American Politics Today - Essentials (3rd Ed)

430 CHAPTER 14|ECONOMIC AND SOCIAL POLICY

such as how well the DMV serves disadvantaged

populations or people for whom English is a second

language. In a DMV offi ce where 50 percent of the

applicants don’t speak English, we wouldn’t expect

the workers to be as effi cient as in one where all

applicants speak English.

Evaluating a public agency such as the State

D e p a r t m e n t i s e v e n m o r e d i ffi cult. How do we know

if diplomacy is being conducted in a manner con-

sistent with congressional and presidential pref-

erences? Would success be defi ned as staying out

of war? Increasing economic activity or cultural

exchanges between countries? Strengthening

democratic institutions in emerging democra-

cies? Getting cooperation in the war on terrorism?

Measuring the achievement of objectives like these is very diffi cult even if those

goals can be clearly defi ned.

Despite these limitations, extensive eff orts to evaluate policy do provide deci-

sion makers with some basis for deciding whether to modify, expand, or terminate

a policy. Programs are notoriously diffi cult to cut or eliminate.

The Key Players in Economic and Social Policy Making

Congress, the president, and the bureaucracy all play important roles in making

economic and social policy. Congress, through the “power of the purse,” has the

constitutional authority to determine the nation’s fi scal policy, but the president

also can shape taxing and spending policy for the nation. The Federal Reserve

and the Treasury implement the nation’s monetary policy, while other bureau-

cratic agencies implement social policy. Additional signifi cant players include the

courts, state governments, and interest groups.

CONGRESS

The Constitution places Congress at the center of economic policy making by giv-

ing legislators the “power of the purse”—that is, power over the nation’s fi scal pol-

icy of taxing and spending. In a way, everything Congress does has an impact on

the economy, whether it is providing money for an interstate highway or a student

loan, regulating the level of air pollutants, or funding the Social Security system.

Some committees are more directly related to economic policy: budget, appropria-

tions, and tax committees direct Congress’s fi scal policy—taxing and spending—

whereas the banking committees have a hand in overseeing aspects of the nation’s

monetary policy—controlling the money supply and interest rates. (However,

as we discuss later in the chapter, monetary policy is primarily the domain of the

Federal Reserve System, or the Fed.) The commerce committees, especially in the

House, also infl uence a range of economic policies. The budget process is the most

important of Congress’s economic policy-making responsibilities.

Budget making in Congress was decentralized through much of the nation’s

history, with various committees and subcommittees serving as the centers of

HEALTH CARE REFORM HAS BEEN ONE
of the most controversial social
policies. When the Supreme Court
heard arguments for and against
the Affordable Care Act in 2012,
groups on both sides of the issue
demonstrated outside the Court.

fi scal policy Government deci-
sions about how to infl uence the
economy by taxing and spending.

monetary policy Government
decisions about how to infl uence the
economy using control of the money
supply and interest rates.

budget making The processes
carried out in Congress to deter-
mine how government money will
be spent and revenue will be raised.