Social and Domestic Policy. Business and Labor Policy

Chapter 21Social and Domestic Policy

Chapter 21Section 1

Business and Labor Policy

Although free enterprise is the foundation of the American economic system, ours is a mixed economy.◦ Mixed Economy: system in which the government both

supports and regulates private enterprise

Government promotes or discourages trade by placing tariffs on imports.

The Government uses tax incentives, government loans, free services and information, and direct cash payments to subsidize businesses.

Promoting and Protecting Business

The Commerce Department provides information services, financial assistance, and research and development services to businesses.

The Small Business Administration offers credit subsidies, advice, and information to small firms.

Promoting and Protecting Business

Constitutional Basis of Regulation◦ The Constitution’s commerce clause allows

regulation of the economy.

◦ The Founders designed this clause to allow the federal government to control interstate commerce.

◦ The Supreme Court has broadened the interpretation of interstate commerce to include a wide variety of economic activities.

Regulating Business

Demand for Reform◦ The federal government took a laissez-faire

approach to the economy until the late 1800s.

◦ At that point, most American businesses were small and locally owned.

◦ As the economy changed, corporations began to dominate industry.

◦ Large corporations would merge to form monopolies and calls for reform began.

Regulating Business

The Sherman and Clayton Antitrust Acts◦ The Sherman Antitrust Act of 1890 regulated

monopolies and corporate trusts that tried to restrain trade.

◦ Trust: a form of business consolidation in which several corporations combine their stock and allow a board of trustees to operate as a giant enterprise

◦ Monopoly: business that controls so much of a product, service, or industry that little or no competition exists

Regulating Business

The Clayton Antitrust Act of 1914 prohibited price-fixing and interlocking directorates.◦ Interlocking Directorates: circumstance in which the same

people served on the boards of directors of competing companies

The Federal Trade Commission (FTC) enforces the act.

Today, oligopolies are more common than monopolies with about 50 multibillion dollar companies controlling about a third of the US’s manufacturing capacity.◦ Oligopoly: a few firms dominating a particular industry

Regulating Business

The 1906 Pure Food and Drug Act makes it illegal to sell foods or drugs that are contaminated, unhealthful, or falsely labeled.

The Federal Trade Commission protects consumers from misleading and fraudulent advertising.

Congress set up the Consumer Product Safety Commission in 1972 to protect consumers from hazardous products.

Consumer Protection

Congress created the Securities and Exchange Commission during the Great Depression to protect small investors from being misled about the value of stocks and bonds and to investigate cases of suspected fraud in the sale of securities.

In 2002, the Sarbanes-Oxley Act required the heads of large corporations to be held personally responsible for improper accounting procedures.

Consumer Protection

The American Federation of Labor was formed in the 1880s.

Workers organized unions to negotiate labor contracts.

New Deal laws of the 1930s guaranteed labor’s right to join unions, bargain collectively, and strike.◦ Collective Bargaining: negotiating labor contracts

Government and Labor

The Wagner Act of 1935, creating the National Labor Relations Board (NLRB), was modified by the Taft-Hartley Act of 1947.◦ Guarantees the right of all workers to organize

and bargain collectively.

The Landrum-Griffin Act of 1959 helped end fraud in union elections and protect the rights of union members.

Government and Labor

Chapter 21Section 2

Agriculture and Environment

Early Agricultural Legislation◦ Congress created the Agriculture Department in

1862.

◦ The Morrill Act established colleges of agriculture.

◦ The Homestead Act gave land to those willing to farm.

The Federal Government and the Farmer

Farm Problems◦ In the 1920s, many farmers lost their land due to

market changes and drought.

◦ During the 1930s Congress made loans to farmers and limited crop production to increase farm prices.

◦ The Agricultural Adjustment Act (AAA) paid farmers to not produce their usual amount of corn, wheat, hogs, and other commodities.

◦ The AAA was overturned by the Supreme Court but quickly replaced with similar legislation.

The Federal Government and the Farmer

The Department of Agriculture provides marketing services to farmers.

Three federal programs prevent farm prices from falling below a certain level:◦ Price supports

Lends money to farmers equal to a price of a crop.◦ Acreage allotments

Government give money only for the number of acres needed to supply all markets.

◦ Marketing quotas Farmers will only market assigned portions of

overproduced goods.

Aid for Farmers Today

The concern for a deteriorating environment, beginning in the 1950s, ultimately led to the creation of the Environmental Protection Agency (EPA) in 1970.

Air pollution regulation began in 1955 and was strengthened in the 1960s.

In the 1990s, clean-air laws mandated sharply reducing car exhaust emissions and placed restrictions on power company wastes.

Protecting the Environment

Water pollution laws prohibit the discharge of harmful amounts of petroleum and other dangerous materials into navigable waters.

The Water Pollution Control Act of 1972 set the goal of completely eliminating water pollution.

since then, the law has been changed and amended to make it easier for states to comply with the Act’s standards.


As the EPA implemented environmental laws, communities complained about unfunded mandates.

In 1996 Congress restricted the imposition of requirements unless funds were provided.


Native Americans and early settlers found clear lakes and rivers, unending forests, and rich deposits of metal.

Americans used these resources to build a strong industrial nation.

The 1973–1974 energy crisis resulted in a new energy policy.

Energy and the Environment

Competing interest groups, such as energy companies and conservation organizations, struggle to shape new policies and programs that reflect their concerns.

One example of this is the debate over oil drilling in the Arctic National Wildlife Refuge.

Energy and the Environment

Chapter 21Section 3

Health and Public Assistance

As the Depression deepened, private charities and state and local governments could not cope with the problems of the poor.

