• THIS MORNING:
• Interest group politics
• Briefing on Debt and Deficits

• INTEREST GROUP POLITICS:
• Repeat of Class 17 notes.
• To understand American government, especially the "middle levels" of power one needs to appreciate the central role interest groups play in the political process.
• Interest groups compared to political parties:
• Do not try to run government as a whole, only to protect the interests of their members.
• Private, not public, bodies and hence not accountable in the same way parties are.
• Do not run their own candidates for office.
• They try to influence election outcomes, however.
• Examples:
• To get some idea of the range and type of interest groups in the U.S. take a look at their PACs.
• A good source is "Political Advocacy Groups"
• Generalizations:
• Most visible politics involves interest group conflict
• Interest group politics involves mostly "branch and twig" decisions and mid-range distributive policies.
• The American way of politics: interest group conflict or pluralism
• The belief in the legitimacy of groups: ours is a nation that places great value on private organizations and groups.
• Main "actors" or players are organized groups, not individuals or unified, organized political parties.
• Usually, several sets of groups on each side of an issue.
• Politics involves creating coalitions.
• Groups struggle in many arenas (institutions) for favorable outcomes.
• Groups mobilize resources such as money, skills, organization, prestige.
• Groups participate in policy development and especially implementation.
• Tools: contact and access and favors (lobbying), public relations, "knowledge," election contributions
• On paper the "system" remain relatively stable, "balanced," open, representative
• On the downside, it encourages "democratic survival of the fittess."

• BACKGROUND:
• 1945-1970 era of growth and prosperity
• Example: growth in real wages.
• The budget process is best described by the term disjointed incrementalism
• Federal programs were "paid" for by tapping into economic growth, not by redistribution.
• The collapse of the old system
• War on Vietnam but "no new taxes"
• The "Great Society": an huge expansion of general welfare policy
• Oil and food shocks
• Growth of international competition
• FED and interest rate rises
• Paul Volcker
• See Debt and Deficits, Chapter 2
• "The consequences: inflation and high unemployment = "stagflation"
• Soaring budget deficits
• Changes in the composition of the budget
• The usual way of looking at the budget can be misleading.
• Spending by function and agency does not reveal the total picture.
• Look at the images and texts on the class web page.
• Growth in entitlements and mandatory spending:
• Transfer programs such as Social Security, federal retirements, veterans benefits
• Before 1996, Aid to Families With Dependent Children (AFDC).
• Recipients or beneficiaries are entitled to benefits if they meet eligibility requirements.
• Interest on the debt.
• Congress does not annually appropriate money for them in the usual fashion.
• Costs go up with inflation, changes in demographics, state of the economy, etc.
• Means-tested and non-means tested entitlements
• Hence, spending on entitlements is called relatively mandatory or uncontrollable.
• See figures "Outlays by Super Function," "Outlays by Agency," "Entitlements," and "Discretionary" Outlays for Major Spending Categories
• Major point: since the early 1970s spending on entitlements has increased by leaps and bounds.
• Contrary to popular belief, spending on discretionary programs has remained more or less steady; in fact, for many categories it has decreased.
• Greatest growth has been in entitlement spending
• The first major roll back: the welfare-reform act of 1996

• DIFFERENCES BETWEEN FEDERAL AND HOUSEHOLD OR BUSINESS BUDGETS:
• Politicians, editors--nearly everyone in fact--insists on comparing the federal budget with business or household budgets.
• How the budget differs from "ordinary" budgets
• What is recorded in federal budget documents are expenditures
• Expenditures are not broken down into funds for consumption and for assets.
• Spending versus investment
• Should investment be thought of the same way as spending for consumption?
• Human capital
• Education, training, health, psychological and social well-being sufficient to make the labor productive.
• Infrastructure
• Both kinds of capital increase productivity.

• COMPARING THE FEDERAL WITH FAMILY, BUSINESS DEBTS:
• The debt in perspective:
• One person's debt is another's assets
• Net debt = gross debt minus government assets
• Who owns the nation's debt?
• Look at the table in Bernstein and Heilbroner, The Debt and Deficits.
• The case for deficit spending:
• "Pump priming" to combat recessions
• See Bernstein and Heilbroner for an explanation of the benefits of "deficit" spending in a recession.
• NEXT TIME:
• Interest groups
• Congress
• Reading:
• Read the essays in "Political Economy" on the web site
• Note again: "Do Something!" has a place to go if you want to do the assignment on campaign finance.

Go to Notes page

Go to American Political System page

Go to H. T. Reynolds page