American Public Policy Promise and Performance SECOND EDITION B. Guy Peters Maurice Falk Professor of American Government UNIVERSITY OF PITTSBURGH M MACMILLAN EDUCATION © B. Guy Peters 1982, 1986 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright Act 1956 (as amended). Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. This edition first published 1986. Published by MACMILLAN EDUCATION LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world IN MEMORY OF MY FATHER BRITISH LIBRARY CATALOGUING IN PUBLICATION DATA Peters, B. Guy American public policy : promise and performance.-2nd ed. 1. United States-Politics and government-1981- 1. Title 320.973 JK261 ISBN 978-0-333-41591-7 ISBN 978-1-349-18388-3 (eBook) DOl 10.1007/978-1-349-18388-3 Contents Part One: The Nature of Public Policy 1 What Is Public Policy? 3 Defining Public Policy. The Instruments of Public Policy. The Environment of Public Policy. 2 The Structure of Policymaking in American Government 16 Federalism. The Separation of Powers. Subgovernments. Public and Private. The Size and Shape of the Public Sector. Summary. Part Two: Making Public Policy 3 Agenda Setting and Public Policy 39 Agenda Setting. Kinds of Agendas. Who Sets Agendas? From Problem to Issue: How to Get Problems on the Agenda. Policy Formulation. Summary. 4 Legitimating Policy Choices 63 Legislative Legitimation. Summary. 5 Organizations and Implementation 77 Dramatis Personae. Implementation. Interorganizational Politics. Summary. 6 Budgeting: Allocation and Public Policy 103 Characteristics of the Federal Budget. The Budget Cycle. Problems in the Budgetary Process. Reforming Budgeting. 7 Evaluation and Policy Change 133 Problems in Evaluating Public Programs. Policy Change. Summary. Part Three: Substantive Policy Issues 8 Making Economic Policy 155 The Goals of Economic Policy. The Instruments of Economic Policy. Tax Policy. Summary. 9 Health-Care Policies r83 Problems in Health Care. Public Programs in Health Care. The Pursuit of National Health Insurance. Summary. 10 Income Maintenance: Social Security and Welfare 209 Social Insurance. Means-Tested Programs. The Persistence of Poverty in the United States. Personal Social Services. Summary. 11 Educational Policy in the United States 234 The Federal Government's Role in Education. Issues in Educational Policy. Summary. 12 Energy and the Environment 252 Energy: Problems and Policies. Environmental Policies. The Politics of Pollution. Summary. 13 Defense Policy 2 7 4 The Environment of Defense Policy. The Strategic Balance. The Development of Nuclear Strategies. Arms Control. Problems in Defense Policy. Summary. Part Four: Policy Analysis 14 Cost-Benefit Analysis 297 Principles of Cost-Benefit Analysis. Doing Cost-Benefit Analysis. Criticism and Modification. 15 Ethical Analysis of Public Policy Fundamental Value Premises. Ethics and Public Policy: Alternatives to Utilitarianism. Glossary Index 337 Tables 2.I Percentages in Public Employment, Selected Policy Areas 27 2.2 Growth of Public Employment and Expenditures 29 2.3 Shifts in Public Employment and Expenditures 30 3·I Kinds of Policy Formulation 56 4·I Confidence in Government 64 4·2 Kinds of Legitimation 65 5·I Examples of Employment in Federal Organizations 79 6.r Executive Controllability of Federal Expenditures II3 6.2 Federal Spending II4 8.r Major Economic Indicators, Selected Countries I 56 8.2 Unemployment in the United States 159 8.3 Sources of Revenue 174 8.4 Tax Exemptions and Deductions 175 9·I Major Health Programs 184 9-2 Infant Mortality I85 9·3 Changes in Medical-Care Costs Compared with Consumer Price Index r88 IO.I Costs of Income Maintenance Programs 2IO I0.2 Social Insurance Beneficiaries 2!2 10.3 Increasing Rates of Social Security Taxation 213 !0.4 Replacement Ratios of Earnings in Social Security by Income Groups 214 !0.5 Characteristics of AFDC Recipients 223 ro.6 Changes in Poverty Rate 230 !0.7 Alternative Definitions of Poverty 231 II. I Property-Tax Revenues 237 13.1 Defense Expenditures 275 13.2 Strategic Nuclear Forces, United States and USSR 277 I3·3 Conventional Weapons, NATO and Warsaw Pact Nations 278 I3·4 Naval Forces, NATO and Warsaw Pact Nations 279 I4·I Costs and Benefits of Dam Project 300 J4.2 Hypothetical Costs and Benefits of Dam Project for Twenty Years Costs and Benefits of Alternative Projects Choosing a Package of Projects by Net Benefit Ratio Who Shall Live and Who Shall Die? Figures 3·I A Decision Tree on Evacuation 59 6.r Relation of Budget Authority to Outlays-r987 Budget rr6 Preface to the Second Edition Understanding public policy in the United States of the r98os is a rather grand undertaking, although limited by both time and space. In a political system as large and as complex as that