I) Making Domestic Policy
A) Politics and the Economy—presidents try to achieve a healthy (growing) economy all of the time, but that is not always achievable. Whether employment is growing or falling, and whether business investment is growing is often beyond the control of the president in a free market, capitalist economy.
1) What Economic Numbers Hurt the President?
(a) Unemployment—rising unemployment figures or a decline in the gross domestic product makes even employed people less willing to support the incumbent government.
B) How the Government Tries to Manage the Economy—despite the fact the president gets top-notch advice from the Council of Economic Advisors (CEA) and Congress from the Congressional Budget Office (CBO), it is impossible to know how the economy is going to perform more than a few month out—and we often can’t tell when a recession begins, or even ends, until months after the event.
1) The Federal Reserve Board—the Fed is, in theory, a relatively free agent; 7 members are appointed for 14-year terms, with one appointed as the chair (and head of the New York City Federal Reserve Bank) for a 4 year term as the president of the Board. The Fed is charged largely to determine the interest rate it charges member banks for short-term loans that ensure liquidity in the credits system—the so-called “prime rate.” This in turn affects the interest rate banks charge customers for loans on houses, cars, and other consumer debt. This is how the money supply is regulated, which in turn is also used to control inflation; the higher the interest rate the Fed charges banks, the tighter the money supply, which in turn slows the growth of the economy—and vice versa.
2) Fiscal Policy—the taxing and spending policies undertaken by government is known as fiscal policy. Ideally, in a recession, the government policy would entail increasing spending and decreasing taxation; in periods of inflation, the government would act to slow the economy by decreasing spending and increasing taxation. Obviously, the latter policy is not very popular with the American people, and therefore most politicians are reluctant to embrace it, even when it is needed. With the re-emergence of conservative small-government advocates in the late 1970s, it has gotten even more difficult to raise taxes—not only at the federal level, but at the state and local levels, as well.
(a) Supply-side economics—part of the legitimization for the Reagan tax cuts was the theory of supply-side economics, which said that by decreasing tax rates, government could spur the economy enough to put more people to work, which would cause the economy to grow, putting more people to work, and actually increase tax revenue. The application of this theory, however, resulted in the Reagan Recession, which saw unemployment reach 25 percent in some areas, and the federal deficit to balloon to unheard of levels.
C) Social Security and Medicare—although the federal government spends its (okay, actually our money) on many things, only 4 of them make up the largest share of the federal budget: Social Security, Medicare, national defense, and interest on the national debt.
1) Changing Social Security—when Social Security began in 1935, there were 42 workers paying taxes for each beneficiary receiving a check; today, there are about 3.5 workers paying for each beneficiary. This means there is more money being paid out than there is coming in. Politicians have long been aware of this problem, and in fact in the mid-1980s took steps to remedy the situation by creating the Social Security Trust Fund, which took the money raised from a tax increase (during the Reagan Administration!) and investing it in the safest investment in the world—US Treasury notes, which are used to finance the federal government debt. Proposals for “solving” the Social Security “crisis” include:
(a) Raise the retirement age
(b) Reduce the benefits for high earners
(c) Raise Taxes on all workers
(d) Increase the wage cap
(e) Let individuals make investments of some or all of their Social Security funds—also known as “privatizing” Social Security.
2) Social Security Trust Fund—what you hear very little of from the talking heads on television is that the Social Security Trust Fund was set up to handle this shortfall—and the trustees, making the most conservative of estimates, guarantee that it can do so until 2036, according to the trustees latest report—when the last of the baby boomers will be 72 years old. Then the fund will only be able to pay out 75 percent of promised benefits. So, in reality, there is no crisis involving Social Security.
3) Changing Medicare—when Medicare was passed in 1965, its sponsors said it would cost 12 billion dollars a year (that’s 82 billion in today’s dollars, by the way); in 2007 the government spent 440 billion dollars. These costs have become higher for several reasons: people are living longer (in part because of the better medical care they have been receiving); and new medical and surgical procedures are saving more lives, but often at very high prices.
(a) Management of Medicare
(b) Keeping costs low
(c) Health Savings Account
D) Making Policy Decisions—each policy has a cost and a benefit; a cost is the burden of a program (whether that be increased taxes, unpleasant regulations, or social stigma), while a benefit is a gain, whether financial or social, that flows to people. Whether a policy has a net benefit or a net cost greatly depends upon one’s ideological perspective or economic or social relationship to what the policy effects.
1) Majoritarian Politics—politics that promotes widely distributed benefits and costs that make them appeal to a large portion of the populace—like Social Security and Medicare.
