This is Kenneth Janda speaking as primary author of Chapter 17, "Economic Policy." Scholars differ over why economics has been called "the dismal science," but students typically agree that government budgets are a source of dismay. Nevertheless, politics often revolve around the raising and spending of public funds, so students of American government need to know something about economic policy. Here are some helpful guides to reading this chapter.

It begins discussing economic theories. Learn the central principle of Keynesian theory, advanced by the British economist John Maynard Keynes, which involves the key concepts of aggregate demand, fiscal policies, and monetary policies. Learn why governments have more difficulty adjusting fiscal policies than monetary policies, and why the president himself has little direct control over monetary policy.

The section on the federal budget contains a graph that plots the pattern of budget surpluses and deficits over time. Study it to learn which presidents have generated surpluses and which generated deficits. Concerning the budget itself, understand that it is essentially prepared by a presidential agency (learn which one) and then submitted to Congress, which usually revises it substantially. Be sure that you understand the difference between congressional "authorization" to spend public funds and the "appropriation" of public funds.

On the revenue side of the budget, understand the principle of "progressive taxation" as compared with a "flat tax." You may think that Americans are heavily taxed compared with other countries. Look at the evidence in the chapter to see whether they are.

The chapter also contains a graph on recent federal spending broken down into about 20 categories. Which categories account for most government spending? Suppose the government scrapped all foreign aid. How much money would that save?

Since the 1960s, the federal government has spent a lot of money to help the poor and disadvantaged. The chapter contains a graph that shows the distribution of family income over the decades since then. Does the graph supply any evidence that government spending programs have equalized income distributions? Spending and taxing policies in the U.S. have been determined by pluralist politics. Is there any evidence that U.S. tax policies would be more progressive if they were enacted in keeping with majoritarian democracy?