ECONOMIC REPORT OF THE PRESIDENT

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Additionally, Pell Grants can be better structured to put more low- and moderate-income students on the path to success, and the Administration’s 2017 budget identifies various ways to improve the current program. To begin, the proposed budget further simplifies the FAFSA by eliminating burdensome and unnecessarily complex questions to make it easier for students and families to access Federal student aid and afford a postsecondary education. The Administration has also called upon Congress to indefinitely index Pell Grants to inflation in order to protect and sustain their value for future generations. Furthermore, it has included two key proposals to promote completion, creating incentives supported by academic research (MDRC 2016). The first would make additional Pell Grant funds available for an additional semester to full-time students, and the second would increase students’ Pell Grants by $300 each year if they take at least 15 credit hours per semester, the amount typically needed to complete a two- or four-year degree on time. Finally, the Administration has requested that Pell Grants be expanded to incarcerated individuals eligible for release, with the goals of helping them complete college, get jobs, support their families, and strengthen their communities.13 There are also important changes to the education tax code that could reduce barriers to college access and success. In particular, the Administration has proposed streamlining and further expanding education tax benefits by: first, consolidating the Lifetime Learning Credit into an expanded AOTC, which would be available for five years and refundable up to $1,500 for students enrolled half-time or more; second, exempting Pell Grants from taxation and the AOTC calculation; and third, eliminating the tax on student loan debt forgiveness, while repealing the complicated student loan interest deduction for new borrowers. Work is also needed to make sure that all borrowers can pay back their debt with an affordable repayment plan. Income-driven repayment plans are helping millions of borrowers stay on track with their payments, but too many borrowers do not take advantage of these plans, as described above. Complexities related to repayment plan selection, income verification, and recertification all present barriers to enrollment. In its 2017 budget, the Administration called upon Congress to improve and streamline PAYE and other income-driven repayment plans to create a single simple and bettertargeted plan for borrowers. Academics have also proposed innovative ways to reduce the complexity of income-driven repayment plans (for example, Dynarski and Kreisman 2013). Such improvements will be critical to help borrowers manage their debt and stay out of default. 13 See CEA’s 2016 criminal justice report for a more detailed overview of the importance of this policy (CEA 2016b). Investing in Higher Education | 347
Better information and regulation of low-quality schools will also help students attend colleges that serve them well and enable them to pay back the debt they incur. The College Scorecard was a significant achievement, but additional efforts to improve the data’s usage, the consumer tool, and the underlying data will help to expand the impact of the Scorecard. The Administration’s efforts to protect students from low-quality schools have likewise been important accomplishments, and future policymakers must continue to be responsive to an ever-changing higher education landscape. Lastly, work remains to continue strengthening outcomes at earlier levels of education to help ensure that students enter college well prepared to benefit from their investment in higher education. Despite this Administration’s accomplishments, racial and socioeconomic gaps in PreK-12 educational inputs and outcomes remain, and these disparities must be addressed in tandem with the inequities in higher education access. ESSA has codified into law many initiatives created and championed by the Obama Administration to set the stage for this future policy, but further progress will require additional effort by policymakers. Conclusion The Obama Administration has enacted policies over its two terms to lower college costs, improve information, simplify student aid, and cap monthly student debt payments at a manageable portion of borrowers’ incomes. The Administration has also promoted excellence and equity in PreK-12 education to better prepare students for college and their careers. Together, these policies represent a significant step forward in building an educational system that supports and encourages all Americans who wish to invest in an affordable, high quality college education to do so. Still, more work is needed to address the challenges that remain. 348 | Chapter 5
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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
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Figure 2-41 IMF World Real GDP Grow
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against the Mexican peso, the Chine
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United Kingdom It has been a turbul
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for example, Japan has grown almost
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Figure 2-45 Credit to Nonfinancial
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Meanwhile, core inflation (excludin
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kept rates low across a wide range
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Investments in surface transportati
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Table 2-2 Supply-Side Components of
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Conclusion The economy continued to
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not increased from 1973 to 2013, in
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developments; individual behavior;
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action affecting income inequality
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have occurred. In doing so, these p
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Percent 24 21 18 15 12 9 6 African
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without the policy response.5 These
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Box 3-2: Income Inequality and the
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unable to obtain insurance at any p
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Figure 3-7B Percent 50 Uninsured Ra
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and have not expanded Medicaid foun
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Box 3-3: Safety Net Policies as Ins
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Millions of People 18 Figure 3-8 Im
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Figure 3-9 Effective Tax Rates for
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Box 3-4: Additional Actions to Make
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$294 million in newly appropriated
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15 10 5 0 -5 -10 -15 Figure 3-12 Pe
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Administration with those of previo
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as a share of potential GDP by Pres
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Figure 3-17 Changes in the Distribu
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30 25 20 15 10 5 0 Single Source: C