2) Client Politics—helps prospective beneficiaries organize themselves. The best examples are subsidies paid to farmers and dairies, and regulations and tariffs concerning the import of certain food products. The farm lobby is very effective in gaining concessions for their objectives (which they sell as benefiting the family farm, even though most of the beneficiaries are actually corporate farms), but the costs are widely spread out. Sometimes that dynamic changes, however, like the dramatic reform of welfare.
3) Interest-Group Politics—when a small group gets a lot of benefits and another small group pays most of the cost, both sides have strong incentives to form interest groups to advocate their positions; i.e. labor unions and management from the 1930s-1970s, consumer advocates and manufacturers in the 1960s-1970s.
4) Entrepreneurial Politics—Often laws are passed that benefit society as a whole over the objections of a small interest group that is responsible for paying most of the cost. The best example are the many environmental and consumer protections laws passed during the 1970s.
E) What These Political Differences Mean—majorities can be formed by each of these four types of politics. On any given issue, one or another group may be powerful, but no one group is powerful across all issues.
II) Making Foreign and Military Policy
A) Kinds of Foreign Policy
1) Majoritarian Policies—confer benefits and costs on almost everyone—questions like war and peace, and arms control treaties are the best examples.
2) Interest Group Politics—where some groups promote a particular policy that an opposing group actively works against. Policies like free trade, which are promoted by business groups that export products, but are opposed by environmental and labor groups because they view it as working against their interests, are the best examples.
3) Client Politics—best illustrated by the example of a corporation doing business overseas that gets favorable tax breaks because of it, or the relationship between Israel and the United States, which initially was reliant upon the political power the Jewish bloc held in the United States.
B) Constitutional Framework of Foreign Policy
1) President—the Commander-in-Chief of the armed forces
2) Congress—granted the power by the Constitution to declare war—and, perhaps more importantly, also granted the power of the purse.
(a) War Powers Act (1973)—in the wake of the Vietnam War, Congress attempted to wrest back from the President some of the power they gave away in the Gulf of Tonkin Resolution. This law has not been directly challenged; presidents from Ford onward have refused to acknowledge that Congress has any control over the commitment of US troops anywhere in the world, and Congress has proven reluctant to challenge that perception.
(b) Congressional Oversight of Intelligence—has also not exactly worked as planned, since the Congressional committees charged with oversight usually simply rubber stamp the action taken. If the pathetic attempt that became known as the Iran-Contra Affair is any indication, even when handed a smoking gun Congress is reluctant to act in a decisive manner.
3) State Department—headed by the Secretary of State, and is nominally independent of the President, although they usually work closely with the president.
4) National Security Council—the White House’s foreign policy team.
5) Defense Department—now plays a much larger role in gathering intelligence, and also rivals the State Department for influence upon the president in formulating foreign policy.
C) The New International Order
1) The Old Bipolar World—from the end of WWII to the collapse of the Soviet Union, the Cold War Struggle was viewed as a struggle between two world super powers—the Unites States and the Soviet Union.
(a) Using client states—although the US and the USSR never directly confronted one another, they willingly used proxies to attempt to best the other, like in Vietnam and Afghanistan.
2) 9/11—the successful terrorist attack has shaped US foreign policy, largely negatively, in my view.
(a) “Pre-emptive strikes”—George W. Bush codified and expanded a policy that originated during the Clinton administration, promising to take unilateral action, if necessary, to prevent another such attack.
(b) Iraq War—while Iraq was reluctant, and did harass UN inspectors, it did cooperate with those inspectors, eventually—who found nothing that the US alleged the Iraqi government was hiding. In fact, the US and its “coalition of the willing” had to wait for those inspectors to leave the country before it could launch an attack.
D) Three Major Problems
1) Nation Building—the US has had a mixed record when it comes to nation building; it works best, it seems, in economically advance countries, when the country had enjoyed a relatively stable government in the recent past—and less successfully when those conditions were absent.
2) Foreign Policy and Terrorism—in only 5 of the 14 major wars the US had been involved in have been fought after obtaining a formal declaration of war by Congress.
(a) Gaining Congressional approval or not seems largely contingent upon the side of the commitment and its duration.
(b) Governing principles
3) Changing the Military—the armed forces are organized to fight other military forces—not terrorist organizations. In the wake of 9/11, much attention had been paid to plans to re-organize the military; perhaps some thought should be spent upon asking whether the use of the military against a terrorist threat is the right strategy, or not.
E) Politics of Foreign and Military Policy
1) Majoritarian politics—in the bipolar world of the 20th century, the perception of danger was usually high enough to get the American people to “rally ‘round the flag,” with the end of the Soviet threat, open opposition to some aspects of foreign policy is much more prevalent.
III) Conclusion
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