New Deal Programs◦ The New Deal included the Social Security Act of

1935.◦ This act was the first of many government-

supported social insurance, public assistance, and healthcare programs.

The Impact of the Depression

Social Insurance: government programs designed to help elderly, ill, and unemployed citizens

Public Assistance: government programs that distribute money to people with low incomes

Social Insurance and Public Assistance

The Social Security Act provides for: ◦ Old Age, Survivors, and Disability Insurance

(OASDI)

◦ Medicare

◦ Unemployment insurance

Social Insurance Programs

Social Security◦ Equal taxes on employers and employees finance

the Social Security system.

◦ Beginning in 1981 a financial crisis threatened the Social Security system because cash outlays exceeded income.

◦ Raising the retirement age, taxing some benefits, and other changes attempted to keep Social Security going.


Medicare◦ In 1965 Congress added Medicare, which pays a

major share of hospital bills for senior citizens, to the Social Security system.

◦ In 2003 Medicare was reformed to include prescription drug coverage.

Unemployment Insurance◦ A tax on employers funds unemployment insurance.◦ Under unemployment programs, federal and state

governments cooperate to provide the needed help.


Supplemental Security Income (SSI)◦ In 1974 Congress set up the Supplemental

Security Income system for the aged, the blind, and the disabled.

◦ The Social Security Administration runs the program.

◦ The federal government makes a monthly payment to anyone 65 or older, who is blind or disabled, or who has little or no regular income.

Public Assistance Programs

Food Stamps◦ In 1961 the food stamp program was created.◦ The purpose of the food stamp program is to

increase the food-buying power of low-income families and to help dispose of America’s surplus agricultural production.

Medicaid◦ In 1965 Congress established Medicaid to help

pay hospital, doctor, and other medical bills for persons with low incomes.


Aid to Families with Dependent Children◦ Aid to Families with Dependent Children (AFDC)

was a program to aid families whose main wage earner had died, but more than 80 percent of children receiving aid had living, but absent, fathers.

The Need for Reform◦ Many Americans grew frustrated over the

mounting cost of welfare programs while the level of poverty remained high.


Sweeping Changes in Welfare◦ In July 1996 Congress and the president agreed

on an overhaul of welfare.

◦ Aid to Families with Dependent Children (AFDC) was replaced with lump-sum payments to the states, who could design and operate their own welfare programs.


Health Programs◦ Most federal spending on health goes for

Medicare and Medicaid.

◦ The Department of Defense provides hospital and other medical care for active and retired American military personnel and their families.

◦ The public health service operates research, grant, and action programs designed to promote the health of all citizens

Promoting Public Health

Food and Drug Protection◦ The Food and Drug Administration (FDA), a federal

agency, tests food and drug products and can ban or withdraw drugs it finds unsafe.

Stem Cell Research◦ Government funding promotes scientific

research with possible applications in treating and preventing illness.

Promoting Public Health

Chapter 21Section 4

Education, Housing, and Transportation

Public education remains a local responsibility under state guidelines.

Federal Aid to Education◦ The first general aid-to-education act was passed in

1965.

◦ The federal government provides funding to local public schools and to higher education.

◦ These funds can be direct or distributed by the state.

Public Education Programs

Aid to Higher Education◦ The Morrill Act of 1862 granted states public land

for colleges.

◦ The G.I. Bill financed education for veterans of World War II and later wars.


Education Issues◦ Federal aid for education is controversial.

◦ Critics charge education should be a state and local concern.

◦ In 1983 President Reagan appointed a commission to study why American students performed less well than European and Asian students.


Education Issues◦ In 1994 Congress passed the Goals 2000:

Education in America Act to improve graduation rates and raise academic standards.

◦ Through legislation like the No Child Left Behind Act, President George W. Bush’s administration has focused its education reform on testing and increasing student and teacher accountability.


Adequate housing is an important part of the general welfare of any society.

The federal government has developed several programs to ensure adequate housing for all citizens.

Housing and Urban Programs

The federal government began providing loans for homes and farms during the Great Depression.

After World War II, Congress passed the Housing Act of 1949.◦ Aimed to provide a decent home and suitable

living environment for every American Family.

Housing Policy

The Department of Housing and Urban Development (HUD) is in charge of the Federal Housing Administration, which helps low-income families purchase homes.

The majority of the federal housing programs that HUD administers are targeted on cities.

Promoting Home Buying and Building

Urban Renewal: programs under which cities apply for federal aid to clear slum areas and rebuild

Urban renewal has restored older neighborhoods but has also driven out lower-income residents.

Urban Renewal

Public housing has faced serious problems in attempting to provide affordable urban housing as many projects have become high-rise slums and centers of crime.

In the 1990s, reforms to the nation’s housing policy gave more control to state and local officials and focused on closing the gap between white and minority home ownership statistics.

Public Housing Programs

In 1811 the first National Road was constructed.

Federal funds have helped construct canals, dams, ports, highways, railroads, and airports.

In 1966 Congress created the Department of Transportation (DOT) to coordinate national transportation policies and programs.

Transportation Programs

DOT has numerous federal agencies, including the Federal Aviation Administration (FAA) and the Federal Highway Administration (FHA).

The Federal Road Aid Act of 1916 first gave aid to states that matched funds.

States now receive billions each year to maintain the interstate highways.


Since 1995 the FHA has focused on transportation needs such as road maintenance and reducing traffic fatalities and congestion.

The Transportation Equity Act for the 21st Century (TEA-21) provided funds to improve mass transit and develop high-speed rail systems.


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Social and Domestic Policy. Business and Labor Policy