on low interest rates. In social policy, government creates a safety net to ensure that people do not fall below the poverty line, and in recent years social policy has been expanded to include health care. In foreign/defense policy, the United States seeks to secure its interests around the world. This often means maintaining access to markets for American goods. In the past, it meant preventing other countries from having influence in the U.S. sphere of influence. And yet, despite the United States being the only superpower today, much of its foreign and defense policy is informed by a deep-seated tradition of isolationism.

Key Ideas to Remember • Public policy reflects the collective will of the political community. • Policy in the United States is often designed around the objectives of efficiency, equity, security, and liberty. • Agenda setting, which is key to formulating policy, is inherently a political process. • Government seeks to manage the economy through the use of both fiscal and mon - etary policy. • Social policy in the United States has revolved around issues of welfare, which often include education, health care, and retirement security. • The United States pursues both foreign and defense policy. • The United States has long had a tradition of isolationism in foreign policy. • Over time, the United States has become a global superpower, but American foreign policy politics often revolves around the desire of many to remain isolated from the rest of the world. Timeline: Evolution of U.S. foreign policy Photo credits (top to bottom): JimLarkin/iStock/Thinkstock, moodboard/moodboard/Thinkstock, Niyazz/iStock/Thinkstock, Culver Pictures, Inc./SuperStock, Underwood Photo Archives/SuperStock fin82797_11_c11_255-280.indd 276 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources Summary and Resources Chapter Summary Public policy reflects the collective will of communities attempting to achieve things for them- selves. The policy process in the United States is a very political one, which does not easily follow a linear flow diagram. Because different groups seeking to serve their interests seek to attain different objectives, there will never be a clear definition of what constitutes a pol- icy problem, let alone what the solutions are. Groups see these issues through the prism of not only their respective interests, but also their respective political ideologies. It is through policy that American politics is played out, because the outcome of policy tells us much about who has power, when they have it, and how they have it. The type of policy that the United States pursues as a nation also says something about how Americans define terms such as life, liberty, and the pursuit of happiness from the Declaration of Independence.

Key Ideas to Remember • Public policy reflects the collective will of the political community.

• Policy in the United States is often designed around the objectives of efficiency, equity, security, and liberty.

• Agenda setting, which is key to formulating policy, is inherently a political process.

• Government seeks to manage the economy through the use of both fiscal and mon- etary policy.

• Social policy in the United States has revolved around issues of welfare, which often include education, health care, and retirement security.

• The United States pursues both foreign and defense policy.

• The United States has long had a tradition of isolationism in foreign policy.

