MAKING PUBLIC POLICY| 427Making Public Policy
Public policy is a course of action pursued by government to address a specifi c
problem. For example, various social policies, such as Medicare or Social Secu-
rity, are aimed at addressing the medical and economic needs of retired American
citizens. In this section we outline the policy-making process and discuss the key
players in shaping economic and social policy.The Policy-Making Process
How are policies shaped and implemented? All policies go through similar stages in
this process. The “How It Works” diagram shows the various stages for Social Secu-
rity, but the steps are the same for most policies. The fi rst stage involves defi ning a
problem as an issue that requires the federal government’s attention. Of the thou-
sands of possible issues, Congress only acts on a relatively small number. Consider
food stamps: poor and hungry people have been part of American society since the
arrival of the fi rst settlers, but this was not seen as a problem requiring government
TRACE THE STEPS
THROUGH WHICH
PROBLEMS ARE
ADDRESSED BY
GOVERNMENT POLICIESpublic policy A law, rule, statute,
or edict that expresses the gov-
ernment’s goals and provides
for rewards and punishments to
promote their attainment.Source: Data from the Internal Revenue Service, “Internal Revenue Bulletin: 2007–45,” November 5, 2007,
Rev. Proc. 2007-66, http://www.irs.gov/irb/2007-45_IRB/ar19.html (accessed 5/12/12; 2008–2012 rates from http://www.irs
.gov (accessed 11/5/12).TOP MARGINAL TAX RATES, 1913–2012
The top marginal tax rate, which is the tax rate paid by the richest Americans on their
income above some threshold ($388,350 in 2012), has plummeted in the past 50 years
from more than 90 percent to 35 percent. What are the arguments for and against
increasing the top marginal tax rate?FIGURE » 14.1
102030405060708090100%1913 1920 1927 1934 1941 1948 1955 1962 1969 1976 1983 1990 1997 2004 2012Top rate