2302+Spring+2009+Week+Six


 * The Legislature: Contemporary Issues - Economic Policymaking -- under construction**

In this section we will try to apply what weve learned about the legislative branch, in general, and attempt to understand some specific issues that are currently being discussed in Congress. Since the stimulus bill has occupied most of the attention recently, it would be appropriate to discuss it now.

The legislative branch is said to control the country's purse strings. This means that it establishes and protects currency, collects revenue, borrows money and controls the allocation and appropriations of funds, among other things. In the early years of the republic, this has been accomplished through the normal bill making process and in committees, but since the early 20th century executive agencies were created with the rulemaking authority to focus on the economy in a professional manner without the political pressure that comes with legislative matters.

That said, American economic history has been quite eventful over its history, and is no less eventful now. The role of government, espacially the national government has changed drastically. In the 1800s, when government played a role in fostring economic growth, it paid little attention to regulating the marketplace. As a result, boom and bust cycles were common, the most severe in our collective recollection was the Great Depression. Since then fiscal and monetary policy have evolved to the point where economists have a resonably good idea about how to manage the economy so that severe booms and busts do not occur. At least that was the story up until about 6 months ago.

This week we will spend a little time providing background of economic policymaking, primarily on the national level since that is where the current controversy lies.

We will cover the basics of the United States budget, and the problems the country faces. We will try to do this in a way that does not make us all want to jump out of a window.

Sources:

History - [|Economic History of the United States]. - [|The Free Market]. - [|Alexander Hamilton]. - Hamilton's Reports to Congress. - The [|First] and [|Second] Banks of the United States. - [|Homestead Act of 1860]. - [|The Gilded Age]. - [|Laissez Faire]. - [|Interstate Commerce Act of 1887]. - [|Federal Reserve Act of 1913]. - [|The Great Depression]. - [|The New Deal]. - [|The Social Security Act]. - [|The Glass Steagall Act]. - John Maynard Keynes. - [|The Interstate Highway Act]. - [|The Great Society]. - [|Medicare]. - [|Medicaid]. - [|Deregulation] and [|Reaganomics]. - Milton Friedman. - [|The New Economy]. - [|Global Financial Crisis of 2008-2009]. - [|The American Recovery and Reinvestment Act of 2009].

Terms --Gross Domestic Product. -- Unemployment. -- Inflation. -- recession. -- expansion. -- Budget Deficits. -- Budget Surpluses. -- Discretionary Spending. -- Non-Discretionary Spending. -- [|Fiscal Policy]. -- [|Monetary Policy].

General Information - [|The United States Economy]. - [|The United States Budget]. - [|The United States Debt]. - [|History of Taxation in the United States]. - The Budget of the State of Texas.

Aside from the sources above, we will look at material made available in a great website funded by Ross Perot: [|Perot Charts]. We will also look at the charts available in [|The First Measured Century.]


 * Assignments:**

For my internet classes

Three written assignments, at least 150 words:

1-The Federalists would have argued that the expansion of the American economy would have been impossible had it not been for the ratification of the Constitution. How? What did the creation of a national government do for economic development that could not have been accomplished under the Articles of Confederation? Were the Federalists right or wrong? 2- The New Deal marked a significant change in the relationship between the national government and the economy. What did it do? Some have recently questioned the success of the New Deal. Did it help bring the United States out the Great Depression? What are the arguments on either side? 3 - Outline the nature of current stimulus bill passed by Congress. What are its main features? How are these supposed to help jumpstart the American economy? Some argue that it will not have the desired effect. What arguments do they make?

Lecture students be prepared for a multiple choice quiz on Wednesday or Thursday.

Notes:

What is the Nature of the Current crisis? - Subprime Mortgage Crisis - real estate bubble - Excessive Credit - Unregulated Speculation on Securities - Leverage - The Bubble Burst - credit dries up - banks no longer lend money - demand tightens - recession - How do you stimulate the economy?

TARP - how to save the banks? ARRA - how to jump start the economy?

What Relationship generally exists, or ought to exist, between government and the economy? - a political question, liberals and conservatives disagree - the creatuion of a national executive - the Constitution - currency, infrastructure, credit, regulation - state and local roles - Laissez Faire - Boom and Bust cycles - Fiscal Policy - Monetarism

Overview of the Bailout - what is the central problem? - nationalize the banks? - buy bad assets? - create a "bad bank"?

Over View of ARRA - pros and cons of public spending - pros and cons of public assistance - pros and cons of tax cuts.