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POLSC431: Public Policy Process

Unit 4: American Economic Policy   During times of economic strife, Americans tend to blame their elected representatives—often voting against sitting presidents and incumbent Congress members because they failed to manage the American economy successfully in the eyes of the public.  This is especially ironic because not only do individual politicians have little ability to impact the overall economy, but one of the major areas of economic policy that the government does have control over—monetary policy—is made not by elected officials but by the appointed members of the Federal Reserve System.  It is this independent government corporation, which was created in the 1910s out of concerns that bankers such as J. P. Morgan held too much power over the America economy, that sets the prime interest rate and can influence the value of the dollar by manipulating the money supply.  This degree of independent control over the economy has raised concerns among some that such chairmen of the Federal Reserve as Alan Greenspan and Ben Bernanke, who are appointed to seven-year terms in order to increase their political independence, actually exercise too much influence.
 
This political independence enjoyed by the makers of monetary policy is in stark contrast to the overtly political battles in the media and on the floor of Congress between Democrats and Republicans over issues of how much to tax the American public and how much to spend on providing government services to citizens. These ongoing battles over fiscal policy are as much ideological as they are economic, and they stretch back to the 1790s, when the first political parties were formed primarily over the issue of the size and scope of government.  Today, many who argue against government involvement in poverty reduction and job creation do so primarily because of a philosophical belief that such activities ought not be the responsibility of the federal government, while others believe that the government ought to provide even more public services than it already does. These political battles over economic policy can often become extremely heated and have even threatened to shut down the government on more than one occasion.
 
Other areas of economic policy that are often very hotly debated concern American trade and development policy—despite the fact that politicians do not always have full control over these policy areas either.  The debate over whether to adopt free trade practices or protective tariffs has been ongoing in the United States since the early 19th century, with manufacturing interests often arguing that they needed help to protect American jobs.  The growth of imports from places such as China as well as the movement, especially since the 1970s, of American manufacturing jobs overseas have rekindled this debate over free trade and concerns over the growing trade deficit even as the United States has joined an increasing number of international economic organizations, such as the North American Free Trade Agreement, the World Bank, and the International Monetary Fund.  Many of these groups also engage in international economic development programs, although they sometimes face criticism for taking too much control over the economies of developing nations and have even inspired violent protests against their policies. 

Unit 4 Time Advisory
This unit will take you approximately 8 hours to complete. 

☐    Subunit 4.1: 2 hours

☐    Subunit 4.2: 3.25 hours

☐    Subunit 4.3: 2.75 hours

Unit4 Learning Outcomes
Upon successful completion of this unit, students will be able to:

  • Identify vital issues and specific areas of concern for contemporary American policymakers within the broad field of American economic policy.
  • Identify key actors and agencies involved in economic policy formulation.
  • Differentiate among such various types of economic policy as monetary, fiscal, and free trade policy.
  • Describe of various decision frameworks used by policymakers in identifying, formulating, implementing, budgeting, and evaluating economic policy.
  • Identify key debates in contemporary economic policy as well as the issues at stake and the arguments advanced by each side of the debate.
  • Explain the context, evolution, and linkages between certain economic policies and within the broader context of American political history.

4.1 Monetary Policy: How Much Is a Dollar Worth   4.1.1 Introducing Monetary Policy   - Reading: Federal Reserve Bank of San Francisco: “U.S. Monetary Policy: An Introduction” Link: Federal Reserve Bank of San Francisco: “U.S. Monetary Policy: An Introduction” (PDF)
 
Instructions: Please click on the link above, select the title “U.S. Monetary Policy: An Introduction” to download the PDF file, and read this entire PDF (24 pages) on American monetary policy.
 
This reading should take approximately 1 hour to complete.
 
Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

4.1.2 The Federal Reserve System   - Lecture: Learner.org: Economics U$A: Episode 9: “The Federal Reserve” and Episode 13: “Monetary Policy” Links: Learner.org: Economics U$A: Episode 9: “The Federal Reserve” (Adobe Flash) and Episode 13: “Monetary Policy” (Adobe Flash)
 
Instructions: Please click on the links above, and select the VoD icon next to each episode to watch it (approximately 29 minutes per video).  These videos discuss the Federal Reserve System and how monetary policy is created in the United States.
 
