ECONOMIC REPORT OF THE PRESIDENT

Recommendations

Info

C H A P T E R 3 PROGRESS REDUCING INEQUALITY In 2013, President Obama declared inequality “the defining challenge of our time.” According to the Congressional Budget Office (CBO), in that year—the most recent year for which complete data are available—the 20 percent of households with the lowest incomes had an average pre-tax income of $25,000, while the 1 percent of households with the highest incomes had an average income of $1.6 million (CBO 2016b). Roughly 15 percent of Americans lived in poverty, even as mean household income reached $75,000 (Proctor, Semega, and Kollar 2016).1 Moreover, these disparities persist across generations due to low levels of intergenerational mobility. Only 8 percent of children from the bottom 20 percent of the income distribution make it to the top 20 percent as adults, while 37 percent of children from the top 20 percent stay there (Chetty et al. 2014). Inequality extends well beyond the distribution of income. Median wealth for non-Hispanic White families in 2013 was $142,000, compared with only $18,000 for all other families (Bricker et al. 2014). A 40-year-old man at the 95 th percentile of the income distribution has a life expectancy 10 years longer than a man at the 5 th percentile (Chetty et al. 2016). Students from families in the bottom 25 percent of the income distribution drop out of high school at a rate four times higher than students from families in the top 25 percent (NCES 2015). Perhaps most troubling is the fact that rising inequality, in conjunction with slower productivity growth, has led to slow growth in inflation-adjusted incomes for the typical household for more than three decades. In previous work, the Council of Economic Advisers (CEA) found that if inequality had 1 The Census Bureau and the Congressional Budget Office use different definitions of income in their estimates of the income distribution. CBO’s definition is generally more comprehensive than that used by the Census Bureau. Mean income in 2013 per the Census Bureau was $75,000 while mean before-tax income in 2013 per CBO was $100,000. 151
not increased from 1973 to 2013, income for the typical household in 2013 would have been about 18 percent, or $9,000, higher (CEA 2015). From his first days in office, President Obama has taken important steps to reduce inequality and make the economy work for all Americans. The policy response to the Great Recession directly reduced inequality in after-tax incomes through progressive tax and spending policies, such as temporary tax cuts for working and middle-class families and extensions of unemployment insurance; and indirectly, the response reduced earnings inequality by boosting employment. This policy response—including the American Recovery and Reinvestment Act (Recovery Act) and subsequent fiscal measures, bank stress tests, and other financial policy measures, support for the automobile industry, and the actions of the Federal Reserve— kept the unemployment rate 6 percentage points lower than it otherwise would have been between 2010 and 2012. By reducing the unemployment rate, these policies offset roughly half of the increase in earnings inequality that would have occurred as even more workers lost their jobs and saw their earnings fall to zero. The Affordable Care Act (ACA), enacted in March 2010, provided Federal support to states to expand their Medicaid programs and financial assistance for families purchasing coverage through the Health Insurance Marketplace, leading to the largest reduction in the uninsured rate since the creation of Medicare and Medicaid and a substantial reduction in inequality in after-tax incomes. The ACA has resulted in 20 million additional American adults gaining health insurance coverage as of early 2016 and helped reduce the uninsured rate to 8.9 percent in the first half of 2016, the lowest level on record. The ACA reduced inequality in health insurance coverage by age, race, and income, with larger