PADM530ex: | Law

Research Requirement:

Ezra.docx 1 8 Hey Class, one economic policy that has caught my attention is the approach taken by the United States to tackle inflation. Since 2023 the Federal Reserve has been actively working to control inflation, which has consistently remained above the 2 percent target set by the Federal Open Market Committee. According to a report submitted to Congress although there have been some improvements, due to reduced supply bottlenecks and declining energy prices inflation continues to be a concern. The World Economic Forum, in collaboration with The Brookings Institution also highlighted that policymakers in the US are making efforts to bring inflation under control. This ongoing struggle demonstrates how complex and persistent inflationary pressures are within our economy. Deloitte Insights provided a perspective on this matter acknowledging that despite challenges such, as rising interest rates aimed at combating inflation uncertain federal budget policies and increasing geopolitical tensions the US economy managed to sustain its growth.This indicates that the strategy to tackle inflation is a part of an approach that addresses multiple interconnected factors. Additionally the Federal Reserve Bank of San Francisco has discussed the concept of a multiplier, which suggests that an increase, in the deficit equivalent to 1% of GDP leads to a corresponding 1% increase in GDP. This concept helps determine whether projected changes in the primary deficit act as either a hindrance or support to term economic growth revealing the wider implications of fiscal policy on economic performance. When examining these policies from various angles; Effectiveness; The policy has shown some effectiveness, in curbing inflation. It still remains above the desired level indicating partial success. Efficiency; Implementing this policy requires balancing to prevent cooling of the economy while addressing inflation highlighting its intricate and delicate nature. Ethics; The goal is to ensure prices and protect the purchasing power of citizens, which's ethically responsible as it prioritizes the economic well being of people. Political Feasibility; This aspect forms a part of the Federal Reserves responsibilities making it politically viable, as an accepted approach to managing the economy. Social Feasibility; Although necessary the increase in interest rates can make loans more expensive impacting areas like housing, education and business financing. This might lead to resistance or opposition. Fairness; While this policy affects everyone it can have an impact on those with variable rate debts or those seeking loans. This may raise concerns about fairness in its implementation. Maintainability; Ongoing adjustments and careful monitoring are required for this policy. It indicates that while maintainable it demands resources and expertise. These policies and my analyses illustrate the interaction of strategies aimed at fostering stability and growth in response to persistent inflationary pressures. References: Monetary policy report – March 2023. Board of Governors of the Federal Reserve System. (n.d.). https://www.federalreserve.gov/monetarypolicy/2023-03-mpr-summary.htm#:~:text=Monetary%20Policy%20Report%20submitted%20to,objective%20of%202%20percent What key economic policy developments happened in 2022 and what Lies ahead in 2023?. World Economic Forum. (n.d.-a). https://www.weforum.org/agenda/2023/01/key-economic-developments-policy-year/#:~:text=Jan%204%2C%202023%20This%20article,Center%20on%20Regulation%20and%20Markets Deloitte. (2023, December 15). United States Economic Forecast. Deloitte Insights. https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis.html#:~:text=The%20Q4%202023%20forecast%20explores,Center%20Daniel%20Bachman%20United%20States Dcallahan. (2023, November 13). Recent and near-term fiscal policy: Headwind or tailwind?. San Francisco Fed. https://www.frbsf.org/economic-research/publications/economic-letter/2023/november/recent-and-near-term-fiscal-policy-headwind-or-tailwind/ less Keith.docx 1 8 For this week’s discussion topic, I chose the topic/policy of minimum wage at the federal level and the current policy in North Carolina. My reasoning for choosing this topic is since my oldest son is about to enter the job market, and this was a topic we discussed at dinner. Currently, the federal minimum wage is set at $7.25 per hour and is the same rate as the North Carolina minimum wage. This wage has not been updated since 2009 and the economy has undergone significant changes since this time. A new piece of legislation is currently being worked on to increase the minimum wage amount to $17 per hour by 2028. This bill, if approved, will