【正文】 ductive employment of the nations work force and stable prices with low inflation This type of policy making is an example of incrementalism because it uses last year’s spending to decide present years budgeting Theories used in this type of policy making: macroeconomics: tries to explain economic cycles and to prescribe governmental policies to counter inflation and recession classical: view market economy as self adjusting mechanism Keynesian: Economic stability product of fluctuations in demands, written into employment act of 1946promotes maximum employment production and purchasing power Reagan used Supply side economics long term growth is more important than short term demand free market is better equipped than government to bring lower prices and supply and demand Clinton used Enterprise Economics government is responsible to stimulate growth and invest in ? human capital ? technology ? infrastructure Moarist Economics stability can be achieved only by holding rate of money and economic growth at the same pace Government spending has grown because of Uncontrollable benefits“, for example: entitlement programs index of benefits cost of inkind benefits( noncash) interest on debt back door spending Social Security is the largest item in the budget while Medicare and Medicaid are the fastest growing Burden of Debt government spends more than it receives in revenues and this drives up the debt things that cause this: burdening future slowing economic growth limiting policy initiatives default amp。 Hyperinflation dealing with deficits Tax increase amp。 Deficits Deficits and entitlements Politics of deficits Formal Budgetary Process amp。 Spending Agencies OMB in the executive office has key responsibility for budget preparation (president has no formal powers over taxing and spending House and Senate budget mittees they established the CBO to review presidential budget after submission to congress Appropriations Act provides money for spending, nothing can be spent without it Appropriations Committees used for specific appropriations in both houses (more in the house than the senate) Revenue ActHouse Committee on ways and means and the senate finance mittee work mostly with taxation Presidential Veto Continuing Resolutions and Shutdowns any government agency that does not pass an appropriations act may not take money from the treasury and is obligated to shut down continuing resolutions allows a way around this Chapter 8: Tax Policy Introduction There is no better illustration of the influence of interest groups in policymaking than natal tax policy Tax laws treat different types of ine differently Unfairness, plexity, amp。 inefficiency of tax laws can be attributed to interest groups Tax Reform Act 1986, IGs suffer defeat Federal Tax System Total revenues from taxes and fees consistently fail to match total spending by the government Individual Ine Taxes largest single source of revenue Corporate Ine Taxes 12% fed government ine Social Security Taxes 36% fed government ine Today taxpayers pay more in Social Security taxes than ine taxes Estate and Gift Taxes Excise and Custom Duties Luxury items account for 12% ine Taxation, Fairness, and Growth Progressive tax: high ine pay higher percentage of ines in taxes Proportionality/flat tax: all ine groups pay same rate Universality: all types of ine subject to same rates Economic Growth High taxes discourage growth Argues that if taxes were reduced, might increase government revenue bee/ encourage growth Economic Recovery Tax Cut Act of 1981 Reagan tax cuts take effect and nation began economic recovery and slowed rate of growth of natal revenue Tax Reform and Special Interests Tax Reform Act of 1986reduction in tax rates in place of tax breaks Many opponentsindustry, real estate, multinational corps, oil amp。 gas, labor unions. Compromising with Special Interest Key to overing opposition of special interests was to offer a tax rate low enough that most people would be willing to give up deductions and preferences Bipartisan effort against special interests Clinton, Deficits, and Taxes Clinton won on promise to revive economy Clinton proposed raising taxes on affluent, elderly, corps, amp。 energy Clinton and Reps agree to middle class tax cut in 1997 Tax Reform and the Flat Tax Flat taxeliminate exemptions, exclusions, deductions, amp。 special treatment with 19% tax on all forms of ine National sales tax replace federal ine tax and get rid of IRS。 penalize consumption not production IRSSimplifying tax laws would not only reduce cost of paying taxes but reassure taxpayer that system is fair..It would reduce the power of the IRS... taxpayers bill of rights might strengthen safeguards against arbitrary actions of IRS Chapter 9: International Trade and Immigration Public Policy Analysis 1/4 of the world’s total output is sold in a country other that where it was made US exports 11%aircraft, puters and imports 12%automobiles Comparative Advantage: what each nation produces best amp。 shift toward making that US corps want lower trade barriers around the worldlower US tariffs GATTGeneral Agreement on Tariffs and Traderegulate international trade WTOWorld Trade Organizationadjudicate trade disputes among nations IMFInternational Moary Fundfacilitate trade by lending World Banklong term loans NAFTAeventual removal of all tariffs between US, Canada, and Mexico Dumpingsale of foreign goods in US markets