{"id":104,"date":"2025-07-09T15:35:33","date_gmt":"2025-07-09T15:35:33","guid":{"rendered":"https:\/\/staging.routledgelearning.com\/americangovernment\/?p=104"},"modified":"2025-08-14T20:18:59","modified_gmt":"2025-08-14T20:18:59","slug":"chapter-15","status":"publish","type":"post","link":"https:\/\/staging.routledgelearning.com\/americangovernment\/chapter-15\/","title":{"rendered":"Chapter 15"},"content":{"rendered":"\n

The Revolution and the Constitution<\/h2>\n\n\n\n
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This chapter discussed national economic and domestic policy-making by providing its historical context, forms, institutions, and ultimately procedures that have come to define macroeconomic and domestic management in the United States. First, it dealt with the establishment of the early colonies as economic joint stock ventures.  The American economy grew slowly without much government intervention until after the Civil War as the government dealt mostly with the sale of public lands and the laying and collecting of imposts and excise taxes. Industrialization and mass transport technologies like steam and rail led to the emergence of macroeconomic regulation by the federal government in the late nineteenth and early twentieth centuries culminating with the establishment of the FED (Federal Reserve Board) in 1913 and the Sixteenth Amendment\u2019s allowance of a federal income tax. The world wars and the Great Depression\u2019s New Deal led to the development of the permanent macro-level regulatory state and welfare provisioning system that we still have today.<\/p>\n\n\n\n

In addition to the FED, other institutions like the CEA (Council on Economic Affairs), OMB (Office of Management and Budget) (formerly BoB: the Bureau of the Budget) and CBO (Congressional Budget Office) have been established to assist the president and the Congress in the creation of economic policy. This policy has followed different formations including Keynesian, monetarist, supply-side, and new economy approaches, but all of them have largely rejected the traditional conservatism of the past with its reliance on laissez-faire economic prescriptions. They differ from one another based on the degree to which they reject the past and employ the interventionist federal state as a macro-economic regulator.<\/p>\n\n\n\n

The development of the welfare state has produced both social insurance and mean-tested programs operated at or at least through the federal government since the 1930s. The programs were expanded through the Great Society of the Johnson administration but have since suffered some retrenchment particularly during the Reagan years. The employment of the federal government as an education provider for the nation as a whole since the end of World War II has provided additional opportunities and constraints on federal power and role within the polity. Questions remain as to the ultimate impacts of the increasing entrenchment of the national debt coupled with an overall decline in future revenue sources due to persistent tax cutting since the 1960s, but it is clear that the federal government is here to stay as a guiding force in the construction of economic and social domestic policy.<\/p>\n\n\n\n

The chapter includes a deliberative discussion over types of taxation ranging from progressive to regressive and flat tax formulations. In practice, it is revealed that the government uses all forms, but income taxes, a progressive version, have become the dominant means of revenue raising by the federal government in recent decades. It also reveals that there has also been some alteration in federal spending patterns as defense spending has declined as a percentage of GDP and as a portion of the annual budget, while entitlement spending (e.g. social insurance programs like social security and Medicare) has increased as well as debt servicing since the late 1960s.<\/p>\n<\/div>\n\n\n\n

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Quizzes<\/h3>\n\n\n\n