gradually increase the minimum wage over the next 4 years to meet the target gone of $17 per hour by 2028. Based on an article from July 2023 from the Economic Policy Institute, this wage increase act would impact roughly 28 million workers across the country, which equates to about 20% of the current workforce. Additionally, North Carolina would have roughly 29% of its workforce impacted by this act and increase the average annual wage by an estimated $4,300. Furthermore, the article highlighted that the biggest population that would benefit from this increase is the 16–19-year-old age group at 66%. This is the current generation that will be entering the workforce by the 2028 timeline and will be impacted by this increase the most. When it comes to policy framework covered in the class so far, this topic covers a few main areas which include fairness, social feasibility, and maintainability. When it comes to social feasibility, the idea of giving employees a higher wage seems like an amazing idea; however, the employer will have to figure out a way to keep costs low to maximize the profits for the company. This may come in the form of less workers to work the counter at a fast-food restaurant or the recent implementation of kiosk ordering systems compared to employees taking customer’s orders. This issue was already under discussion in 2017 with the article by Jennifer L. Romich, about raising the minimum wage, but other factors have come into play since this article was published. For example, the advancement in technology to include AI and other smart food ordering systems like Uber Eats, etc; as well as the COVID-19 outbreak in 2019. The advancement in technology and recent pandemic have shown that the use of kiosk-based ordering system is not only an option, but the preferred system in most fast-food restaurants currently. Interconnected with the idea of feasibility is the idea of maintainability when it comes to paying employees the proposed $17 per hour wage. A large amount of fast-food based restaurants has already moved away from the traditional order taking concept at the front counter and have moved to various kiosks or apps to take the customer’s orders. This has eliminated a large amount of work force who would usually be expecting the $17 per hour minimum wage over the coming years. References: Leung, X. Y., Torres, B. J. V., & Fan, A. (2021). Do kiosks outperform cashiers? An S-O-R framework of restaurant ordering experiences. Journal of Hospitality and Tourism Technology, 12(3), 580–592. https://doi.org/10.1108/jhtt-03-2020-0065 Romich, J. (2017). Is raising the minimum wage a good idea? Evidence and implications for social work. Social Work, 62(4), 367–370. https://doi.org/10.1093/sw/swx033 The budgetary and economic effects of S. 2488, the Raise the Wage Act of 2023. (2023, December 18). Congressional Budget Office. https://www.cbo.gov/publication/59833#:~:text=Summary,rate%20as%20median%20hourly%20wages. The impact of the Raise the Wage Act of 2023. (n.d.). Economic Policy Institute. https://www.epi.org/publication/rtwa-2023-impact-fact-sheet/#:~:text=What%20does%20the%20Raise%20the,%2417%20an%20hour%20by%202028. Winters, M. (2023, September 6). Here’s how much money a family of 4 needs to get by in every U.S. state. CNBC. https://www.cnbc.com/2023/09/06/how-much-money-a-family-of-4-needs-to-get-by-in-every-us-state.html less Richard.docx 1 8 Economic Policy The policies that shape a nation’s economic landscape are a crucial determinant of its global success. This pivotal role of economic policies becomes vividly apparent in landmark legislations such as the Consolidated Appropriations Act (CAA), 2021. The CAA Act, unprecedented on numerous fronts in contemporary society, illustrates the complexity, importance, and indispensability of economic policies, especially in the face of extraordinary, natural and socioeconomic factors. It underscores the role of appropriation bills in not only in responding to immediate crises, such as the global pandemic, but also in orchestrating a resilient and adaptive framework for sustained national prosperity. Still, it remains incumbent to examine the CAA Act using key evaluative criteria to ensure the legitimacy of the policy in its aftermath, focusing on its effectiveness, efficiency, ethics, political feasibility, social feasibility, fairness, and maintainability. The H.R. 133 - Consolidated Appropriations Act , 2021, extended several provisions of the CARES Act while introducing new more comprehensive set of economic programs designed to mitigate the impact of the COVID-19 pandemic on American industries, small businesses, workers, and families (National Credit Union Administration, 2023). Notable provisions within