of the United States, understanding policy making necessitates an explanation of the complex political system. Policymak ing is not strictly a political undertaking, however; it also involves the skills and biases of economists, philosophers, engineers, and many other professionals outside the field of political science. To understand public policy in the United States the student must first have a firm grasp of what policy is and must under stand the basic institutional and value structures in which it is made. Almost all the numerous definitions of public policy have some validity. In this book I attempt to focus on the effects that policy statements, declarations, and pro grams have on citizens, but I look too at more formal definitions of policy. Also, because policies are made within a set of institutions that limit their op tions and shape their outcomes, students must understand these institutions. Public policy is also made by means of a complex, subtle, and not always formal process. That is, many agents who do not show up on any formal chart of government organizations may nevertheless influence the shape of policy, perhaps even more than many formal institutions do. The process of making policy begins in the mass society as problems and issues are defined, goes into the formal institutions for some policy decisions, and then is returned to the broader society for implementation and, eventually, evaluation. All too often, the close connection between state and society, between the formal and informal actors in the policymaking process, is forgotten by both analysts and citizens, and the reality and subtlety of the relationships are re duced. It is also important to realize that policy problems are rarely if ever "solved"; solutions may be offered, but in all probability before long the prob lems will require new solutions. This is in part a result of changing circum stances and in part a result of the fallibility of policymaking institutions. Understanding public policy also requires some knowledge of specific pol icy areas. The policy process is generic, but it varies substantially between policy areas. The technological, social, and institutional frameworks in which policies Vll AMERICAN PUBLIC POLICY are made will influence their outcomes, and it is important to understand some of those differences. To that end, I have included chapters on specific policy areas. These have been selected because of my interests and expertise and be cause of the likelihood of significant modifications of the policies during the r98os. Also, the policy areas that have been selected represent a variety of types, in terms of the technological and professional influences on policymaking. These policy areas are all domestic, and most lie in the broad area of social policy. But within that seemingly narrow set of policies is sufficient variation to demonstrate the importance of understanding the particular framework of each policy. Finally, there must be some means of evaluating policies after they are made or proposed. This can be done on the basis of economic costs and benefits or on the basis of "softer;' more humane values. I discuss both kinds of eval uation and, to some degree, the differences between them. As in many areas of policymaking, neither kind of evaluation is entirely right or entirely wrong; both are necessary to understanding policy in the fullest. This second edition represents no major departures from the first, although it does contain a good deal of new material. Most important, it contains a chapter on defense policy, to balance the dominant concern of the book (and the author) with domestic and especially social policies. Also, the chapter on economic policy has been revised to take into account both the greater interest in an industrial policy in the United States and the centrality of tax policies in the mid-r98os. Finally, the impact of the Reagan administration on Amer ican public policy, at least during its first term, has been discussed and to some degree assessed. As with the first edition, there are a number of people who should be thanked for their contributions to this volume. Again, my family had to put up with the inevitable pressures arising from the need to complete a manuscript. Again, students who have heard much of this provided a number of useful com ments, although at times there were only dazed looks. Many colleagues in the profession provided useful feedback. Sandra Mathews typed the manuscript quickly and accurately-even the dreaded footnotes. If there are any differences in quality between the first and second editions, they may be attributed to hav ing to listen to the Pirates rather than the Yankees. Vlll PART ONE The N a tore of Public Policy