American Issues Connector: Government’s Role in the Economy

A photo of an elderly man with a sign, "Hands Off My Social Security!"

Activists protest plans to privatize Social Security.

TRACK THE ISSUE

What is the proper balance between free enterprise and government regulation of the economy?

In theory, a free-enterprise system should function with little government interference. In practice, though, our government often plays a strong economic role. How much government regulation of the economy is appropriate? Use the timeline below to explore this enduring issue.

    1890 Sherman Antitrust Act

    Congress tries to curb the power of monopolies.

  • 1906 Pure Food and Drug Act

    Progressive law regulates the safety of food and medicine.

  • 1913 Federal Reserve Act

    Federal Reserve system is established to control the money supply.

  • 1933 Agricultural Adjustment Act

    New Deal law pays farmers to reduce production, causing higher crop prices and farm profits.

  • 2001 Tax Cuts

    Government lowers taxes in an effort to promote economic growth.

DEBATE THE ISSUE

Social Security’s Effectiveness The government manages retirement accounts for millions of Americans through the Social Security system. But with the coming retirement of millions of baby boomers, some people believe that Social Security can no longer achieve its original goals.

“Well, the system is facing serious financial problems, but more than that it has become an increasingly bad deal for today’s workers. Workers are paying 12 1/2 percent of their income into a system that is providing a poorer and poorer return. It’s a system in which workers don’t own their assets, have no legal rights to their benefits, don’t control their money, and a system that penalizes groups like African Americans and working women.”

—Michael Tanner, Cato Institute

“Social Security is one of the most successful government programs. It has consistently provided a safety net for seniors so that retirees are able to support themselves through their retirement and pay for food, housing, and medical costs. By helping to support the elderly and vulnerable among us, Social Security provides Americans with the guarantee of security for life.”

—Center for American Progress

Federal Social Welfare Spending

A bar chart of Federal Welfare Spending.

SOURCES: Historical Statistics of the United States; Social Security Bulletin; Statistical Abstract of the United States

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TRANSFER Activities

  1. Compare Do you think that today’s Center for American Progress would support or oppose New Deal laws like the AAA?
  2. Analyze Costs and Benefits Compare the data on this page to the data in the Section 2 Social Security feature. Do you think that the costs of Social Security outweigh the benefits?
  3. Transfer Use the following Web site to see a video, try a WebQuest, and write in your journal. Web Code: neh-8202
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Table of Contents