reductions in uninsured rates for groups with lower levels of coverage, including young adults, racial minorities, and low-income families. A growing body of research documents that expanded coverage under the ACA is greatly improving families’ well-being by increasing their access to care, financial security, and health. Viewed as additions to income, expanded Medicaid eligibility and financial assistance for families purchasing health insurance through the Marketplace have dramatically reduced inequality in after-tax incomes. Over the course of this Administration, the President has signed into law a series of progressive changes in tax policy that have increased tax rates for the highest-income Americans and increased the generosity of tax credits for working families, thereby reducing inequality in after-tax incomes. Changes in tax policy other than ACA coverage provisions will boost aftertax incomes in the bottom quintile by 2 percent in 2017 and reduce after-tax incomes for the top 0.1 percent by 9 percent relative to what incomes would 152 | Chapter 3
Page 1 and 2:
ECONOMIC REPORT OF THE PRESIDENT To
Page 4:
C O N T E N T S ECONOMIC REPORT OF
Page 8 and 9:
economic report of the president To
Page 10 and 11:
eforms in history. Banks have sharp
Page 12:
the annual report of the council of
Page 16 and 17:
C O N T E N T S CHAPTER 1: EIGHT YE
Page 18 and 19:
. THE ECONOMIC RATIONALE FOR FEDERA
Page 20 and 21:
2.4. Government Purchases as Share
Page 22 and 23:
4.iii. Premium for the Benchmark Pl
Page 24 and 25:
6.18. Systemic Risk (SRISK) 2005-20
Page 26 and 27:
C H A P T E R 1 EIGHT YEARS OF RECO
Page 28 and 29:
Figure 1-1 Actual and Consensus For
Page 30 and 31:
Figure 1-3 Real Hourly Wage Growth
Page 32 and 33:
Figure 1-4 Real GDP per Capita: Eur
Page 34 and 35:
Figure 1-6 Household Net Worth in t
Page 36 and 37:
Figure 1-8 Global Trade Flows in th
Page 38 and 39:
Subsequent revisions to fourth-quar
Page 40 and 41:
Percent 6 Figure 1-9 Fiscal Expansi
Page 42 and 43:
substantial costs to the Federal Go
Page 44 and 45:
worked to promote innovation and in
Page 46 and 47:
expansion, a period of low producti
Page 48 and 49:
The 2017 Economic Report of the Pre
Page 50 and 51:
Chapter 4: Reforming the Health Car
Page 52 and 53:
to the ACA and other factors. The A
Page 54 and 55:
than 98 percent of Americans should
Page 56 and 57:
Figure 1-13 Borrowers in Income Dri
Page 58 and 59:
success of the financial rescue and
Page 60 and 61:
einforced U.S. leadership in the ru
Page 62 and 63:
Partnership (OGP), a global partner
Page 64 and 65:
Figure 1-16 Labor Productivity Grow
Page 66 and 67:
Labor Force Participation Household
Page 68 and 69:
number of steps to ensure that econ
Page 70 and 71:
C H A P T E R 2 THE YEAR IN REVIEW
Page 72 and 73:
Percent 11 Figure 2-1 Unemployment
Page 74 and 75:
allowing for additional investments
Page 76 and 77:
Percentage Point 0.6 0.4 Figure 2-3
Page 78 and 79:
public, largely highway constructio
Page 80 and 81:
The size of the Federal Reserve’s
Page 82 and 83:
Figure 2-5 Private-Sector Payroll E
Page 84 and 85:
fell 80 percent from September 2014
Page 86 and 87:
Figure 2-8 Rates of Part-Time Work,
Page 88 and 89:
Figure 2-v Prime-Age Male Labor For
Page 90 and 91:
Output Real GDP grew 1.6 percent ov
Page 92 and 93:
Figure 2-11 Compensation and Consum
Page 94 and 95:
Table 2-i Optimal Weighting for Hou
Page 96 and 97:
esults suggest that, to a first app
Page 98 and 99:
Figure 2-viii Real GDP, Average and
Page 100 and 101:
Figure 2-13 Consumer Sentiment and
Page 102 and 103:
Figure 2-xi Household Debt Service,
Page 104 and 105: Ratio to Annual DPI 1.10 1.05 Figur
Page 106 and 107: Figure 2-17 National House Price In
Page 108 and 109: Index 220 Figure 2-19 Housing Affor
Page 110 and 111: Figure 2-21 Composition of Growth i
Page 112 and 113: Figure 2-23 Capital Services per Un
Page 114 and 115: Box 2-7: Explanations for the Recen
Page 116 and 117: Figure 2-xv Business Fixed Investme
Page 118 and 119: Figure 2-26 Foreign Real GDP and U.
