Economic Report of the President 1994 - The American Presidency ...

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PageThe Federal Government's Fiscal Stance 75Industrial and Regional Disparities 76Deficit Reduction and the Real Interest Rate 78How Deficit Reduction Reduces Long-Term InterestRates 81Short-Run Effects of Interest Rates 84Long-Term Effects of Deficit Reduction 85The Economy's Response to Higher Income Taxes 87Do Taxes Change Behavior? 88Do Higher Tax Rates Increase Tax Revenues? 89The Economic Outlook 90Risks to the Forecast 92Sources of Long-Run Growth 93Conclusion 95CHAPTER 3. TRENDS AND RECENT DEVELOPMENTS IN THE U.S.LABOR MARKET 97Employment Growth 98A Slow Recovery 99Sources of Job Growth 101Unemployment and Nonemployment 103Trends 103Is the Natural Rate of Unemployment Increasing? ... 110Direct Measures of the Natural Rate 112The Magnitude and Costs of Job Loss 114Slowing Wage Growth and Widening Inequality 115Slow Income Growth 115Growing Inequality 115Explaining Slow Wage Growth 117Explaining the Growth of Inequality 118Job Quality 121Hours of Work 121Job Stability 123Benefits 127Toward a Comprehensive Work Force Policy 128CHAPTER 4. Health Care Reform 131Universal Coverage and Health Security 133Insurance Market Reform 137Insuring Major Risks and Preexisting Conditions 137Community Rating 138Reducing Administrative Costs 139Creating a More Efficient Market and Containing Costs 140Explaining Cost Increases 144Who Pays for Health Care? 145Health Care and Government Budgets 149The Architecture of the Health Security Act 151Elements of Reform 15114
PageProviding Comprehensive Benefits 153Organizing the Insurance Market 154Paying for Insurance 155Providing Discounts 157Using Savings to Guarantee Health Security andReduce the Deficit 159Economic Effects of the Health Security Act 163Macroeconomic Effects 163Sectoral Effects 163Conclusion 167CHAPTER 5. MICROECONOMIC INITIATIVES TO PROMOTE EFFI-CIENCY AND PRODUCTIVITY 169Promoting Efficiency in the Public and Private Sectors ... 170Creating a More Effective Government 170Promoting Competition 173More Efficient Regulation of Natural Monopolies 175Addressing Environmental Externalities 179Managing Resources on Federal Lands 181Climate Change Action Plan 184Superfund Reauthorization: the Administration Position186Sustainable Development and Green Accounting 188Promoting Technology 189Principles of Technology Policy 190The Administration's Technology Initiatives 194Technology Policy, Growth, and Competitiveness 204CHAPTER 6. THE UNITED STATES IN THE WORLD ECONOMY 205Trends in U.S. Trade 206Trade, Jobs, and Wage Inequality 212The Administration's Trade Initiatives 214Domestic Initiatives: The National Export Strategy 214Bilateral Negotiations 215Regional Initiatives 225Multilateral Initiatives: The Uruguay Round 233The Trade Policy Agenda 238Trade and the Environment 238International Trade and Competition Policy 239Regionalism 240Foreign Exchange Market Developments 240The European Monetary System 243The European Currencies in Turmoil 244The Maastricht Treaty on Economic and MonetaryUnion 245Conclusions 24715
Page 1: S : Sf:' ;: W^W't-^WW': ;, S 4 Si :
Page 5: unitedminds
Page 9 and 10: Economic Report of the PresidentTo
Page 11: the Technology Reinvestment Project
Page 14: formed health care system, increase
Page 19: CONTENTSPageCHAPTER 1. A STRATEGY F
Page 24 and 25: LIST OF CHARTS—CONTINUEDPage3-5 L
Page 27 and 28: CHAPTER 1A Strategy for Growth and
Page 29 and 30: which have left consumers and busin
Page 31 and 32: that growth in both real compensati
Page 33 and 34: for inflation was on average roughl
Page 35 and 36: Box 1-2.—Saving, Investment, and
Page 37 and 38: investments in human capital; inves
Page 39 and 40: of the income distribution (Table 1
Page 41 and 42: Box 1-3.—Credible Deficit Reducti
Page 43 and 44: Chart 1-7 Correlation of Investment
Page 45 and 46: Box 1~4*~-A Balanced Budget Amendme
Page 47 and 48: This educational record is not good
Page 49 and 50: fallen markedly since the 1960s (Ch
Page 51 and 52: The development and deployment of n
Page 53 and 54: Earlier rounds of GATT talks had fo
Page 55 and 56: Chart 1-10 Projected Real Growth Ra
Page 57 and 58: are therefore on the public dole. M
Page 59: prise communities and be granted sm
Page 62 and 63: ingredient that should allow the ec
Page 64 and 65: Chart 2-2 National Defense Purchase
Page 66 and 67: Chart 2-3 Growth of U.S. Merchandis
Page 68 and 69: Chart 2-5 Households: Credit Market
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THE HEADWINDS ARE MOSTLY CALMINGAs
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1993, real consumer spending increa
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RESIDENTIAL INVESTMENTResidential i
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smallest annual increase in 20 year
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ments with the Internal Revenue Ser
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safe-harbor rules for underpayment
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Chart 2-9 Alternative Measures of t
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Meanwhile, the Mountain States were
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inflation is measured by the Blue C
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Saving, Investment, and Capital Acc
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the future should be reflected in l
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Chart 2-15 Dynamic Effects of Defic
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joyed healthy average real GDP grow
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Chart 2-16 Personal Income Taxes as
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TABLE 2-2.— Administration Foreca
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TABLE 2-3.— Accounting for Growth
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CHAPTER 3Trends and Recent Developm
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first quarter of 1991, nonfarm payr
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cause defense cutbacks have caused
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UNEMPLOYMENT AND NONEMPLOYMENTThe U
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Chart 3-3 Civilian Unemployment Rat
