Multistage Policy Cycle Model

Policy Eras 

1.Roosevelt/Democratic dominance 1930-1980

2. Reaganism/Conservatice Ascedenc 1980-2006

3. New era of Liberalism? 2006-????

Policy Theories

–

1. Populist model: public opinion is translated into public policy. The elections serve as mandates. Politicians are re-election driven and political parties mobilize opinion

2. Elitism: power is based on the unequal distribution of resources; these resources are cumulative (all to the rich). The elites allocate values with elite consensus. The mass public has little influence on policy.

3. Pluralism and interest groups: Power can be based on many resources. The power resources are dispersed and leadership is fluid. Leaders compete for mass support and elections are referenda on past performance not future directions.

4. Liberal-conservative cycle theory: government policy is dominated by altering periods of liberal and conservative dominance.

A. Roosevelt/Democratic dominance 1930-1980

B. Reaganism/Conservatice Ascedency 1980-2006

C. New era of Liberalism 2006-????

Decision Theory

Representation Theories

- describes how some individuals stand in for others or a group of others, for a certain time period. Representation usually refers to representative democracies, where elected officials nominally speak for their constituents in the legislature.

Generally, only citizens are granted representation in the government in the form of voting rights; however, some democracies have extended this right further.

Bounded Rationality

Positive Feedback

 - An economic policy that is triggered when a certain economic situation results in economic instability, as a result of gross domestic product (GDP) being either above or below full employment equilibrium or the price level not clearing the aggregate market. Feedback-rules are representations of what the government, in terms of monetary or fiscal policy, should do in order to help the economy get back to equilibrium.

 Positive feedback is a process in which the effects of a small disturbance on a system can include an increase in the magnitude of the perturbation
·      Increase in one variable leads to a further increase in another.
·      Examples: bandwagons, fads, arms races, rhetoric wars

Rational Choice

Decision-makers maximize their returns from a decision, after defining, evaluating, and prioritizing all relevant aspects of the decision.

they are Goal-oriented, Maximizes (best means used given the goal)

Requires substantial amounts of information and must complexly understand the problem that they are trying to solve and the specific polices open to them. This is called rational decision making.
·      Most commonly use cost-benefit analysis that campers the benefits of a policy to its costs

– Is an interdisciplinary study within the social sciences that generally seeks to explain why social mobilization occurs, the forms under which it manifests, as well as potential social, cultural, and political consequences. More recently, the study of social movements has been subsumed under the study of contentious politics.

Perspective that offers an explanation for both long periods of policy stability and short bursts of policy change.
·      Insist that social movements rarely occur, but then they do they produce substantial policy changes

Consumption Spending Policies

– 
Consumer spending or consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. There are two variants of consumption in the aggregate demand model, including induced consumption and autonomous consumption.

Or personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. There are two variants of consumption in the aggregate demand model, including induced consumption and autonomous consumption.

Fiscal Policy

– direct spending or lending by government

Involves the national budget: using federal spending, purchasing and taxing, as well as special social programs and job projects

Monetary Policy

– Manipulation of the money supply (the amount of money in circulation, including cash & credit). Money is created: government can create it by printing it, and banks can create it by making loans. Central Bankers can create it thorough other means than printing.

The management and the circulation of money primarily through the Federal Reserve System

Price Fixing


– Is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. The intent of price fixing may be to push the price of a product as high as possible, leading to profits for all sellers but may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.

  An agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.

Laissez-faire capitalism

– It is based on Adam Smith's Invisible hand, that the market self-regulates itself without the need of government regulations since consumers and producers are rational maximizers, and will take measures to maximize profit or save money and/or capital.

Supporters of laissez-faire capitalism do not want the government to interfere in business matters. Promotes competition and prices on all produced products.

Debt 

Government Financial Obligations

- the difference between what the government has promised to pay and what it has set aside to pay it.

A debt that is backed by the full taxing power of the U.S. government. Direct obligations include Treasury bills, Treasury bonds, and U.S. savings bonds. These investments are generally considered to be of the very highest quality.

Mandatory Spending

- spending on certain programs that is required by existing law.

Mandatory spending are those expenditures that must go into the U.S. budget. They are mandated by Federal law, and so can't be changed without, quite literally, an act of Congress. AS a result, the mandatory budget is an estimate of the cost to implement the benefits promised by these Federal laws. The estimate is made by the Office of Management and Budget, or OMB.
·      Example: Medicare and Social Security

Inflation

Deflation


Interest Rates


 Medicare

Medicaid

Medicare Part D

MediGap 

- refers to various private supplemental health insurance plans sold to Medicare beneficiaries in the United States that provide coverage for medical expenses not or only partially covered by Medicare.

Is various private supplemental health insurance plans sold to Medicare beneficiaries in the United States that provide coverage for medical expenses not or only partially covered by Medicare. Medigap's name is derived from the notion that it exists to cover the difference or "gap" between the expenses reimbursed by Medicare and the total amount charged. As of 2006, 18% of Medicare beneficiaries were covered by a Medigap policy.

Patient Protection and Affordable Care Act 
The Individual Mandate:


Medicare Catastrophic Coverage Act of 1988
 -

Adverse Selection


- anti-selection, or negative selection-

is a term used in economics, insurance, risk management, and statistics. It refers to a market process in which undesired results occur when buyers and sellers have asymmetric information (access to different information); the "bad" products or services are more likely to be selected. For example, a bank that sets one price for all of its chequing account customers runs the risk of being adversely selected against by its low-balance, high-activity (and hence least profitable) customers. Two ways to model adverse selection are to employ signaling games and screening games.

Clinton’s Health Security Act