Page 120 and 121: somewhat generalizable (Box 2-8), b
Page 122 and 123: prices weakened and the global econ
Page 124 and 125: inadequate demand has contributed t
Page 126 and 127: Figure 2-31 Nominal Wage Inflation
Page 128 and 129: Figure 2-33 Real Hourly Wage Growth
Page 130 and 131: Index 6 Figure 2-36 Financial Condi
Page 132 and 133: Percent 4.0 Figure 2-38 Nominal Lon
Page 134 and 135: Dollars per Barrel 80 Figure 2-40 B
Page 136 and 137: Figure 2-41 IMF World Real GDP Grow
Page 138 and 139: against the Mexican peso, the Chine
Page 140 and 141: United Kingdom It has been a turbul
Page 142 and 143: for example, Japan has grown almost
Page 144 and 145: Figure 2-45 Credit to Nonfinancial
Page 146 and 147: Meanwhile, core inflation (excludin
Page 148 and 149: kept rates low across a wide range
Page 150 and 151: Investments in surface transportati
Page 152 and 153: Table 2-2 Supply-Side Components of
Page 154: Conclusion The economy continued to
Page 159 and 160: developments; individual behavior;
Page 161 and 162: action affecting income inequality
Page 163 and 164: have occurred. In doing so, these p
Page 165 and 166: Percent 24 21 18 15 12 9 6 African
Page 167 and 168: without the policy response.5 These
Page 169 and 170: Box 3-2: Income Inequality and the
Page 171 and 172: unable to obtain insurance at any p
Page 173 and 174: Figure 3-7B Percent 50 Uninsured Ra
Page 175 and 176: and have not expanded Medicaid foun
Page 177 and 178: Box 3-3: Safety Net Policies as Ins
Page 179 and 180: Millions of People 18 Figure 3-8 Im
Page 181 and 182: Figure 3-9 Effective Tax Rates for
Page 183 and 184: Box 3-4: Additional Actions to Make
Page 185 and 186: $294 million in newly appropriated
Page 187 and 188: 15 10 5 0 -5 -10 -15 Figure 3-12 Pe
Page 189 and 190: Administration with those of previo
Page 191 and 192: as a share of potential GDP by Pres
Page 193 and 194: Figure 3-17 Changes in the Distribu
Page 195 and 196: 30 25 20 15 10 5 0 Single Source: C
Page 197 and 198: ate on capital gains and dividends
Page 200 and 201: C H A P T E R 4 REFORMING THE HEALT
Page 202 and 203: eneficiaries have received cumulati
Page 204 and 205: form of lower premium costs and ind
Page 206 and 207:
Percent 25 20 Creation of Medicare
Page 208 and 209:
Figure 4-3 Health Insurance Coverag
Page 210 and 211:
90 80 70 60 50 40 30 20 10 0 25 55
Page 212 and 213:
Percent Uninsured 25 CHIP Created 2
Page 214 and 215:
Legislative actions subsequent to C
Page 216 and 217:
Percent Uninsured 40 35 Figure 4-7
Page 218 and 219:
ecause of the ACA’s provision all
Page 220 and 221:
Box 4-2: Dynamics in the Individual
Page 222 and 223:
projected during the debate over th
Page 224 and 225:
whelming majority of Marketplace en
Page 226 and 227:
Figure 4-v Change in Benchmark Prem
Page 228 and 229:
20 Figure 4-10 Share of Workers in
Page 230 and 231:
percent during the decade preceding
Page 232 and 233:
Panel A: Share with a Personal Doct
Page 234 and 235:
Box 4-3: Interpreting Results from
Page 236 and 237:
Fortunately, the OHIE is not the on
Page 238 and 239:
Figure 4-14 Uncompensated Care as a
Page 240 and 241:
Figure 4-15 Uninsured Rate by Popul
Page 242 and 243:
Figure 4-17 Monthly Gain in Private
Page 244 and 245:
Change in Working-Age Employment to
Page 246 and 247:
this cross-sectional relationship b
Page 248 and 249:
ecent discussions of macroeconomic
