LAPC What Is the Proper Role of The American Government During a Recession Discussion

User Generated

Enssv

Humanities

Los Angeles Pierce College

Description

refer to Ronlehavipowerpointpresentation The economic policy and the Constitution:

Discuss the question re: the proper role of American Government during a recession. Make sure you use the Constitution itself to justify your answer. (based on the commerce clause or based on the 10th amendment etc)

Also, read the story of President Cleveland veto of the farm bill. Answer the question that was posed re: his policy and tie it to the idea of the proper role of American Government in the economy.

Unformatted Attachment Preview

The proper role of the U.S. government in the economy A constitutional and Ideological debate The Question What is the proper role of the U.S. government in the American Economy? In your opinion, should the government help stabilize the economy, create jobs and help the people during a recession or should it allow the market fix itself through the business cycle • 1) government should help • 2) market should be left alone THE DEBATE • The Business cycle, or the regular ebbs and flows of the market are naturally occurring. Left alone, it leads to regular cycles of recessions and prosperity. Is it constitutionally proper for the government to regulate economic activities? How does economic stabilization work? Is it economically wise to regulate the economy? Should the economy be left alone and allowed to climb out of the recession on its own? The Business Cycle Two Debates: 1 ) The constitutional debate: Strict Construction vs. Loose Construction 2) The ideological debate: Progressivism or big government vs. Laissez Faire or small government (free market) Historical Review • Jefferson versus Hamilton debate concerning the1st bank of the United States. Hamilton wanted to create a central bank. Jefferson said the constitution forbids it. Illegal. • Strict construction: If the constitution does not say yes it means no. Not allowed • Loose construction: if the constitution does not say no it means yes. Allowed • Enumerated versus implied powers: Enumerated vs implied powers • Enumerated powers: Powers that are clearly stated in the Constitution. Allow Congress and the President to directly pursue a policy. • Implied Powers: Powers that are not clearly stated. They are derived from vague statements. Subject to debate. • Those who view the constitution strictly use enumerated powers. Those who view the constitution loosely, use implied powers. Constitutional basis for strict construction The Tenth Amendment: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. Using the 10th amendment would support Jefferson view that a bank is illegal because its not in the constitution. Constitutional Basis for Loose Construction • • General welfare clauses: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; • • preamble We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America. • • Necessary and Proper clause: The Congress shall have Power - To make all Laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof • • The Commerce Clause: The Congress shall have Power To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes Loose construction • Necessary and Proper clause: • Have Power - To make all Laws which shall be necessary and proper. • General welfare clauses: provide for the common Defense and general Welfare of the United States. • Very vague statements that give the government an open ended implied power to do what ever they want Strict construction/ Laissez Faire in action • • • President Grover Cleveland once told a friend that he saw his chief legislative duty to be stopping bad bills from becoming law, One of Cleveland’s most famous vetoes was • his veto of the Texas Seed Bill in 1887. A long and severe drought had stricken areas of Texas. Congress authorized a special appropriation to send seeds to the drought-stricken farmers. The amount ($10,000, or approximately $223,000 in • today’s dollars) “I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that, though the people support the government, the government should not support the people.” Furthermore, Cleveland said, it would weaken the “bonds of a common brotherhood” for the government to provide assistance to individuals where individuals, families, communities and private charities otherwise would. What do you think of Cleveland’s policy ? 1. It was cruel unwarranted by the constitution and unwise 2. It was appropriate reading of the constitution but socially unwise 3. It was appropriate reading of the constitution and both socially and economically wise. End of the Story • After the President vetoed the bill using strict construction of the constitution, the farmers went to the churches and community organizations. They were able to raise far more money that was promised them under the vetoed bill. They were able to successfully reseed the next year. Loose Construction and big government in action • 1900-2011: • The Progressive Era: first expansion of role of government. (creation of the FDA, Federal Reserve Board etc.) • The Great Depression and the New Deal 1933-1950 • The Great Society 1964 • Universal Health Care and the Stimulus Obama Care. • In the 20th century, the government gradually used the commerce clause to regulate the economy and provide jobs during time of recession. In the 20th century starting with the progressive era, loose construction of the commerce clause led to expansion of government regulation of the economy. Fiscal and Monetary Stabilization Policies 1) Monetary Policy • The monetary policy is the act of regulating the money supply by the Federal Reserve Board of Governors. One of the main responsibilities of the Federal Reserve System is to regulate the money supply so as to keep production, prices, and employment stable. • The "Fed" has three tools to manipulate the money supply. They are the 1)reserve requirement, 2)open market operations, and 3)the discount rate 2)Fiscal Policy • The second way to influence the money supply lies in the hands of the government with the Fiscal Policy. The fiscal policy consists of two main tools. The changing of tax rates, and changing government spending. The main point of fiscal policy is to keep the surplus/deficit swings in the economy to a minimum by reducing inflation and recession. In summary: • Fiscal Policy is performed by Congress, President, Department of the treasury, Office of management and budget. • Monetary policy is performed by a relatively independent bureaucracy called the Federal Reserve Board. • Both of these policies would be impossible in a 19th century strict construction of the economy. Fiscal Policy Pie chart of discretionary part of the budget Summary • Fiscal Policy involves changing government spending and taxation. It involves a shift in the governments budget position. e.g. Expansionary fiscal policy involves tax cuts, higher government spending and a bigger budget deficit. • Monetary policy involves influencing the demand and supply of money, primarily though the use of interest rates. It can also involves unorthodox policies such as open market operations and quantitative easing Fiscal and monetary policies during recession/inflation Market condition/ideology Progressive/loose construction/keynesian Laissez faire/strict construction/ conservative Recession/unemployment Fiscal policy: Increase the budget, run deficit, stimulus Monetary policy: lower discount rate, lower reserve requirement, buy back government bonds Fiscal Policy: lower taxes Monetary policy: lower discount rate, lower reserve requirement, buy back government bonds Inflation/ overheated market Fiscal policy: increase taxes Reduce spending Monetary policy: Increase discount rate, increase reserve requirement, sell government bonds Fiscal policy: cut the budget reduce government spending as part of GDP. Monetary policy: reduce the money supply, increase discount rate, increase reserve requirement, sell government bonds Problems with Fiscal/Monetary • Problems with fiscal policies and monetary policies: • Federal reserve is an independent bureaucracy, congress is ideologically politically motivated. They may pursue contradictory policies: • During recession, the fed may lower interest rates and buy bonds, while congress may run a deficit stimulus which requires borrowing money by selling bonds and raising interest rates. • Tomorrow: Keynesian demand side vs Arthur Laffer supply side vs Milton Friedman Monetarism Homework • Synthesis level analysis: Imagine you were an advisor to a President, write a policy program advising the president how to end a recession. Make sure you properly address the debate and use the fiscal and monetary policy tools Which policy would you pursue during recession? 1. 2. 3. 4. 5. Congress expands the budget through stimulus, Fed reduce interest rates, buys back government bonds. Congress cuts the budget contracts economic policy. Fed reduces interest rates and buys back bonds. Congress lowers taxes, cuts the budget, fed lowers rates, buys back government bonds Congress increases taxes, passes stimulus, fed buys back bonds Congress lowers taxes, Fed expands money supply by printing money
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached. Please let me know if you have any questions or need revisions.

What is the proper role of the American Government during a recession?
The American Government is constitutionally in a position to help during a recession using the
monetary policy a...


Anonymous
This is great! Exactly what I wanted.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags