The Importance of Money in Government

What is the cost-benefit analysis? Several studies take place at any given time in order to compare the most cost-effective approach that can deliver the same benefits. The cost-benefit analysis is a study of what all the projected costs would be for a potential policy versus all the benefits that would be gained, an example was how the gas tax was calculated by identifying two items that would affect the projected cost versus five items that would prove to be a benefit as a result.

This policy was created in order to fund highway maintenance and to force Americans to reduce their consumption of oil. The control of American consumption affects air pollution, co2 emissions, imports, traffic on the roads, and in the end accidents. What is 'bottom-up' delivery? After a policy passes it can only be implemented after working through the specifics of the law and then delivering the service.

This service can be delivered through a chain of command model as in a top-down or bottom-up process.

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The top-down process starts with the most elite of the hierarchy working their way down the ladder. The bottom-up or street-level process starts at the bottom where the worker bees are working their way up and is used for complex policies and works directly with the public providing government services. These services include social workers, IRS agents, and air traffic controllers and are regulated by the government but are empowered to make decisions on their own. What is path dependence and what example is used to illustrate it? Path-dependence is the final stage of the process of policymaking and where policymakers are inclined out of habit to follow the same processes on the particular subject matter.

The policy is implemented, evaluated and the feedback is used for future policymaking. An example used to illustrate is the Social Security program. The designers of this program used the word “entitlement,” giving senior citizens the mindset that they have earned the right to receive these benefits from the government in their old age and has even gone as far as planning their retirement around this “path.” This path has made it impossible for policymakers to make changes or eliminate this program, but in all honesty, why should they? The money funding this program is taken from the taxpayers during their working years with the expectation of being able to collect when their bodies can no longer work for a living. When did European countries generally develop modern social policies?

European countries developed their social policies starting in the 1880s.  What are 'means tested' programs? Medicaid is a means-tested program and only available to those that fall below a specific income level and varies from state to state. What does the term 'entitlement' mean? The term “entitlement” means rights granted by law to receive payments. 6. What is the difference between fiscal policy and monetary policy? Fiscal and monetary policies affect our economy. The two main controls of a fiscal policy are to either cut taxes which is supported by the Republicans or expand spending which is supported by the Republicans in order to stimulate the economy. The fiscal policy is a process that allows consumers to spend more money than they usually would or could afford and companies to hire more employees during a time they would initiate a hiring freeze. Manipulating the economy affects the national economic growth so that the United States can keep making payments on its debts without creating a worldwide monetary meltdown. The monetary policy is the manipulation of the money supply and interest rates by the Federal Reserve in order to increase the employment rate and maintain interest rates. Businesses are more apt to borrow money to expand their business which then increases their need to hire and consumers will borrow to purchase homes and goods. In essence, the Federal Reserve manipulates inflation and unemployment with this policy.