Chapter Summary with Key Terms

Public policy is a government plan of action to solve problems that people share collectively or that they cannot solve by themselves. Policies that address these problems can be redistributive policies, which shift resources from those who have them to those who do not; distributive policies, which use the resources of all to benefit a segment of society; or regulatory policies, which seek to modify the behavior of groups or individuals.

Public policy is made by actors in all branches and levels of government. The policymaking process involves agenda setting, policy formulation, policy adoption, policy implementation, and policy evaluation.

Social policies are mostly redistributive and distributive policies that work to improve individuals' quality of life. They include social welfare policies, usually means-tested programs directed toward those who cannot care for themselves, and social insurance programs, like Social Security, that offer benefits in exchange for contributions. Social Security is currently in financial straits because it is an entitlement program whose benefits must be paid whether or not the money is there, and because the older Americans who receive those benefits are well organized politically. Social welfare programs are easier to reform because poor people do not organize effectively to defend their interests, and in 1996 the guarantees of the Social Security Act of 1935 were eliminated with the advent of Temporary Assistance to Needy Families (TANF). Other social welfare policies include food stamps and Head Start. Social policy also covers health care policy, including Medicare and Medicaid, and various programs that supply subsidies to citizens and corporations to encourage behaviors that the government values, like buying a home, going to college, and providing jobs.

Economic policy refers to government strategies to provide for the health of the economy as a whole and solve economic problems. One of its main tools is fiscal policy, which involves regulating the ups and downs of the economy through government's power to tax and spend. Practitioners of fiscal policy believe that it is not necessary for government to pursue a balanced budget but that deficits and surpluses are tools to be used strategically to help regulate the economy. A second tool of economic policy is monetary policy, which tries to regulate the economy by controlling the money supply through manipulation of interest rates. Congress is the main agent of fiscal policy, which means that it is often subject to political pressure. Monetary policy, made by the Federal Reserve System, is much more insulated from politics.

Part of the nation's tax policy, federal income taxes are progressive taxes, meaning that people with more income are taxed at a higher rate; other taxes are regressive taxes, meaning that they impose a greater burden on the less well-off. Conservatives in the United States would rather have fewer progressive taxes and seek to eliminate the capital gains tax on investments altogether. Liberals prefer the wealthy to bear a larger share to lighten the load on the poor. Current proposals for reforming the tax code include a flat tax and a consumption tax such as a value-added tax (VAT).

Foreign policy is designed to solve problems between us and foreign actors. Sometimes the United States has tried to ignore the rest of the world, a policy known as isolationism, but more often it has tried to reach its goals by engaging other nations with a more active policy of interventionism. The actors the United States engage with are many other countries, intergovernmental organizations, nongovernmental organizations (NGOs), and multinational corporations, among others. Foreign policies can be crisis policy, dealing with emergency threats; strategic policy, dealing with our basic stance to a foreign actor or problem; or structural defense policy, dealing with defense and military issues. Throughout the latter half of the twentieth century, our foreign policy was defined by the Cold War with the Soviet Union, in which we pursued a policy of containment to limit the USSR's influence. Our policy in a post–Cold War era is more difficult to define, as the threats to us are not necessarily from other nations but from groups like Al Qaeda.

American foreign policy is made by a variety of actors--executive, legislative, and judicial--acting on behalf of the federal government. The president is the chief foreign policy maker, with the assistance of a huge network of federal agencies, among them the National Security Council, the Department of State, the Department of Defense, the Joint Chiefs of Staff, and the intelligence community, including the Central Intelligence Agency (CIA) and the director of national intelligence. With different constitutional responsibilities, the president and Congress often wrangle for control over foreign policy, most recently over what has come to be known as the Bush Doctrine.

Learning Objectives

After reading this chapter, you should understand

what policy is
who makes it
how it is made
specific domestic policy areas--social policy such as Social Security, welfare, and health care policy, and economic policy such as fiscal, monetary, and tax policy--and the less familiar world of foreign policy.

Materials developed by Matthew J. Streb, Northern Illinois University