Chapter 12: Political Ideology�How Beliefs Shape Our Choices

Ch. 12 Learning Targets

• 12.1 Describe the different ideologies of the Republican and Democratic parties.
• 12.2 Describe liberal and conservative perspectives on economic policy making.
• 12.3 Describe monetary policy and how the Federal Reserve uses the money supply to regulate the economy.
• 12.4 Describe liberal and conservative perspectives on social policy.

Section 12.1�Introduction

• Political ideology – a set of beliefs about the desired goals and outcomes of a process of governance
• Americans share values but disagree over desired policymaking

Section 12.1 Party Ideology

• A party’s philosophy about the proper role of government and its set of positions on major issues
• Party identification – an individual’s attachment to a political party
• Conservatism – an ideology favoring more control of social behavior, fewer regulations on businesses, and less government interference in the economy
• Liberalism – an ideology favoring less government control over social behavior and more regulation of businesses and of the economy
• Libertarianism – an ideology favoring very little government regulation and intervention beyond protecting private property and individual liberty

Section 12.1�Opposing Ideologies

• Democrats
• Liberty of privacy
• Order in gun regulation
• Protect liberties of the accused
• Pro-choice
• Favor tax increases on wealthy

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• Republicans and Democrats have different ideologies about how to balance the competing values of liberty and order in addressing social and economic issues
• Parties attempt to attract supporters by offering sharp ideological contrasts to each other

• Republicans
• Liberty in the marketplace
• Order in immigration
• Stronger punishment for offenders
• Pro-life
• Favor tax cut for businesses/wealthy

Section 12.2 Government Intervention in the Economy

• Adam Smith argued in favor of a free market economy
• Laissez-faire – economic policy in which governments intrude as little as possible in the economic transactions between citizens and businesses
• Free enterprise a part of American political culture
• Command-and-control economy – economic policy in which government dictates much of nation’s economic activity, including the amount of production and price for goods
• Mixed economy – economic policy in which many economic conditions are left to individuals and businesses, with the government regulating economic activity

Section 12.2 Monitoring the Health of the Economy

• The health of the economy guides economic policy
• Determined by:
• Gross domestic product (GDP) – the total value of goods and services produced by an economy
• Two consecutive quarters of negative GDP growth = economic recession
• Unemployment rate – the percentage of people actively looking for work who cannot find jobs
• Inflation – the rise in the prices of goods and services
• Consumer price index (CPI) – the cost of a fixed basket of goods and services over time, used to measure the cost of living

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Section 12.2�Keynesianism Theory

• John Maynard Keynes, works published during the Great Depression
• Effect of individual decisions with regard to saving and spending drives business cycles
• Boom = people spend more, invest unwisely
• Bust = cut back on spending and investing, exacerbating contraction
• Governmental policy, therefore, should be to inject more money into the economy
• Democrats support this (New Deal under FDR; Recovery Act under Obama, theory used to prevent total collapse with COVID)

Section 12.2 Supply-Side Theory

• “Reaganomics”- Propose lower taxes on individuals and businesses
• Critics: Trickle-down economics - the wealthy will benefit, unlikely these benefits will make their way to individuals not directly impacted by lower tax rates
• Proponents: excessive taxation drags down the economy and growth of businesses
• Republicans support supply-side
• Reagan, Bush, Trump tax cuts
• Fiscal policy – government use of taxes and spending to attempt to lower unemployment, support economic growth, and stabilize the economy

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Section 12.3 Monetary Policy

• Monetary Policy-A set of economic policy tools designed to regulate the amount of money in the economy
• Too much money supply can lead to inflation
• Federal Reserve System – a board of governors, Federal Reserve Banks, and member banks responsible for monetary policy
• “The Fed”
• Board members appointed by the president, confirmed by Senate, serve for fixed terms
• Why is it important that members of “The Fed” serve for a term and cannot be removed without cause?

Section 12.3 “The Fed”

• Three main tools to influence the economy:
1. Buys and sells treasuries
2. Sets the reserve rates that require banks to have a certain amount of deposits kept in reserve
3. Influences interest rates banks pay to borrow money from the federal government
• As the economy grows, the Fed uses its tools to control inflation

Janet Yellen, former Federal Reserve Chair and former Sec. of Treasury meets with the board members. Yellen tried to chart a course for the economy to steer it back to health following the 2008 financial crisis, in 2018 Jerome Powell who is seated second from her left, replaced Yellen.

Section 12.2�Guiding the Nation’s Economy Through Decisions on Spending and Taxation

• Republicans support:
• Budgets increasing military spending and decrease taxes
• Bush/Trump tax cuts
• Reduced income tax rates for wealthy Americans, increased spending to fund wars in Iraq and Afghanistan
• Democrats support:
• Budgets increasing spending on programs meant to target inequity
• Obama/Biden fiscal policy
• Increased taxes on wealthy
• Government spending to boost economy

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Section 12.2�Review Question: Free Response

1. Describe the economic theory being discussed in the quote above.
2. In the context of the quote, how would a policymaker argue that the theory identified in A would make the United States more competitive in a global economy?
3. Explain how Congress and the Supreme Court could use their powers of checks and balances on the executive to prevent this economic theory from being implemented.

The following is from the 2016 Republican Party Platform.

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“Because the Federal Reserve’s monetary policy decisions affect job creation, upward mobility for workers, and equitable prosperity, they should be transparent. Similarly, the Federal Reserve’s important role as a lender of last resort should also be carried out in a more transparent manner. The Republican Party will advance legislation that brings transparency and accountability to the Federal Reserve, the Federal Open Market Committee, and the Federal Reserve’s dealing with foreign banks.”- https://www.gop.com/the-2016-republican-party-platform/

After reading the passage, respond to A, B, and C below.

1. Referencing the scenario, describe an action, other than advancing legislation, that members of Congress may take to bring transparency and accountability to the Federal Reserve.

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B. In the context of this section of the Republican Party platform, explain how the action to increase transparency and accountability described in part A would affect the Federal Reserve’s ability to make economic policy.

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C. The passage suggests that greater transparency in the Federal Reserve will help workers and create more equitable prosperity for average Americans. Suppose the Democratic Party wants to create a statement about helping workers and reducing inequality in their party platform. Explain how the ideological perspective of the Democratic Party would likely affect how it would address these economic issues using Fiscal Policy.

Section 12.4�The Federal Government and Health Care

• Great Society under LBJ created social insurance program amending Social Security
• Medicare – a federal program that provides health insurance to seniors and the disabled
• Social Security and Medicare = largest portion of federal budget
• Medicaid – a federal program that provides healthcare for the poor
• As of 2012, US had the highest medical care costs in the world

Section 12.4�Patient Protection and Affordable Care Act

• Signed in 2010 by President Obama- named “Obamacare” by Republicans (why?)
• Overhauled American health care system
• Not popular among Republican party members
• Congresses have attempted to overturn unsuccessfully
• More Americans had access to healthcare coverage
• Liberals argue health care should be made widely available
• Conservative opposition – people should be responsible for making their own decisions, not be forced by the government

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Section 12.4�School Choice, Competition, and the Markets

• Public education reform
• School voucher programs
• Proponents – provide families with more school choice by providing vouchers to enable private or religious school attendance
• Mostly a conservative held belief
• Opponents – vouchers drain much-needed monies from traditional public schools
• Denies public school children equality of opportunity
• Mostly a liberal held belief

https://indianacoalitionforpubliced.org/voucher-cost/

Section 12.4�Review Question: Free Response