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Chart 3-6 Employment-to-Population
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Chart 3-8 Ratio of White-Collar to
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than would be expected given its hi
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that the natural rate is falling? M
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SLOW INCOME GROWTHIncome trends hav
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Chart 3-10 Average Annual Growth of
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Box 3-3.—Consequences of Producti
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likely that immigration could expla
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We do, however, know how many worke
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size. No data are available on vola
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BENEFITSOne of the concerns raised
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edented partnership to develop a nu
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CHAPTER 4Health Care ReformTHE UNIT
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make cost-conscious decisions. In a
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A third rationale for universal cov
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Box 4-1.—Moral Hazard and Adverse
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ies depending on one's health statu
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than people in other countries do,
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sumers are ill equipped to bring st
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By itself, the aging of the populat
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TABLE 4-3.- Sources and Uses of Hea
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about 65 to 70 cents for a typical
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THE ARCHITECTURE OF THE HEALTHSECUR
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etary savings for the Federal Gover
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contribution, within limits. Outsid
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salary income, payments from the em
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TABLE 4-6.—Caps on Premiums by Fi
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An example will illustrate the proc
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TABLE 4-9.—Sources and Uses of Fe
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Chart 4-9 Business Spending on Heal
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Health care reform should set the s
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and private sectors, addressing env
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Box 5-1.—Selected National Perfor
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Box 5-2*—Market PowerFirms are sa
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ate regulation. For example, State
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competitiveness of U.S. industry, a
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Box 5-4.—ExternalitiesAn external
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in the habitat of the spotted owl r
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CLIMATE CHANGE ACTION PLANCertain g
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eral, lays a foundation for broader
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The Administration's proposal seeks
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vances in technical know-how have a
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Investments in R&D are risky. Like
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1950s and 1960s, and American compa
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ico and Lawrence Livermore in Calif
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of industry. MOCs will be affiliate
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tiveness. Again, the hoped-for resu
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forts to cut the massive Federal bu
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TECHNOLOGY POLICY, GROWTH, ANDCOMPE
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mitment to an open international tr
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ses, which take such intersectoral
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An important sectoral development i
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TABLE 6-3.—Stock of U.S. Outward
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technical change has been offered a
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ent account is a broader measure of
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TABLE 6-6.—Intrafirm Trade as Sha
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greater access to the Japanese mark
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the transparency of its trade regim
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that if the states of the former So
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Box 6-3.—Mexican Economic Reforms
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1998, while nontariff barriers on a
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ward convergence in environmental a
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Box 6-4.—The Asian "Miracle"Per c
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Box 6-5.—The Economic Impact of t
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development, and environmental clea
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THE TRADE POLICY AGENDABy lowering
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ignated monopolies. It also establi
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The dollar ended 1993 roughly where
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Box 6-7.—Exchange-Rate Volatility
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Chart 6-5 French Franc-Deutsche Mar
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Besides bringing these endeavors to