Viewing these videos should take approximately 1 hour to complete.
  
Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

4.2 Fiscal Policy: Taxes and Public Spending Programs   4.2.1 Fiscal Policies of the United States Government   - Lecture: Learner.org: Economics U$A: Episode 6: “Fiscal Policy,” Episode 14: “Stabilization Policy,” Episode 24: “Reducing Poverty,” and Episode 26: “Public Goods and Responsibilities” Links: Learner.org: Economics U$A: Episode 6: “Fiscal Policy” (Adobe Flash), Episode 14: “Stabilization Policy” (Adobe Flash), Episode 24: “Reducing Poverty” (Adobe Flash), and Episode 26: “Public Goods and Responsibilities” (Adobe Flash)
 
Instructions: Please click on the link above, and select the VoD icon next to each episode to watch it (approximately 29 minutes per video).  These videos discuss measures by the government to provide services to the public and reduce economic inequality in America.
 
Viewing these videos should take approximately 1 hour and 30 minutes to complete.
  
Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • Web Media: Khan Academy’s “FICA Tax” Link: Khan Academy’s “FICA Tax” (YouTube)

    Instructions: Please click on the link above, and watch the above video (approx. 7 minutes) on the Federal Insurance Contributions Act (FICA), a tax on earned income that is paid into Social Security and Medicare. This video provides an overview on FICA and how the tax is calculated.
     
    Viewing this video and note-taking should take approximately 15 minutes.
     
    Terms of Use: This resource is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. It is attributed to the Khan Academy.

4.2.2 Government Promotion of Job Creation in New York   - Reading: The Public Policy Institute of New York State: Heather Briccetti and Steven A. Taylor's : “New York Must Step Up Its Game: The Global Struggle for Biopharmaceutical Jobs” Link: The Public Policy Institute of New York State: Heather Briccetti and Steven A. Taylor's :  “New York Must Step Up Its Game: The Global Struggle for Biopharmaceutical Jobs” (PDF)
 
Instructions: Please click on the link above, and select the “New York Must Step Up Its Game: The Global Struggle for Biopharmaceutical Jobs” link to read this entire PDF (32 pages) about job creation in New York.
 
This reading should take approximately 1 hour and 30 minutes to complete.
  
Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

4.3 International Trade Policy: American Government in the Global Economy   4.3.1 An Introduction to International Trade   - Lecture: Learner.org: Economics U$A: Episode 27: “International Trade” Link: Learner.org: Economics U$A: Episode 27: “International Trade” (Adobe Flash)
 
Instructions: Please click on the link above, and selec tVoD icon next to “International Trade” to watch this entire video (approximately 29 minutes) on the key concepts of international trade policy.
 
Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

4.3.2 American Trade and Development Policy   - Reading: MIT: Fundamentals of Public Policy: “Trade and Development Policy” and “Trade and Development Policy Continued” Links: MIT: Fundamentals of Public Policy: “Trade and Development Policy” (PDF) and “Trade and Development Policy Continued” (PDF)
 
Instructions: Please click on the link above, locate the PDF’s listed above from the linked page, and read these entire presentations (19 pages) on American trade and development policy.
 
This reading should take approximately 15-20 minutes to complete.
 
Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.  

4.3.3 Debating Free Trade and Protectionism   - Lecture: Learner.org: Inside the Global Economy: Episode 2: “Protectionism vs. Free Trade” and Episode 3: “Trade Policy” Links: Learner.org: Inside the Global Economy: Episode 2: “Protectionism vs. Free Trade” (Adobe Flash) and Episode 3: “Trade Policy” (Adobe Flash)
 
Instructions: Please click on the links above, and select the VoD icon next to each episode to watch it (approximately 57 minutes per video).  These videos discuss debates over whether free trade policies or tariffs should be used in the United States.

 Viewing these videos should take approximately 2 hours to
complete.   
    
 Terms of Use: Please respect the copyright and terms of use
displayed on the webpage above.