ECONOMIC REPORT OF THE PRESIDENT

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incomes in the bottom quintile by 18 percent, or $2,200, and in the second quintile by about 6 percent, or $1,500, relative to what they would have been under the continuation of 2008 policies (Figure 3-12).9 These policies will also boost incomes in the middle quintile by 0.7 percent, or $300. In contrast, these policies will reduce the after-tax incomes of very high-income families, particularly those in the top 1 percent. Targeted tax increases will reduce after-tax incomes by 5 percent for the 99 th through 99.9 th percentiles and reduce after-tax incomes by 10 percent for the families in the top 0.1 percent, a group projected to have average incomes over $8 million in 2017. Average tax rates provide an alternative perspective on the impact of these polices. Changes in tax policy since 2009 and tax-related coverage provisions of the ACA will increase the average tax rate for the top 0.1 percent by 7 percentage points in 2017, from 31 percent to 38 percent. For families in the top 1 percent but not the top 0.1 percent, these changes will increase average tax rates by 4 percentage points. These changes in tax policy and the coverage provisions of the ACA have led to commensurate changes in the distribution of income. As a result of these policies, the share of income received by the top 1 percent will decrease by 1.2 percentage points in 2017, or 7 percent, from 16.6 percent to 15.4 percent (Figure 3-13). The share of income accruing to the bottom 99 percent of Americans will increase by a corresponding 1.2 percentage points. Income shares in the first quintile will rise by 0.6 percentage point, or 18 percent; in the second quintile by 0.5 percentage point, or 6 percent; and in the third quintile by 0.1 percentage point, or 1 percent. The robust reduction in inequality resulting from these policies is apparent across a wide range of inequality measures (Figure 3-14). The impact of fiscal policies enacted during the Obama Administration on inequality varies by measure, ranging from a 3-percent reduction in the Gini index to a more than 20-percent reduction in the ratio of average incomes in the top 1 percent to the bottom 20 percent, but all measures show a meaningful reduction in inequality. Changes in tax policy and the coverage provisions of the ACA have had their largest effects on very high-income families, where the restoration of Clinton-era tax rates and responsible tax increases to finance the ACA are most important, and in the bottom third of the distribution, where the ACA’s expansion of health insurance coverage to 20 million more Americans has had its largest impact. Thus, not surprisingly, 9 The ACA coverage provisions and tax changes enacted since 2009 have offsetting effects on the 2017 deficit judged relative to a 2008 current-policy baseline, with the coverage provisions increasing the deficit and the tax changes decreasing it. Allocating an additional fiscal adjustment proportional to income to achieve zero net effect on the deficit would not substantially affect the results. Such an adjustment can be critical in assessing the ultimate distributional impact of deficit-financed policy changes. Progress Reducing Inequality | 181
15 10 5 0 -5 -10 -15 Figure 3-12 Percent Change in After-Tax Income by Income Percentile: Changes in Tax Policy Since 2009 and ACA Coverage Provisions, 2017 Percent Change in After-Tax Income 20 Source: U.S. Treasury, Office of Tax Analysis. Change in Share of After-Tax Income by Income Percentile: Changes in Tax Policy Since 2009 and ACA Coverage Provisions, 2017 Change in Share of After-Tax Income (Percentage Points) 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8 -1.0 Figure 3-13 Source: U.S. Treasury, Office of Tax Analysis. 182 | Chapter 3
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ECONOMIC REPORT OF THE PRESIDENT To
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C O N T E N T S ECONOMIC REPORT OF
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economic report of the president To
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eforms in history. Banks have sharp
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the annual report of the council of
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C O N T E N T S CHAPTER 1: EIGHT YE
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. THE ECONOMIC RATIONALE FOR FEDERA
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2.4. Government Purchases as Share
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4.iii. Premium for the Benchmark Pl
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6.18. Systemic Risk (SRISK) 2005-20
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C H A P T E R 1 EIGHT YEARS OF RECO
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Figure 1-1 Actual and Consensus For
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Figure 1-3 Real Hourly Wage Growth
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Figure 1-4 Real GDP per Capita: Eur
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Figure 1-6 Household Net Worth in t
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Figure 1-8 Global Trade Flows in th
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Subsequent revisions to fourth-quar
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Percent 6 Figure 1-9 Fiscal Expansi
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substantial costs to the Federal Go
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worked to promote innovation and in
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expansion, a period of low producti
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The 2017 Economic Report of the Pre
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Chapter 4: Reforming the Health Car
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to the ACA and other factors. The A
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than 98 percent of Americans should
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Figure 1-13 Borrowers in Income Dri
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success of the financial rescue and
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einforced U.S. leadership in the ru
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Partnership (OGP), a global partner
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Figure 1-16 Labor Productivity Grow
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Labor Force Participation Household
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number of steps to ensure that econ
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C H A P T E R 2 THE YEAR IN REVIEW
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Percent 11 Figure 2-1 Unemployment
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allowing for additional investments
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Percentage Point 0.6 0.4 Figure 2-3