• Over time, the United States has become a global superpower, but American foreign policy politics often revolves around the desire of many to remain isolated from the rest of the world. Timeline: Evolution of U.S. foreign policy Photo credits (top to bottom): JimLarkin/iStock/Thinkstock, moodboard/moodboard/Thinkstock, Niyazz/iStock/Thinkstock, Culver Pictures, Inc./SuperStock, Underwood Photo Archives/SuperStock fin82797_11_c11_255-280.indd 277 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources Questions to Consider 1. What are the principal objectives of public policy, and what are the tradeoffs between them? 2. What is the principal difference between the polis and the market, and what are the implications of this distinction for policy in the United States? 3. What is the difficulty in defining a policy problem and determining whether such a problem is placed on the agenda? 4. What are the four types of public policy politics that James Q. Wilson identifies, and how do they coincide with Theodore Lowi’s three types of politics? 5. What are the implications for policy of how liberals, conservatives, and libertarians view the role of government? 6. In terms of economic management, what is the difference between fiscal and mon- etary policy and supply-side economics? 7. How do liberals and conservatives differ on how policy should respond to increasing globalization? 8. What distinguishes social policy from economic policy? 9. In what ways does welfare reform represent a return to the American tradition of individualism? 10. What has been the impact of isolationism on the evolution of American foreign and defense policy? 11. Does the Truman Doctrine represent a radical departure from the Monroe Doctrine, or is it actually a continuation of it? 12. In what ways does the war on terror demonstrate the limitations of isolationism? Key Terms client politics When politicians view con- stituents as clients who need to be served and where benefits are concentrated but costs are distributed. containment Refers to a military strategy that attempts to limit the enemy’s expan - sion and influence; during the Cold War, the United States practiced containment when it sought to limit both Soviet and Communist influence to where it was and prevent its expansion. Council of Economic Advisors An office in the White House that prepares annual reports on the state of the economy; created by the Employment Act of 1946. defense policy The government’s strategic use of military forces and decisions about the scale of those forces. discount rates The interest rates that the Fed charges its favorite banks. entrepreneurial politics Where the ben- efits of policy are distributed, but the costs are concentrated. fiscal policy The government’s approach to spending and taxation, with the goal of influencing the nation’s economy by affect- ing consumer spending. foreign policy The government’s approach to the array of military, diplomatic, eco- nomic, and security exchanges it has with other nations. globalization Refers to a process whereby there is greater economic interdependence between nations. inflation The rise in prices of goods and services. fin82797_11_c11_255-280.indd 278 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources interest-group politics When politicians seek to satisfy interest groups and both ben - efits and costs are concentrated. isolationist Refers to a foreign policy approach that aims to keep a country out of the affairs of others; a historically U.S. desire to separate from the rest of the world in for - eign affairs and avoid entanglements abroad, specifically in Europe. majoritarian politics When politicians appeal to large blocs of voters and where benefits are broadly enjoyed and costs are widely shared. monetary policy The central bank’s approach to influencing the size and rate of growth of the money supply through inter - est rates, with the goal of influencing the nation’s economy. Monroe Doctrine Articulated by President James Monroe; stated that European efforts to colonize land or interfere in states in North, Central, and South America would be viewed as acts of aggression, thereby war- ranting U.S. intervention. most favored nation status Refers to the special treatment one country gives another in international trade. mutually assured destruction (MAD) A principle that presumed that neither superpower would be the first to launch a nuclear attack because it was understood that such an attack would lead to certain destruction. nation-building Refers to attempts by one power to remake another, preferably into a familiar model (e.g., the United States trying to install democracies in other countries). Open Door Policy The United States’ policy that declared that all nations trading with China should also have equal privileges in China. policy entrepreneurs People both inside and outside government who are able to put together coalitions of support and achieve a legislative majority. preemption A foreign policy principle emphasized by George W. Bush that held that the United States is permitted to use force to prevent hostile acts. proactive public policy Policy measures intended to prevent problems in the future. public policy A plan of action that reflects the collective will of the political community. reactive public policy Policy measures taken in response to specific problems that have already occurred. rent-seeking When actors in the market- place seek benefits. Applied to politicians, it means that they are seeking something like constituent support in exchange for deliver - ing something like a desired policy. reserve requirements Refers to the amount of cash that member banks of the Federal Reserve System must keep on hand. social insurance Usually refers to an array of government programs to ensure that indi- viduals will have economic security and will be immunized from risk and the vagaries of the marketplace. supply-side economics An economic the- ory that holds that big tax cuts should go to the wealthy because they will invest respon - sibly, thereby creating jobs and benefits for those at the bottom. Truman Doctrine Policy that asserted that it was the intention of the United States to support free peoples who were resisting attempted subjugation by armed minorities or by outside pressures. fin82797_11_c11_255-280.indd 279 3/24/16 1:49 PM \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Summary and Resources underemployed Usually refers to those who would like to be employed full time but took part-time jobs because that was all that was available. unemployment insurance (UI) Funds that workers receive while unemployed that allow them more time to search for jobs that are a better match for their skills. workfare A welfare reform whereby recipi - ents of public assistance were required to work in exchange for their benefits. Further Reading Heclo, H. (1978). Issue networks and the executive establishment. In A. King (Ed.), The political system (pp. 87–124). Washington, D.C.: The American Enterprise Institute for Public Policy Research. Katz, M. B. (1989). The undeserving poor: From the war on poverty to the war in welfare. New York, NY: Pantheon Books.

Keynes, J. M. (1964). The general theory of employment, interest, and money. New York, NY: Harvest/Harcourt.

Mead, L. C. (1986). Beyond entitlement: The social obligations of citizenship. New York, NY: The Free Press.

Mead, L. C. (1992). The new politics of poverty: The nonworking poor in America. New York, NY: Basic Books.

Murray, C. (1984). Losing ground: American social policy, 1950–1980 . New York, NY: Basic Books.

Rushefsky, M. E. (2008). Public policy in the United States: At the dawn of the twenty-first century. Armonk, NY: M. E. Sharpe. Schattschneider, E. E. (1975). The semisovereign people: A realist’s view of democracy in America. Hinsdale, IL: Dryden Press.

Sen, A. (1999). Development as freedom. New York, NY: Anchor Books.

Stone, D. (2002). Policy paradox: The art of political decision making. New York, NY: W. W. Norton & Co.

Wilson, J. Q. (1992). American government: Institutions and policies. Lexington, MA: D.C. Heath and Company.