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Visit this website to read about lobbying.

In the early 2000s, about 40 million people in the United States were eligible for Medicare , a government program that provides health insurance for those 65 and older. On some issues, the elderly are a powerful interest group. They donate money and time to political campaigns, and in the 2012 presidential election, 70% of those over age 65 voted, while just 49% of those aged 18 to 24 cast a ballot, according to the U.S. Census.

In 2003, Congress passed and President George Bush signed into law a substantial expansion of Medicare that helped the elderly to pay for prescription drugs. The prescription drug benefit cost the federal government about $40 billion in 2006, and the Medicare system projects that the annual cost will rise to $121 billion by 2016. The political pressure to pass a prescription drug benefit for Medicare was apparently quite high, while the political pressure to assist the 40 million with no health insurance at all was considerably lower. One reason might be that senior citizens are represented by AARP , a well-funded and well-organized lobbying group, while there is no umbrella organization to lobby for those without health insurance.

In the battle over passage of the 2010 Affordable Care Act (ACA) , which became known as “Obamacare,” there was heavy lobbying on all sides by insurance companies and pharmaceutical companies. However, a lobby group, Health Care for America Now (HCAN) , was financed by labor unions and community groups and was organized to offset corporate lobbying. HCAN, spending $60 million dollars, was successful in helping to get the legislation passed which added new regulations on insurance companies and a mandate that all individuals will obtain health insurance by 2014. The following Work It Out feature further explains voter incentives and lobbyist influence.

Paying to get your way

Suppose Congress proposes a tax on carbon emissions for certain factories in a small town of 10,000 people. The tax is estimated to reduce pollution to such an extent that it will benefit each resident by an equivalent of $300. The tax will also reduce profits to the town’s two large factories by $1 million each. How much should the factory owners be willing to spend to fight the passage of the tax, and how much should the townspeople be willing to pay to support it? Why is society unlikely to achieve the optimal outcome?

Step 1. The two factory owners each stand to lose $1 million if the tax is passed, so each should be willing to spend up to that amount to prevent the passage of the tax, a combined sum of $2 million. Of course, in the real world, there is no guarantee that lobbying efforts will be successful, so the factory owners may choose to invest an amount that is substantially lower.

Step 2. There are 10,000 townspeople, each standing to benefit by $300 if the tax passes. Theoretically, then, they should be willing to spend up to $3 million (10,000 × $300) to ensure passage. (Again, in the real world with no guarantees of success, they may choose to spend less.)

Step 3. It is costly and difficult for 10,000 people to coordinate in such a way as to influence public policy. Since each person stands to gain only $300, many may feel lobbying is not worth the effort.

Step 4. The two factory owners, however, find it very easy and profitable to coordinate their activities, so they have a greater incentive to do so.

Questions & Answers

why is the marginal curve u shaped
jake Reply
which of marginal curve?
begyere
marginal cost curve
jake
what is demand function
uju Reply
demand function is the mathematical representation of price and quantity demanded of goods and services at various prices at a given time .
King
Demand function is an equation which shows the mathematical relationship between the quantity demanded of a good and the values of the various determinants of demand.
Bon
why would division of labour without trade not work
Frederick Reply
as far there is an output as a goal... trade can't be exempted... because the sole reason for division of labour is for an effective and efficient output or outcome.. with such exchange trade has taken place. .
Agha-Aiguokhian
Please what is paradox of value
rakia
what is the features of monopoly market? how it is different from monopolistic market?
alisha
how does scarcity described as the efficient byway to allocate resources in a free market?
God Reply
scarcity gives or births a rational thinking to an individual or state economy in the distribution of revenue or income to the right channels of their ends... assuming the market has the features of a free market (free entry and exit, close substitutes, market price control etc)
Agha-Aiguokhian
wath is the meaning the macro economics
Jimcaale Reply
What is the way out of Scarcity
Samuel
a state referenced economic study, the manner or behavioural pattern of a state choice in making economic decisions in satisfying their ends
Agha-Aiguokhian
Thanks brother
Samuel
what is macro economics
Balogun
is the study of a national economy as a whole
Rhoda
thanks
Balogun
what is micro economics
Balogun
micro is not the study of the entire economy as a whole. that is macro economics.
Brock
micro focuses more on decisions that individuals and firms make but also uses examples of countries regarding production.
Brock
I think is why some people get mixed up.
Brock
thanks a lot
Balogun
yes ,I think that is right
rene
how would you use budget constraints to explain trade off?
begyere
what is the difference between wants and needs as in economics
rene
wants may be unlimited but needs have the limit on the base of effort to pay.
Dambar
when total utility is constant, marginal utility do what?
rasheed Reply
Why is it that whenever I ask a question no one hears me out
Dominic
😊😊
Konadu
This is deals with only 1producer 1producer 1consumer
Motasay Reply
Oligopoly
Gh
thanks for you answer
Qaasim
With two buyers n sellers
Motasay
nothing only I study
Qaasim
still oligopoly That is when there is a limited buyer and seller in the industry. There are no perfectly elastic market entry, that is for both the price taker and the seller
Gh
thanks for your advice
Qaasim
welcomed bro
Gh
we can ask our doubt also isn't
Rohit
Yea you can as well
Gh
Like "beauty opportunity cost lies in the eyes of the beholder"discuss with practical examples
Dominic
Criticism of scarcity definition
No Reply
life is all about scarcity. there is a big reason behind that
Hassan
tell me the whole
No
as we are Muslims
Hassan
so what
No
we believe that our Allah. the God of Universe is Examining each and every one on the planet this Scarcity. the only place there is no scarcity is Aakhiro Doomsday
Hassan
i want Explanation ?
No
theory
No
You have came back our book of Quran
Hassan
Make some of our basic needs not available. For example like if we need a particular drugs to cure a virus ohh disease because if the scarcity of it it may lead to death
Motasay
what men gdb
Jimcaale Reply
with men government demand price
Jimcaale
how to draw demand curve
Michael Reply
What are the distinction between trade off and opportunity cost?
Eric Reply
what is monopoly
Mary Reply
What are the sources of monopoly
Mary
Sources of Monopoly Power Monopoly power is influenced by the following factors: Barriers to entry Number of competitors Advertising Degree of product differentiation The larger and more expensive the barriers to entry the greater the monopoly power The smaller the number of competitors in th
edward
monopoly occurs when specific enterprise supplies goods and controls the market.
sade
i think the sources of monopoly are barriers to enrty and product differentiation.
sade
Monopoly is a market structure characterized by a single seller, selling a unique product in the market in which s/he faces no competition, as s/he is the sole seller of goods with no close substitute.
edward
Monopoly is a market structure where the production of goods and services coupled with price determination of such commodities are left in the hands of a sole producer. Such factors are; Perfectly inelastic competition, High market barricade, High cost of raw materials,
Gh
what is price discrimination monopoly
sandra Reply
Charging different sets of consumers different prirces for the same good or service, for reasons not involved in cost of production. There are 3 degrees of price discrimination.
Darren
what are the 3 degree
obed
hello
Oparaugo
What up guys
Divine
what are four sources of monopoly
dora Reply
examples of what cause demand and supply to shift to the left.
Verte Reply
hello
Konadu
hi
Yaman
how are you
Yaman
are you fine
Yaman
hii
Liya
Why is there a trade off between inflation and employment? Give a situation to clear it up please
Kurt

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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