With corporate profits at an all- time high, the “annual $92 billion in direct and indirect subsidies to businesses and private-sector corporate entities” (Slivinski, S. May 14, 2007) would provide the funding necessary to implement the proposal.
Policy invariably comes down to political positioning, and in this case the question becomes whether the strengthening of the middle class is a more important goal then subsidizing corporate coffers. In formulating the legislation the policy model provides a realistic approach for reaching a consensus on sustainable economic development. Sound policy depends on compromise and the belief that there is recognized agreement on the ostensible outcomes of the prescribed action. Formulation, implementation, and analysis then depend on a concrete and identifiable source of measurable criterion on which to base judgment.
A general criterion model provides four platforms from which to gauge the efficacy of the policy proposal: Economic (cost-benefit), Equity (social allocation of costs-benefits), Technical (effectiveness), and Political (acceptable to stakeholders) (California State University Long Beach. N.D.). Utilization of this model depends on the criteria and their measures as unambiguous. They should be relatively straightforward and simple to measure. Their application should produce uniform results, no matter who does the measuring of different alternatives. And repeated measurements of the same alternative should produce the same results, again, no matter who does the measuring. (California State University Long Beach. N.D.)
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Evaluation of the policy under these conditions reveals a sound and fundamental approach to providing relief to the middle class.
On the economic front the cost of the program is met with revenues requisite to pay for its continued stability. The economic benefit of the program is considerable in its long-term effect on increasing savings for individuals, concomitant with an increase in capital stock for the economy, and a consistent channel of bond purchases for the U.S. Treasury. On the equity angle the allocation of the benefits comes to a large swath of Americans at the cost of reducing corporate welfare for a select few companies. The technical aspect demonstrates that the policy would be effective in its goal of increasing middle class Americans savings rates. Lastly, the political channel allows for policy makers to craft a program which helps a large spectrum of voters while not adversely impacting a large voting constituency; the definitive political opportunity.
Crafting public policy is a mix of politics, economics, and social justice. No policy is perfect however, one that combines aspects of utilitarianism (the greatest good for the greatest number), with a mix of sound economic fundamentals will provide the best recipe for a successful implementation and outcome. The middle class in America is the foundation of our economic engine. These individuals are the consumers, entrepreneurs, and hardworking drivers of the resilient U.S. economy. With economic globalization there has been considerable pressure on the middle class in the U.S. which has negatively impacted the savings of this demographic. While the discussed policy prescription of modifying the Roth IRA does not tackle all of the challenges of the middle class it does provide a measured and sound response on the issue of retirement savings and security.
References
California State University Long Beach. (N.D.). Establishing Analysis Criteria. PPA 670
Policy Analysis. California State University Long Beach. Retrieved July 13, 2011 from http://www.csulb.edu/~msaintg/ppa670/p&sch5.htm
Fox, W., Bayat, S. & Ferreira, N. (2006). A Guide to Managing Public Policy. Juta & Company Limited. http://books.google.com/books?id=pHZczfNlk_gC&pg=PA67&lpg=PA67&dq=institutional+model+of+public+policy&source=bl&ots=Co_GsXMnO7&sig=KIlgzR2XVjVyawT5LJEzcTqOSVY&hl=en&ei=N3cdTu20DeT30gGu3oDNBw&sa=X&oi=book_result&ct=result&resnum=6&sqi=2&ved=0CEcQ6AEwBQ#v=onepage&q=institutional%20model%20of%20public%20policy&f=false
Nutting, R. (July 8, 2011). How the Bubble Destroyed the Middle Class. Yahoo Finance.
Retrieved July 13, 2011 from http://finance.yahoo.com/banking-budgeting/article/113086/bubble-destroyed-middle-class-marketwatch?mod=bb-budgeting
Slivinski, S. (May 14, 2007). The Corporate Welfare State:
How the Federal Government Subsidizes U.S. Businesses. Policy Analysis. Cato Institute. Number 592. Retrieved July 13, 2011 from http://www.cps-news.com/wp-content/corporate-welfare/The-Corporate-Welfare-State-How-the-Federal-Government-Subsidizes-U.S.-Businesses.pdf
Your Roth IRA Guide.com. (May 4, 2010). Compare the Roth IRA vs. Traditional IRA.
Your Roth IRA Guide.com. Retrieved July 13, 2011 from http://www.yourrothiraguide.com/compare-the-roth-ira-vs.-traditional-ira/
