The federal government to the rescue. Again?

The U.S. Constitution provided the federal government with the power to regulate commerce with foreign nations and among the states, to establish uniform bankruptcy laws, to coin money and regulate the value of it, to fix standards of weights and measures, to establish post offices and roads, and to make rules regarding patents and copyrights. Political leaders in the nineteenth and early twentieth centuries generally accepted the theory of laissez-faire and opposed excess government interference in the economy.

The most significant increase in the federal government's involvement in the economy was initiated by President Franklin D. Roosevelt to address the Great Depression. His New Deal legislation created the Securities and Exchange Commission, which regulates the stock market; the Federal Deposit Insurance Corporation, which guarantees bank deposits; and Social Security, which provides pensions to the elderly.

Economic upheaval in the 1970s led to changing attitudes about government regulation. President Ronald Reagan's agenda in the early 1980s included reducing the size of the federal government and eliminating regulations that affected the consumer, the workplace, and the environment. The current and ongoing recession results mainly from lending abuses in the mortgage market. Banks made too many adjustable rate mortgage payments (ARMs) to high-risk home buyers who were teased into borrowing by initial low rates.

After several years, these rates doubled in most cases, leading the borrowers to default and lose their homes. The banks were stuck with properties that were worth considerably less than the amount of the loan and many went bankrupt. The government was forced to rescue the surviving banks by injecting $700-billion TARP (Troubled Assets Recovery Program) federal dollars in hopes of stabilizing the system and getting banks to start lending to consumers and businesses again.

In addition, the freezing of credit has led to a downward spiral of business failures, job losses, and home foreclosures. President Obama's controversial stimulus legislation is aimed at getting the economy stabilized and growing again. The stimulus of more than $800-billion is an attempt to get money into the hands of reluctant consumers to spend again, and also to invest in jobs related to our new priorities: green and alternative energy, rebuilding the infrastructure, reforming education, and developing more efficient vehicles and mass transportations systems.

So, the pendulum swings back again from a market driven economy, that failed to create greater wealth for all, to more government involvement and regulation as it did in the 1930s.

Which side do your students support in this economic debate that affects them and their families? Leading Issues provides an excellent way for students to build critical thinking skills while they learn more about our economy and the politics that drive it.

Assign students to open the Leading Issue: Economic Policy, U.S. and defend a pro or con position.

Students should click on the My Analysis tab that gets them started on the five-step process of analyzing, synthesizing, and creating a report or presentation that demonstrates their reasoned opinion on the issue. This process includes essential questions for critical thinking that students will have to address in their conclusions.

ProQuest also provides four unique report and presentation models for students to use that are specifically tailored to the five-step format of each Leading Issue. To access these, click the Educator Resources link at the top of the Search page.

• Writing a Research Paper
• Writing a Mini-Research Paper (student and teacher management versions)
• Creating a PowerPoint Presentation
• Creating a Mini-Debate (student and teacher management versions)

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