MAKING PUBLIC POLICY| 433OTHER IMPORTANT PLAYERS
By providing a necessary legal foundation, the courts ensure fair application of
economic and social policy laws and regulations. For example, contract law, pat-
ent law, banking and fi nance law, and property rights are all elements of a legal
system that provides the foundation for economic development. Courts issue rul-
ings on the regulation of telecommunications, banking, and energy industries and
decisions on environmental law and eminent domain that aff ect property rights.
All these policies have an impact on economic policy. Courts are also important
in helping to shape economic and social policy by deciding when laws passed by
Congress may be unconstitutional.
State governments have a central role in areas such as education and welfare.
Welfare has always been administered at the state and local level, with varying
degrees of national control. Medicaid is administered at the state level (with fed-
eral assistance), and education is almost completely controlled by local and state
governments. One sticking point with health care reform in 2009–10 was the
extent to which policy would be centered in the states or have a stronger national
component. (The stronger national approach failed, but the new law signaled a
defi nite shift to a more national role in health care.)
Education policy, too, is seeing more involvement by the national government.
But even with the national accountability mechanisms and testing requirements
established by President Bush’s No Child Left Behind Act, and the incentives pro-
vided by President Obama’s “Race to the Top” program, education policy remains
largely a state and local aff air.
In contrast, economic policy making is more of a national responsibility. States
are severely constrained in making fi scal policy because they must have balanced
budgets every year (unlike the national government, which may run defi cits to
stimulate the economy). Monetary policy is entirely the domain of the national
government.
Interest groups constitute another important player in shaping policy, although
those advocating for social policy are not as infl uential as groups focusing on
business, labor, the environment, or gun ownership. A major exception is A ARP,
a highly powerful lobby that addresses policy issues aff ecting the elderly (see
WELFARE OFFICES CAN OFTEN BE
alienating places in which it is
very diffi cult to navigate through
the bureaucracy. Dozens of
women and children wait to speak
to counselors in this East Los
Angeles welfare offi ce.