Page 250 and 251:
Figure 4-23 Life Expectancy at Birt
Page 252 and 253:
Figure 4-24 Mortality Rate vs. Medi
Page 254 and 255:
more to cover Medicare patients tha
Page 256 and 257:
example, through CMMI, the Administ
Page 258 and 259:
orient payment around the entirety
Page 260 and 261:
Percent of Payments 60 Figure 4-26
Page 262 and 263:
covered under ACO contracts at the
Page 264 and 265:
Additional Steps to Reform the Heal
Page 266 and 267:
legislation that overrides the reco
Page 268 and 269:
Figure 4-28 Health Care Price Infla
Page 270 and 271:
Figure 4-30 Trends in Real Prices f
Page 272 and 273:
average growth rate of real per enr
Page 274 and 275:
Figure 4-34 Growth in Real Costs fo
Page 276 and 277:
made a large, readily quantifiable
Page 278 and 279:
in states experiencing weaker and s
Page 280 and 281:
distribution, holding fixed both sp
Page 282 and 283:
individuals among individuals 65 an
Page 284 and 285:
Figure 4-40 Average Real Deductible
Page 286 and 287:
Figure 4-41 Real Per-Enrollee Presc
Page 288 and 289:
educe the growth rate of Medicare s
Page 290 and 291:
improvements will strengthen ACOs
Page 292 and 293:
-5 0 -2 Figure 4-42 Cumulative Perc
Page 294 and 295:
Woolhandler 2015). These analysts a
Page 296 and 297:
productivity on the job. These bene
Page 298 and 299:
Figure 4-46 Premiums and Cost Shari
Page 300 and 301:
(KFF 2016). Another fifth of tradit
Page 302 and 303:
2030 2028 2026 2024 2022 2020 2018
Page 304 and 305:
C H A P T E R 5 INVESTING IN HIGHER
Page 306 and 307:
Gainful Employment regulations. To
Page 308 and 309:
Thousands of 2015 Dollars 900 800 7
Page 310 and 311:
externalities, credit constraints,
Page 312 and 313:
Figure 5-4 Earnings by Age and Educ
Page 314 and 315:
Figure 5-5 Variation in Earnings by
Page 316 and 317:
Box 5-1: Anti-Poverty Efforts and E
Page 318 and 319:
careers. Some of the effects of the
Page 320 and 321:
eligibility cutoff likewise finds s
Page 322 and 323:
Box 5-2: Federal Investments in K-1
Page 324 and 325:
Evaluations of early local Promise
Page 326 and 327:
America’s College Promise Playboo
Page 328 and 329:
Dollars 45,000 40,000 35,000 30,000
Page 330 and 331:
pre-payment penalty. Second, by tyi
Page 332 and 333:
equirements, pushed efforts associa
Page 334 and 335:
Figure 5-16 Size of Outstanding Loa
Page 336 and 337:
Figure 5-17 Average Monthly Payment
Page 338 and 339:
Figure 5-18 Distribution of Key Out
Page 340 and 341:
Figure 5-20 Earnings by Family Inco
Page 342 and 343:
to student needs and improve test s
Page 344 and 345:
Box 5-5: Making Sure Students Enter
Page 346 and 347:
prior, the early FAFSA reform helps
Page 348 and 349:
Figure 5-ii Number of Institutions
Page 350 and 351:
Figure 5-23 Gainful Employment Earn
Page 352 and 353:
Additionally, Pell Grants can be be
Page 354 and 355:
C H A P T E R 6 STRENGTHENING THE F
Page 356 and 357:
with no easy way to get the funds f
Page 358 and 359:
public has limited information, run
Page 360 and 361:
value added of the sector has gradu
Page 362 and 363:
managers. Thus, after fees, savers
Page 364 and 365:
Too Many Resources in Finance? Beyo
Page 366 and 367:
of the firm after the purchase affe
Page 368 and 369:
Percent 100 Figure 6-2 Mortgage Ori
Page 370 and 371:
Figure 6-4 Case-Shiller Home Price
Page 372 and 373:
Figure 6-7 Global OTC Derivative Ma
Page 374 and 375:
consumer and investor protections.
