ABSTRACT
As recently as 1965, a section on economic policy in a textbook on American politics would not have been considered necessary. Today it is essential. N ot since the 1930s have economic issues dominated the policy agenda as they do now. Abroad, America’s standing has changed in a new and often hostile international economic order. At home, maintaining steady growth with low inflation and balanced budgets has become the number one domestic policy priority. It hardly needs stressing that the state of the economy is vitally important, not only for the economic role of governments in society and the ways in which they tax citizens and allocate expenditure, but also for the health of the polity. It is small wonder, then, that economic policy came to dominate the agenda of the 1980s and 1990s. Governments, moreover, are now irrevocably involved in economic affairs. Some 35 percent of gross domestic product is accounted for by government expenditure at all levels; federal regulation of industrial and commercial affairs, from environmental protection to antimonopoly law, is widespread; and by manipulating aggregate levels of expenditure and taxation and altering the supply of money in the economy, all federal governments now accept the need to “manage” the economy. Regulation
has been discussed elsewhere (Chapter 10), and this section’s aim is to study economic management policies and in particular to identify those forces that shape the economic policy making agenda. As with social policy, particular attention is paid to the relationship between public expectations and the objective performance of the government in the economic policy area.