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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Report to the President on the Acti
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duction budget package, the North A
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Working Group studying cost-benefit
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prepares the Economic Indicators an
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Appendix BSTATISTICAL TABLES RELATI
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POPULATION, EMPLOYMENT, WAGES, AND
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AGRICULTURE:PageB-96. Farm income,
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NATIONAL INCOME OR EXPENDITURETABLE
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TABLE B-2.—Gross domestic product
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TABLE B-3.—Implicit price deflato
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TABLE B-4.—Fixed-weighted price i
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TABLE B-5.—Changes in gross domes
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TABLE B-7.—Cross domestic product
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TABLE B-9.—Gross domestic product
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TABLE B-ll.—Gross domestic produc
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TABLE B-13.—Gross domestic produc
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TABLE B-15.—Personal consumption
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TABLE B-17.—Gross and net private
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TABLE B-19.—Inventories and final
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TABLE B-21.—Foreign transactions
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TABLE B-23.—Relation of gross dom
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TABLE B-25.—National income by ty
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TABLE B-26.—Sources of personal i
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TABLE B-27.—Disposition of person
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TABLE B-29.—Gross sating and inve
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TABLE B-31.—Median money income (
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TABLE B-33.—Population and the la
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TABLE B-34.—Civilian employment a
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TABLE B-36.—Unemployment by demog
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TABLE B-38.—Civilian labor force
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TABLE B-40.—Civilian unemployment
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TABLE B-42.—Unemployment by durat
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TABLE B-44.—Employees on nonagric
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TABLE B-45.—Hours and earnings in
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TABLE B-47.—Productivity and rela
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PRODUCTION AND BUSINESS ACTIVITYTAB
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TABLE B-51.—Industrial production
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TABLE B-53.—New construction acti
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TABLE B-54.—New housing units sta
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Year or monthTABLE B-56.—Manufact
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TABLE B-58.—Manufacturers' new an
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TABLE B-60.—Consumer price indexe
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TABLE B-61.—Consumer price indexe
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TABLE B-63.—Changes in consumer p
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TABLE B-64.—Producer price indexe
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TABLE B-66.—Producer price indexe
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TABLE B-67.—Changes in producer p
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TABLE B-69.—Components of money s
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TABLE B-70.—Aggregate reserves of
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TABLE B-72.—Bond yields and inter
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TABLE B-73.—Total funds raised in
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TABLE B-74.—Mortgage debt outstan
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TABLE B-76.—Consumer credit outst
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TABLE B-78.—Federal receipts, out
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TABLE B-79.—Federal budget receip
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TABLE B-81.—Federal and State and
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TABLE B-83.—State and local gover
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TABLE B-85.—Interest-bearing publ
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TABLE B-87.—Estimated ownership o
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TABLE B-89.—Corporate profits by
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TABLE B-91.—Sales, profits, and s
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TABLE B-93.—Sources and uses of f
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TABLE B-95.—Business formation an
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19481949195019511952195319541955195
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TABLE B-99.—Indexes of prices rec
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TABLE B-101.— Farm business balan
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TABLE B-103.—U.S. international t
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TABLE B-104.—U.S. merchandise exp
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TABLE B-106.—U.S. merchandise exp
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TABLE B-108.—Industrial productio
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TABLE B-110.—Foreign exchange rat
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NATIONAL WEALTHTABLE B-l 12.—Nati
Page 404:
SUPPLEMENTARY TABLETABLE B-114.—S
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