Page 376 and 377:
Figure 6-iv Top 5 Banks as Share of
Page 378 and 379:
cult to replace with services from
Page 380 and 381:
Are U.S. Banks Too Big? The questio
Page 382 and 383:
The three federal banking agencies
Page 384 and 385:
Risk Taking The Dodd-Frank Act took
Page 386 and 387:
Box 6-3: The Performance of Communi
Page 388 and 389:
Figure 6-ix Return on Assets of Ban
Page 390 and 391:
egulators can take a more holistic
Page 392 and 393:
Figure 6-13 Repo and Reverse Repo,
Page 394 and 395:
Figure 6-15 Private Funds Reporting
Page 396 and 397:
Days 60 Figure 6-16 Weighted-Averag
Page 398 and 399:
Figure 6-18 Systemic Risk (SRISK),
Page 400 and 401:
In the absence of another financial
Page 402 and 403:
lower funding costs in 2007-09, “
Page 404 and 405:
through the Dodd-Frank Act and othe
Page 406 and 407:
Prior to the financial crisis, one
Page 408 and 409:
asis.24 One of the advantages of ce
Page 410 and 411:
findings from the NRSRO examination
Page 412 and 413:
Prior to the crisis, enforcement of
Page 414 and 415:
Box 6-5: Addressing the Problem of
Page 416 and 417:
Table 6-i Sources of Investment Adv
Page 418 and 419:
financial system and the systems of
Page 420 and 421:
Box 6-6: The JOBS Act While it was
Page 422 and 423:
Figure 6-23 S&P 500, 2003-2016 Inde
Page 424 and 425:
Figure 6-27 Mortgage Delinquency an
Page 426:
It created the FSOC to consider ris
Page 429 and 430:
energy efficient and lower greenhou
Page 431 and 432:
of domestic actions to reduce green
Page 433 and 434:
people and vegetation (U.S. Global
Page 435 and 436:
investment are much higher than the
Page 437 and 438:
Delaying Action on Climate Change I
Page 439 and 440:
uses and land management activities
Page 441 and 442:
Carbon Pollution Standards for Powe
Page 443 and 444:
a projected range of $16 billion to
Page 445 and 446:
these resulted in insignificant cha
Page 447 and 448:
Figure 7-4 Corporate Average Fuel E
Page 449 and 450:
diesel fuel and jet fuel. The Vehic
Page 451 and 452:
Box 7-3: Building Resilience to Cur
Page 453 and 454:
sources in the oil and gas sector,
Page 455 and 456:
emissions and total greenhouse gas
Page 457 and 458:
Figure 7-7 Energy Intensity of Real
Page 459 and 460:
Figure 7-10 U.S. Petroleum Consumpt
Page 461 and 462:
Figure 7-12 Energy Intensity Transp
Page 463 and 464:
Figure 7-14c Energy Intensity Comme
Page 465 and 466:
Figure 7-16 U.S. Energy Consumption
Page 467 and 468:
2008 to 7 percent in 2015. Figure 7
Page 469 and 470:
Index, 2008 =0 0.1 0.0 -0.1 Figure
Page 471 and 472:
Figure 7-23 Decomposition of Emissi
Page 473 and 474:
three determinants of emissions? If
Page 475 and 476:
Percent 100 80 Figure 7-26 Sectoral
Page 477 and 478:
characteristics, and management tre
Page 479 and 480:
oil and gas sector) were subsequent
Page 481 and 482:
while creating new jobs and raising
Page 483 and 484:
such as using similar methodologies
Page 485 and 486:
Box 7-4: Supporting Increased Penet
Page 487 and 488:
sector, the fee would incentivize p
Page 489 and 490:
to be used to decompose emissions i
Page 491 and 492:
Reinvestment Act.” NBER Working P
Page 493 and 494:
D’Amico, Stefania, et al. 2012.
