ECONOMIC REPORT OF THE PRESIDENT

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Figure 7-2 Greenhouse Gas Emissions by Type and Sector in 2014 Commercial & Residential 12% Nitrous Oxide 5% Fluorinated Gases 3% Agriculture 9% Industry 21% Methane 10% Electricity 30% Transportation 26% Carbon Dioxide 82% Source: Environmental Protection Agency. responding to its effects. Greenhouse gas emissions in the United States amounted to 6,870 million metric tons of carbon dioxide equivalents in 2014 (the most recent inventory), and these emissions are spread over several sectors, as shown in the left chart of Figure 7-2.11 In 2014, carbon dioxide emissions made up 82 percent of total greenhouse gas emissions; methane, 10 percent; nitrous oxides, 5 percent; and fluorinated gases, 3 percent (right chart of Figure 7-2) (EPA 2016a). The electricity sector in 2014 generated the largest share of emissions—nearly a third—which together with the fact that some of the least-expensive marginal emissions reductions opportunities are in the power sector (Kaufman, Obeiter and Krause 2016) motivate the Clean Power Plan and clean energy investments (discussed below). Transportation follows with 26 percent of emissions, motivating a variety of efficiency and innovation policies in the transportation sector.12 The Administration’s steps to address greenhouse gases cover nearly all sectors and gases. These steps help reduce emissions both now and in the longer term by promoting low-carbon electricity generation, dramatically improving energy efficiency for many products, facilitating the transition to a cleaner transportation system, reducing emissions of high-potency greenhouse gases, and bolstering our land-sector sink (the capacity of land 11 These are gross greenhouse gas emissions. Note that the Administration’s multi-year GHG reduction targets are based on GHG emissions, net of carbon sinks. 12 The most recent EPA GHG annual inventory is from 2014. In March 2016, the rolling 12-month average emissions estimates from the U.S. Energy Information Administration suggested that transportation emissions had exceeded those from electric power generation for the first time since 1979. Addressing Climate Change | 433
uses and land management activities to remove carbon dioxide from the atmosphere). In parallel, they have also promoted resilience, with a variety of programs focused on adapting to a changing climate. This section highlights just a few of the Administration’s many climate and energy initiatives. The next section discusses outcomes. Supporting Growth of Renewable Energy President Obama has made substantial investments in renewable energy supported by Federal policies that promote research, development, and deployment of renewable energy. These policies help address the underinvestment in renewable energy due to environmental externalities as well as the underinvestment in R&D due to knowledge spillovers. The Administration signaled its strong support for clean energy from the beginning by making a historic $90 billion investment in clean energy in the American Recovery and Reinvestment Act. The macroeconomic demand shock of the Great Recession required a bold policy response that included stimulus spending along with tax cuts and aid to affected individuals and communities. The Administration’s decision to focus an important part of that spending (about an eighth of the total) on clean energy was a vital step in pushing the economy toward a cleaner energy future, and a foundational step for supporting continued progress throughout the President’s eight years in office. The Recovery Act extended and expanded the Production Tax Credit (PTC) and the Investment Tax Credit (ITC), critical policies directly focused on renewable energy. These policies provide subsidies for renewable energy production and installation to help address the unpriced externalities that place renewable energy at a disadvantage. In December 2015, the Administration secured a five-year extension of the PTC and ITC, signaling to developers that renewable energy continues to be an area worthy of greater investment (Bailey 2015). The Recovery Act also created two new programs to support renewable energy generation: a set of loan guarantees for renewable energy project financing (the 1705 Loan Guarantee Program) and cash grants for renewable energy projects (the 1603 Cash Grant Program). The 1705 program supported construction of the first five solar PV projects over 100 MW in the United States. The 1603 program provided $25 billion to support total installed renewable energy capacity of 33.3 GW (CEA 2016c). The Act also included funding for energy efficiency projects, clean transportation, grid 434 | Chapter 7
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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
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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
Page 388 and 389: Figure 6-ix Return on Assets of Ban
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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
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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
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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: Delaying Action on Climate Change I
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,
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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
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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
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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
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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
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Dranove, David, Craig Garthwaite, a
Page 509 and 510:
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
Page 517 and 518:
______. 2016. “Certification of M
Page 519 and 520:
Arcidiacono, Peter, V. Joseph Hotz,
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Bulman, George, and Caroline Hoxby.
Page 523 and 524:
______. 2015a. “Economic Costs of
Page 525 and 526:
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
Page 541 and 542:
______. 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
Page 556 and 557:
Report to the President on the Acti
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consulting with a wide variety of o
Page 560 and 561:
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
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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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