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ate on capital gains and dividends
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C H A P T E R 4 REFORMING THE HEALT
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eneficiaries have received cumulati
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form of lower premium costs and ind
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Percent 25 20 Creation of Medicare
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Figure 4-3 Health Insurance Coverag
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90 80 70 60 50 40 30 20 10 0 25 55
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Percent Uninsured 25 CHIP Created 2
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Legislative actions subsequent to C
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Percent Uninsured 40 35 Figure 4-7
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ecause of the ACA’s provision all
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Box 4-2: Dynamics in the Individual
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projected during the debate over th
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whelming majority of Marketplace en
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Figure 4-v Change in Benchmark Prem
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20 Figure 4-10 Share of Workers in
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percent during the decade preceding
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Panel A: Share with a Personal Doct
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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
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
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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
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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 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
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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
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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
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lower funding costs in 2007-09, “
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through the Dodd-Frank Act and othe
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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
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Box 6-5: Addressing the Problem of
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Table 6-i Sources of Investment Adv
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financial system and the systems of
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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
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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
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these resulted in insignificant cha
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Figure 7-4 Corporate Average Fuel E
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diesel fuel and jet fuel. The Vehic
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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
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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
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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
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D’Amico, Stefania, et al. 2012.
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______. 2016. “Chapter 3: Develop
Page 497 and 498:
Chetty, Raj, et al. 2014. “Where
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NBER Working Paper 22170. Cambridge
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American Hospital Association and H
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Cantor, Joel C., et al. 2012. “Ea
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______. 2012a. “Direct Spending a
Page 507 and 508:
Dranove, David, Craig Garthwaite, a
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Wars: Global Solutions for Developi
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Huang, Jidong, and Frank J. Chaloup
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McWilliams, J. Michael. 2016. “Ch
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Pinkovskiy, Maxim. 2014. “The Imp
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______. 2016. “Certification of M
Page 519 and 520:
Arcidiacono, Peter, V. Joseph Hotz,
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Bulman, George, and Caroline Hoxby.
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______. 2015a. “Economic Costs of
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Dobbie, Will, and Roland G. Fryer J
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Committee on Health, Education, Lab
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Jepsen, Christopher, Kenneth Troske
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Marcotte, Dave E., et al. 2005. “
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Reynolds, Arthur J., et al. 2011.
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Chapter 6 Acharya, Viral. V., Deniz
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Fama, Eugene F., and Kenneth R. Fre
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Wheelock, David C., and Paul W. Wil
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______. 2016a. “The Economics of
Page 543 and 544:
______. 2016c. Short Term Energy Ou
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Interagency Working Group on the So
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Office of Management and Budget (OM
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A P P E N D I X A REPORT TO THE PRE
Page 553 and 554:
Council Members and Their Dates of
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Report to the President on the Acti
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consulting with a wide variety of o
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In October, the Council released a
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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,
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Year or quarter Table B-1. Percent
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Table B-2. Gross domestic product,
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Table B-3. Quantity and price index
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Table B-5. Real exports and imports
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Year Total Table B-7. Real farm inc
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Table B-9. Median money income (in
Page 581 and 582:
Labor Market Indicators Table B-11.
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Year or month Table B-12. Civilian
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Table B-14. Employees on nonagricul
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Year or month Table B-15. Hours and
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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
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Table B-23. U.S. Treasury securitie
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Year and month Bills (at auction) 1
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Year and month Table B-26. Money st
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