Page 495 and 496:
______. 2016. “Chapter 3: Develop
Page 497 and 498:
Chetty, Raj, et al. 2014. “Where
Page 499 and 500:
NBER Working Paper 22170. Cambridge
Page 501 and 502:
American Hospital Association and H
Page 503 and 504:
Cantor, Joel C., et al. 2012. “Ea
Page 505 and 506:
______. 2012a. “Direct Spending a
Page 507 and 508:
Dranove, David, Craig Garthwaite, a
Page 509 and 510:
Wars: Global Solutions for Developi
Page 511 and 512:
Huang, Jidong, and Frank J. Chaloup
Page 513 and 514:
McWilliams, J. Michael. 2016. “Ch
Page 515 and 516:
Pinkovskiy, Maxim. 2014. “The Imp
Page 517 and 518:
______. 2016. “Certification of M
Page 519 and 520:
Arcidiacono, Peter, V. Joseph Hotz,
Page 521 and 522:
Bulman, George, and Caroline Hoxby.
Page 523 and 524:
______. 2015a. “Economic Costs of
Page 525 and 526:
Dobbie, Will, and Roland G. Fryer J
Page 527 and 528:
Committee on Health, Education, Lab
Page 529 and 530:
Jepsen, Christopher, Kenneth Troske
Page 531 and 532:
Marcotte, Dave E., et al. 2005. “
Page 533 and 534:
Reynolds, Arthur J., et al. 2011.
Page 535 and 536:
Chapter 6 Acharya, Viral. V., Deniz
Page 537 and 538:
Fama, Eugene F., and Kenneth R. Fre
Page 539 and 540:
Wheelock, David C., and Paul W. Wil
Page 541 and 542:
______. 2016a. “The Economics of
Page 543 and 544:
______. 2016c. Short Term Energy Ou
Page 545 and 546:
Interagency Working Group on the So
Page 547 and 548:
Office of Management and Budget (OM
Page 550:
A P P E N D I X A REPORT TO THE PRE
Page 553 and 554:
Council Members and Their Dates of
Page 556 and 557:
Report to the President on the Acti
Page 558 and 559:
consulting with a wide variety of o
Page 560 and 561:
In October, the Council released a
Page 562 and 563:
Research Economists David Boddy . .
Page 564:
A P P E N D I X B STATISTICAL TABLE
Page 567 and 568:
GOVERNMENT FINANCE, INTEREST RATES,
Page 569 and 570:
Year or quarter Table B-1. Percent
Page 571 and 572:
Table B-2. Gross domestic product,
Page 573 and 574:
Table B-3. Quantity and price index
Page 575 and 576:
Table B-5. Real exports and imports
Page 577 and 578:
Year Total Table B-7. Real farm inc
Page 579 and 580:
Table B-9. Median money income (in
Page 581 and 582:
Labor Market Indicators Table B-11.
Page 583 and 584:
Year or month Table B-12. Civilian
Page 585 and 586:
Table B-14. Employees on nonagricul
Page 587 and 588:
Year or month Table B-15. Hours and
Page 589 and 590:
Government Finance, Interest Rates,
Page 591 and 592:
Table B-19. Federal receipts and ou
Page 593 and 594:
Table B-21. Federal and State and l
Page 595 and 596:
Table B-23. U.S. Treasury securitie
Page 597 and 598:
Year and month Bills (at auction) 1
Page 599:
Year and month Table B-26. Money st
show all

ECONOMIC REPORT OF THE PRESIDENT

Create successful ePaper yourself

Delete template?

Save as template?