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Domestic Policy on Economy

Governments have the responsibility to take care of their people by ensuring the stability of the economy. The 2020 pandemic had its toll on all economies in the world, the worst-hit were the poor countries. This led to unemployment and loss of livelihoods to many households. The government came up with recovery plans that were aimed at reducing the devastating impact of the pandemic on the country and people. For individuals, aid came in terms of the expansion of unemployment insurance, direct payouts to families, and allowed students to differ payments of their loans (Benjamin, 2021). On the other hand, businesses were given hundreds of billions in grants and loans, at a lower interest, to aid businesses to remain afloat to present massive layoffs. The American government has a social policy with three main goals to help American citizens live decent lives. These goals are addressing the risk associated with lack of income through aging, illness, disability, and unemployment. It provides students with the opportunity to access higher education through student loans. Finally, it seeks to alleviate poverty. Chapter 14 of the book `We The People’ describes the government’s use of fiscal, monetary, and regulatory policies to influence the economy. It explains the ongoing debates in economic policies. The book advances equality of opportunity. Additionally, the book explains how contributory, noncontributory, and tax expenditure programs benefit different groups of Americans. Also, it traces the history of government programs designed to promote economic security. It also seeks to describe education, health, and housing policies. The social policy contributes to the economic policy of the government, which ensures economic growth and stability, by promoting business development, while protecting employees and consumers. Both economic and social policy have effects on the economic growth and well-being of the society.

The government uses policies to influence the economy. Two major policies are fiscal and monetary policies. In fiscal policy, the government uses taxing, monetary, and spending powers to manipulate the economy. The fiscal policy enables the government to counter inflation by being in control of the business cycle. In the early 1800s, most of the government revenue came from tariffs and taxation of imported goods (Margaret, 2021). This has however evolved due to the progressive nature of economies, to also have income taxation. Taxation mainly raises revenue for the expenditure of the government, and it helps in wealth distribution. Through revenues government raises from taxation, it runs the government on a set budget, which may over time experience deficits. The deficits are settled using public debt through the government. The government also uses its revenues to support other sectors of the economy that are struggling, to achieve a balance in the economy. The other policy is the monetary policy, where the government regulates the economy by manipulating the supply of money and credit. The Federal Reserve System was established in 1913, where 12 private banks integrated to form one single system. The federal reserve system is bankers who make loans to other banks, clear cheques and supply the economy with currency. They regulate the operations and conduct of their member banks. The government through its regulation policy, regulates the growth of companies, to prevent monopoly in the industry, where one company becomes too powerful. The government may order such to break into smaller affiliate companies.

There have been disagreements in America over the role the government should play in the intervention of the economy. The economy is always a strong political issue, especially for candidates when vying for president. The coronavirus pandemic was one of the biggest problems the Trump administration faced, due to the devastation it caused to the economy. In 1929, most Americans believed that the government should not play an active role in the economy. The great depression of 1933 changed the view of people. Many had previously believed that the economy was perfect self-regulating, the crisis changed this perception. The economic issue has become a political issue, as the republicans and democrats disagree on the roles of the government. The Republicans are opposed to the government cutting taxes as they view it as a way of influencing other aspects of the economy. Also, the Republicans argue that government spending is too high, the ballooning expenditure is dangerous to the economy. Americans generally believe that government regulation of the economy ass more harm than it does good to the economy.

In American history, the poor in the society were taken care of by the local governments and charities. This system however collapsed during the great depression. Later, the welfare state was created, which was aimed to oversee the welfare of all Americans. These policies have evolved over the years, as the needs of citizens change over time. The modern welfare state consists of three categories: contributory programs, non-contributory programs, and tax expenditure systems. Contributory programs, also known as social insurance, encourage people to save a portion of their earnings for their healthcare and retirement period. In this program, both the employer and employee contribute equal amounts. Criteria for eligibility vary from state to state. Non-contributory programs, also known as social assistance programs, created cash assistance programs for families with children and the poor, elderly, blind, and disabled people. Later, the government also created programs to provide housing assistance, food stamps, and school lunches. These programs provided noncash assistance for goods and services that would otherwise be paid for in cash. Additionally, the American government provided tax breaks such as credits, deductions, and preferential tax rates. These were offered to employers who offered medical insurance and retirement plans for their workers.

The advancement of space exploration by the Soviets was a wake-up call to America to have an overhaul of its education. This prompted the national government to be involved in education. Science and mathematics were made mandatory and examinable every year. Funding by the national government to the k-12 schools is about 10%, with 45% being the responsibility of the local governments. Education has always been regarded as an enabler in access to opportunities, and college education is key. The growing costs of higher education make it inaccessible to most of the American population. This continues to be a huge barrier to access to college education as many graduates with huge debt burdens after college. An increase in funding to education will increase access to loans and education for many. Until in recent history, the government did not take any responsibility in public health. However, during the cholera outbreak of 1867, this changed the perception of governments as they saw a role they could play in public health. Reforms have grown the insurance industry and have led to public health insurance. America is the only first-world country without universal health access to all its citizens (Truman, 2018). The Obama administration introduced Obamacare, which was aimed at reducing the burden of healthcare on citizens through insurance. Medicare provides insurance for poor and unemployed Americans.

Before the great depression, many Americans lived in very substandard living conditions. The only available module of owning a house was through purchase. After the great depression, many people were left homeless due to financial distress and a rise in prices. As housing standards began to improve, housing policies were failing. Federal housing assistance policy introduced housing vouchers which assisted people from low-income and poor families were able to pay rent.

The elderly are the biggest beneficiaries of welfare programs in America. The two main policies that take care of the elderly in America are the retirement pension and health insurance. This helps to reduce poverty among the elderly and promote decent living. The middle and upper class sometimes are not mentioned in the social welfare policy (Hansen, 2019), but the reliefs in tax and health insurance given by the government also contribute to their wellbeing. The help given to the non-working poor is limited, to the care for children’s welfare. The minority, women, and children are always being assisted by the welfare because they belong to a category of low income, that cannot support all aspects of their living.

In an article dated 19 July 2019 on the CNN website, an article titled “Here`s how Obama Care has changed America.” Millions of Americans got insurance through the ACA exchanges and Medicaid expansion. This enabled people from poor families access decent heath care services that would otherwise be unreachable to most of the population.Free health services were introduced, as well as regulations of safety standards on restaurant products on calories. Also, it ensured that people with pre-existing conditions are not turned away by insurers, as has been the case that has resulted in healthcare being expensive in the past. This has brought down the number of uninsured citizens, meaning many have access to insurance thus can get quality healthcare for everyone. The domestic policy on education, health, and housing has enabled many Americans to improve their living standards and live better lives. It has also helped, though marginally, to reduce the rates of poverty in the country.


Benjamin Ginsberg, Theodore lowi, Margaret, Caroline Tolbert, Andrea Campbell, Robert Spitzer. (2021). We the people: an introduction to American politics. W.W. Norton and Company. CHAPTER 14

Hahn, R. A., Truman, B. I., & Williams, D. R. (2018). Civil rights as determinants of public health and racial and ethnic health equity: health care, education, employment, and housing in the United States. SSM-population health4, 17-24.

Hanson, R. L. (2018). Liberalism and the course of American social welfare policy. In The dynamics of American politics (pp. 132-159). Routledge.

Ross, C., Sama-Miller, E., & Roberts, L. (2018). Using Research and Evaluation to Support Programs That Promote Parents’ Economic Security and Children’s Well-Being. OPRE Report 2018-04. Administration for Children & Families.

Wilson, D., & Wilson, T. (2018). State and Social Welfare, The: The Objectives of Policy. Routledge.


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