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public, largely highway constructio
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The size of the Federal Reserve’s
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Figure 2-5 Private-Sector Payroll E
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fell 80 percent from September 2014
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Figure 2-8 Rates of Part-Time Work,
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Figure 2-v Prime-Age Male Labor For
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Output Real GDP grew 1.6 percent ov
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Figure 2-11 Compensation and Consum
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Table 2-i Optimal Weighting for Hou
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esults suggest that, to a first app
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Figure 2-viii Real GDP, Average and
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Figure 2-13 Consumer Sentiment and
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Figure 2-xi Household Debt Service,
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Ratio to Annual DPI 1.10 1.05 Figur
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Figure 2-17 National House Price In
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Index 220 Figure 2-19 Housing Affor
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Figure 2-21 Composition of Growth i
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Figure 2-23 Capital Services per Un
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Box 2-7: Explanations for the Recen
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Figure 2-xv Business Fixed Investme
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Figure 2-26 Foreign Real GDP and U.
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somewhat generalizable (Box 2-8), b
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prices weakened and the global econ
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inadequate demand has contributed t
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Figure 2-31 Nominal Wage Inflation
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Figure 2-33 Real Hourly Wage Growth
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Index 6 Figure 2-36 Financial Condi
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Percent 4.0 Figure 2-38 Nominal Lon
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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 157 and 158: not increased from 1973 to 2013, in
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: $294 million in newly appropriated
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
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Fortunately, the OHIE is not the on
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Figure 4-14 Uncompensated Care as a
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Figure 4-15 Uninsured Rate by Popul
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Figure 4-17 Monthly Gain in Private
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Change in Working-Age Employment to
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this cross-sectional relationship b
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ecent discussions of macroeconomic
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Figure 4-23 Life Expectancy at Birt
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Figure 4-24 Mortality Rate vs. Medi
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more to cover Medicare patients tha
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example, through CMMI, the Administ
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orient payment around the entirety
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Percent of Payments 60 Figure 4-26
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covered under ACO contracts at the
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Additional Steps to Reform the Heal
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legislation that overrides the reco
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Figure 4-28 Health Care Price Infla
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Figure 4-30 Trends in Real Prices f
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average growth rate of real per enr
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Figure 4-34 Growth in Real Costs fo
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made a large, readily quantifiable
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in states experiencing weaker and s
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distribution, holding fixed both sp
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individuals among individuals 65 an
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Figure 4-40 Average Real Deductible
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Figure 4-41 Real Per-Enrollee Presc
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educe the growth rate of Medicare s
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improvements will strengthen ACOs
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-5 0 -2 Figure 4-42 Cumulative Perc
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Woolhandler 2015). These analysts a
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productivity on the job. These bene
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Figure 4-46 Premiums and Cost Shari
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(KFF 2016). Another fifth of tradit
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2030 2028 2026 2024 2022 2020 2018
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C H A P T E R 5 INVESTING IN HIGHER
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Gainful Employment regulations. To
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Thousands of 2015 Dollars 900 800 7
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externalities, credit constraints,
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Figure 5-4 Earnings by Age and Educ
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Figure 5-5 Variation in Earnings by
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Box 5-1: Anti-Poverty Efforts and E
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careers. Some of the effects of the
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eligibility cutoff likewise finds s
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Box 5-2: Federal Investments in K-1
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Evaluations of early local Promise
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America’s College Promise Playboo
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Dollars 45,000 40,000 35,000 30,000
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pre-payment penalty. Second, by tyi
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equirements, pushed efforts associa