the Act included direct economic impact payments to individuals, extended unemployment benefits, and funding for the Paycheck Protection Program (PPP) to support small businesses (Barnes et al., 2021). These measures were implemented to cater to and safeguard against the multifaceted economic challenges posed by the pandemic. The significance of the $2.3 trillion economic stimulus bill becomes particularly apparent when considering the pandemic’s impact on the economy within its initial year. The Wall Street Journal reported a record 200,000 additional business closures, highlighting the profound economic challenges (Simon, 2021). Moreover, according to an article by Bartik et al. (2020) in the PNAS , the median American business facing monthly expenses slightly exceeding $10,000, had only two weeks of cash in hand. Suffice it to say that this this financial strain and economic downturn resulted in widespread business closures and mass layoffs. Efficiency and Effectiveness Given the severity of the pandemic, the Consolidated Appropriations Act (CAA), which extended many of the relief measures initially provided by the CARES Act, including the Paycheck Protection Program, effectively fulfilled its purpose (Barnes, 2021). It played a crucial role in alleviating economic hardships, particularly for low-income households grappling with pronounced liquidity constraints. This targeted approach acknowledged and addressed those most severely impacted by the pandemic, reinforcing the Act's overall efficiency and effectiveness. Ethics However, the time taken before the CAA Act was passed, brought about by division over certain provisions of the bill, marred the ethics of the Act as it exacerbated the adverse effects of the pandemic that millions of Americans were facing. For instance, the Long’s (2020) coverage of the Act, Stimulus deal is a needed lifeline for the economy, but more help will likely be needed in 2021 - The Washington Post notes that the months of inaction spent by Congress debating various provisions caused numerous small businesses to permanently shut down which undermined the ethical standing of the Act. Political and Social feasibility Given its importance in providing the stimulus relief needed to revitalize the economy and prevent a government shutdown passing the necessary appropriations bills to fund the federal government, the CAA act received a majority bipartisan support including from the party leaders. Similarly, the fact that the bill addressed the immediate needs of the US populace, mitigated economic hardship, and gathered almost unanimous public support showcases its social feasibility. Fairness While serving as a crucial lifeline for many Americans, the omission of various provisions, the smaller size of the package compared to the CARES Act, and the short deadline of some of the aid measures which Long (2020) noted would leave numerous businesses, localities, and individuals without much-needed assistance while the pandemic still raged undercut the fairness of the policy. Maintainability The scope of the CAA Act encompassed a substantial financial commitment, with its combined proposed spending of $2.3 trillion making it one of the largest spending bills enacted by Congress (Elis, 2020). This massive cost in light of growing political division in both houses, budgetary constraints, prevailing economic conditions, and funding mechanisms predicated on bipartisan support, point to potential issues in the Act’s maintainability. References Barnes, N. M., DeMatties, D., Maffett-Nickelman, J. L., Mason, T., Alexander, A., & Kim, A. J. (2021). The Consolidated Appropriations Act, 2021: Implications for Business: Covid-19 Update. Journal of Taxation of Investments, 38(3). Bartik, A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). The impact of COVID-19 on small business outcomes and expectations. Proceedings of the national academy of sciences, 117(30), 17656-17666. Elis, N. (2020, December 12). Congress unveils $2.3 trillion government spending and virus relief package. The Hill. https://thehill.com/policy/finance/531164-congress-unveils-23-trillion-government-spending-and-virus-relief-package/ Long, H. (2020, December 21). $900 billion stimulus is second-biggest in U.S. history, but it won’t last long enough. The Washington Post. https://www.washingtonpost.com/business/2020/12/21/stimulus-bill-economy/ National Credit Union Administration. (2023, January 12). Summary of the Consolidated Appropriations Act, 2021. Retrieved from https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/summary-consolidated-appropriations-act-2021 Simon, R. (2021). Covid-19’s toll on US business? 200,000 extra closures in pandemic’s first year. The Wall Street Journal.