Prentice Hall: United States History
CHAPTER 1 Many Cultures Meet (Prehistory–1550)
1 The American Indians 2 The Europeans 3 The West Africans 4 First Encounters American Issues Connector: Global Interdependence Quick Study Guide and Assessment
CHAPTER 2 Europeans Establish Colonies (1492–1752)
1 Spain’s Empire in the Americas 2 The French Empire 3 England’s Southern Colonies 4 The New England Colonies 5 The Middle Colonies Quick Study Guide and Assessment
CHAPTER 3 The American Colonies Take Shape (1607–1765)
1 Immigration and Slavery 2 The American Colonies and England 3 Comparing Regional Cultures 4 Wars of Empire Quick Study Guide and Assessment Reflections: Seeds of Change
CHAPTER 4 The American Revolution (1765–1783)
1 Causes of the Revolution 2 Declaring Independence Declaration of Independence 3 Turning Points of the War 4 War’s End and Lasting Effects Quick Study Guide and Assessment
CHAPTER 5 Creating the Constitution (1781–1789)
1 A Confederation of States 2 Drafting the Constitution 3 Ratifying the Constitution American Issues Connector: Expanding and Protecting Civil Rights Quick Study Guide and Assessment The Constitution and Bill of Rights
CHAPTER 6 The New Republic (1789–1816)
1 Government and Party Politics 2 The Struggle Over Foreign Policy 3 The Age of Jefferson 4 The War of 1812 Quick Study Guide and Assessment Reflections: Jefferson’s Vision
CHAPTER 7 Nationalism and Sectionalism (1812–1855)
1 Industry and Transportation 2 Sectional Differences American Issues Connector: Sectionalism and National Politics 3 An Era of Nationalism 4 Democracy and the Age of Jackson 5 Constitutional Disputes and Crises Quick Study Guide and Assessment
CHAPTER 8 Religion and Reform (1812–1860)
1 A Religious Awakening American Issues Connector: Church and State 2 A Reforming Society 3 The Antislavery Movement 4 The Women’s Movement Quick Study Guide and Assessment
CHAPTER 9 Manifest Destiny (1800–1850)
1 Migrating to the West 2 Texas and the Mexican-American War 3 Effects of Territorial Expansion Quick Study Guide and Assessment Reflections: An Age of Reform
CHAPTER 10 The Union in Crisis (1846–1861)
1 Slavery, States’ Rights, and Western Expansion American Issues Connector: Federal Power and States’ Rights 2 A Rising Tide of Protest and Violence 3 Political Realignment Deepens the Crisis 4 Lincoln, Secession, and War Quick Study Guide and Assessment
CHAPTER 11 The Civil War (1861–1865)
1 Resources, Strategies, and Early Battles 2 African Americans and the War 3 Life During the War 4 Turning Points of the War 5 The War’s End and Impact Quick Study Guide and Assessment
CHAPTER 12 The Reconstruction Era (1865–1877)
1 Rival Plans for Reconstruction American Issues Connector: Checks and Balances 2 Reconstruction in the South 3 The End of Reconstruction Quick Study Guide and Assessment Reflections: The Civil War
CHAPTER 13 The Triumph of Industry (1865–1914)
1 Technology and Industrial Growth 2 The Rise of Big Business 3 The Organized Labor Movement American Issues Connector: Technology and Society Quick Study Guide and Assessment
CHAPTER 14 Immigration and Urbanization (1865–1914)
1 The New Immigrants 2 Cities Expand and Change American Issues Connector: Migration and Urbanization Social and Cultural Trends Quick Study Guide and Assessment
CHAPTER 15 The South and West Transformed (1865–1900)
1 The New South 2 Westward Expansion and the American Indians American Issues Connector: American Indian Policy 3 Transforming the West Quick Study Guide and Assessment
CHAPTER 16 Issues of the Gilded Age (1877–1900)
1 Segregation and Social Tensions American Issues Connector: Women in American Society 2 Political and Economic Challenges 3 Farmers and Populism Quick Study Guide and Assessment Reflections: Little Bighorn
CHAPTER 17 The Progressive Era (1890–1920)
1 The Drive for Reform 2 Women Make Progress American Issues Connector: Social Problems and Reforms 3 The Struggle Against Discrimination 4 Roosevelt’s Square Deal 5 Wilson’s New Freedom Quick Study Guide and Assessment
CHAPTER 18 An Emerging World Power (1890–1917)
1 The Roots of Imperialism American Issues Connector: Territorial Expansion of the United States 2 The Spanish-American War 3 The United States and East Asia 4 The United States and Latin America Quick Study Guide and Assessment
CHAPTER 19 World War I and Beyond (1914–1920)
1 From Neutrality to War American Issues Connector: America Goes to War 2 The Home Front 3 Wilson, War, and Peace 4 Effects of the War Quick Study Guide and Assessment Reflections: The Progressive Era
CHAPTER 20 The Twenties (1919–1929)
1 A Booming Economy 2 The Business of Government 3 Social and Cultural Tensions American Issues Connector: U.S. Immigration Policy 4 A New Mass Culture 5 The Harlem Renaissance Quick Study Guide and Assessment
CHAPTER 21 The Great Depression (1928–1932)
1 Causes of the Depression 2 Americans Face Hard Times 3 Hoover’s Response Fails Quick Study Guide and Assessment
CHAPTER 22 The New Deal (1932–1941)
1 FDR Offers Relief and Recovery 2 The Second New Deal 3 Effects of the New Deal American Issues Connector: Government’s Role in the Economy 4 Culture of the 1930s Quick Study Guide and Assessment Reflections: Art in the New Deal
CHAPTER 23 The Coming of War (1931–1942)
1 Dictators and Wars 2 From Isolation to Involvement 3 America Enters the War Quick Study Guide and Assessment
CHAPTER 24 World War II (1941–1945)
1 The Allies Turn the Tide 2 The Home Front 3 Victory in Europe and the Pacific 4 The Holocaust 5 Effects of the War Quick Study Guide and Assessment
CHAPTER 25 The Cold War (1945–1960)
1 The Cold War Begins 2 The Korean War 3 The Cold War Expands 4 The Cold War at Home American Issues Connector: Civil Liberties and National Security Quick Study Guide and Assessment
CHAPTER 26 Postwar Confidence and Anxiety (1945–1960)
1 An Economic Boom 2 A Society on the Move 3 Mass Culture and Family Life 4 Dissent and Discontent Quick Study Guide and Assessment Reflections: Postwar Changes
CHAPTER 27 The Civil Rights Movement (1945–1975)
1 Early Demands for Equality 2 The Movement Gains Ground 3 New Successes and Challenges American Issues Connector: Voting Rights Quick Study Guide and Assessment
CHAPTER 28 The Kennedy and Johnson Years (1960–1968)
1 Kennedy and the Cold War 2 Kennedy’s New Frontier 3 Johnson’s Great Society American Issues Connector: Poverty and Prosperity Quick Study Guide and Assessment
CHAPTER 29 The Vietnam War Era (1954–1975)
1 Origins of the Vietnam War 2 U.S. Involvement Grows 3 The War Divides America 4 The War’s End and Impact American Issues Connector: America and the World 5 Nixon and the Cold War Quick Study Guide and Assessment
CHAPTER 30 An Era of Protest and Change (1960–1980)
1 The Counterculture 2 The Women’s Rights Movement 3 The Rights Revolution Expands 4 The Environmental Movement American Issues Connector: Interaction With the Environment Quick Study Guide and Assessment
CHAPTER 31 A Crisis in Confidence (1968–1980)
1 Nixon and the Watergate Scandal 2 The Ford and Carter Years 3 Foreign Policy Troubles Quick Study Guide and Assessment Reflections: The Civil Rights Struggle
CHAPTER 32 The Conservative Resurgence (1980–1993)
1 The Conservative Movement Grows 2 The Reagan Revolution 3 The End of the Cold War 4 Foreign Policy After the Cold War Quick Study Guide and Assessment
CHAPTER 33 Into a New Century (1992–Today)
1 The Computer and Technology Revolutions 2 The Clinton Presidency 3 Global Politics and Economics 4 The George W. Bush Presidency 5 Americans Look to the Future American Issues Connector: Education and American Society Quick Study Guide and Assessment
Reflections: Enduring Issues Five Themes of Geography Profile of the Fifty States Atlas Presidents of the United States Economics Handbook Landmark Decisions of the Supreme Court Documents of Our Nation English and Spanish Glossary Index Acknowledgments
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