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Figure 5-16 Size of Outstanding Loa
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Figure 5-17 Average Monthly Payment
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Figure 5-18 Distribution of Key Out
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Figure 5-20 Earnings by Family Inco
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to student needs and improve test s
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Box 5-5: Making Sure Students Enter
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prior, the early FAFSA reform helps
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Figure 5-ii Number of Institutions
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Figure 5-23 Gainful Employment Earn
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Additionally, Pell Grants can be be
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C H A P T E R 6 STRENGTHENING THE F
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with no easy way to get the funds f
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public has limited information, run
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value added of the sector has gradu
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managers. Thus, after fees, savers
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Too Many Resources in Finance? Beyo
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of the firm after the purchase affe
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Percent 100 Figure 6-2 Mortgage Ori
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Figure 6-4 Case-Shiller Home Price
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Figure 6-7 Global OTC Derivative Ma
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consumer and investor protections.
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Figure 6-iv Top 5 Banks as Share of
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cult to replace with services from
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Are U.S. Banks Too Big? The questio
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The three federal banking agencies
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Risk Taking The Dodd-Frank Act took
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Box 6-3: The Performance of Communi
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Figure 6-ix Return on Assets of Ban
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egulators can take a more holistic
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Figure 6-13 Repo and Reverse Repo,
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Figure 6-15 Private Funds Reporting
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Days 60 Figure 6-16 Weighted-Averag
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Figure 6-18 Systemic Risk (SRISK),
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In the absence of another financial
Page 402 and 403:
lower funding costs in 2007-09, “
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through the Dodd-Frank Act and othe
Page 406 and 407:
Prior to the financial crisis, one
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asis.24 One of the advantages of ce
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findings from the NRSRO examination
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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
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financial system and the systems of
Page 420 and 421:
Box 6-6: The JOBS Act While it was
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Figure 6-23 S&P 500, 2003-2016 Inde
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Figure 6-27 Mortgage Delinquency an
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It created the FSOC to consider ris
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energy efficient and lower greenhou
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of domestic actions to reduce green
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people and vegetation (U.S. Global
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investment are much higher than the
Page 437 and 438:
Delaying Action on Climate Change I
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uses and land management activities
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Carbon Pollution Standards for Powe
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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
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diesel fuel and jet fuel. The Vehic
Page 451 and 452:
Box 7-3: Building Resilience to Cur
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sources in the oil and gas sector,
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emissions and total greenhouse gas
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Figure 7-7 Energy Intensity of Real
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Figure 7-10 U.S. Petroleum Consumpt
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Figure 7-12 Energy Intensity Transp
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Figure 7-14c Energy Intensity Comme
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Figure 7-16 U.S. Energy Consumption
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2008 to 7 percent in 2015. Figure 7
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Index, 2008 =0 0.1 0.0 -0.1 Figure
Page 471 and 472:
Figure 7-23 Decomposition of Emissi
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three determinants of emissions? If
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Percent 100 80 Figure 7-26 Sectoral
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characteristics, and management tre
Page 479 and 480:
oil and gas sector) were subsequent
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while creating new jobs and raising
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such as using similar methodologies
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Box 7-4: Supporting Increased Penet
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sector, the fee would incentivize p
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to be used to decompose emissions i
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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 . .
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A P P E N D I X B STATISTICAL TABLE
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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,
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Table B-19. Federal receipts and ou
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Table B-21. Federal and State and l
Page 595 and 596:
Table B-23. U.S. Treasury securitie
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Year and month Bills (at auction) 1
Page 599:
Year and month Table B-26. Money st
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