The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Union Calendar No.
117th CONGRESS
2nd Session
} HOUSE OF REPRESENTATIVES {
REPORT
117-XXX
THE 2022 JOINT ECONOMIC REPORT
_______
116th CONGRESS
1st Session
REPORT
OF THE
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ON THE
2022 ECONOMIC REPORT
OF THE PRESIDENT
JUNE 23, 2022 – Committed to the Committee of the Whole House on the state of the Union and
ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON: 2022
MONTH XX, 2021 –
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON: 2021
I
JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5 (a) of Public Law 304, 79 th Congress]
HOUSE OF REPRESENTATIVES
DONALD S. BEYER JR., Virginia, Chairman
DAVID TRONE, Maryland
JOYCE BEATTY, Ohio
MARK POCAN, Wisconsin
SCOTT PETERS, California
SHARICE L. DAVIDS, Kansas
DAVID SCHWEIKERT, Arizona
JAIME HERRERA BEUTLER, Washington
JODEY C. ARRINGTON, Texas
RON ESTES, Kansas
SENATE
MARTIN HEINRICH, New Mexico, Vice Chairman
AMY KLOBUCHAR, Minnesota
MARGARET WOOD HASSAN, New Hampshire
MARK KELLY, Arizona
RAPHAEL G. WARNOCK, Georgia
MIKE LEE, Utah, Ranking Member
TOM COTTON, Arkansas
ROB PORTMAN, Ohio
BILL CASSIDY, M.D., Louisiana
TED CRUZ, Texas
Tamara L. Fucile, Executive Director
Kevin Corinth, Republican Staff Director
II
LETTER OF TRANSMITTAL
__________________
June 23, 2022
HON. NANCY PELOSI
Speaker, U.S. House of Representatives
Washington, DC
DEAR MADAM SPEAKER:
Pursuant to the requirements of the Employment Act of 1946, as
amended, I hereby transmit the 2022 Joint Economic Report. The
analyses and conclusions of this Report are to assist the several
Committees of the Congress and its Members as they deal with
economic issues and legislation pertaining thereto.
Sincerely,
Donald S. Beyer Jr.
Chairman
III
IV
CONTENTS
CHAIRMAN’S VIEWS .................................................................... 1
CHAPTER 1: THE ECONOMY REBOUNDED FASTER THAN
EXPECTED IN 2021 THANKS TO EFFORTS BY CONGRESS AND THE
BIDEN ADMINISTRATION, BUT LONG-TERM CHALLENGES
REMAIN ........................................................................................ 5
The U.S. has experienced a robust economic recovery, but
global events have pushed up prices, depriving workers of the
full benefits of the recovery ..................................................... 5
The U.S. experienced economic growth in 2021 not seen in
four decades, recovering faster than peer economies........... 5
The U.S. has added a record 8.7 million jobs under
President Biden and unemployment dropped to 3.6% in the
spring of 2022 ....................................................................... 7
The U.S. has added over half a million new manufacturing
jobs under President Biden, reversing a decades-long
decline in manufacturing jobs ............................................... 8
Wage growth has been strong, especially for the lowest
earners .................................................................................. 9
Business starts reached record levels in 2021 .................... 10
Global events have pushed up prices worldwide, denying
American workers the full benefits of the economic recovery
............................................................................................. 11
The Biden administration and Congress took action to drive
a robust recovery and address economic challenges ............ 12
The American Rescue Plan supported families and
communities through hardship caused by the coronavirus
pandemic ............................................................................. 12
The Biden administration has taken steps to raise wages and
protect workers ................................................................... 14
Biden administration actions alleviated supply chain
disruptions........................................................................... 15
Congress and the Biden administration are working to bring
down inflationary pressures and reduce costs .................... 16
The U.S. faces both long-standing and new economic
challenges ............................................................................... 17
V
The U.S. has enduring wealth and income disparities along
racial and gender lines ....................................................... 17
Working families face unaffordable costs caring for children
............................................................................................. 18
Climate change poses a unique threat to society and
economy but investments in clean energy will reduce costs
and support new jobs .......................................................... 18
Working families face barriers to finding stable, affordable
housing ................................................................................ 19
Concentrated corporate power has reduced American
competitiveness, raising costs for families and lowering
wages ................................................................................... 19
New financial technology creates opportunities and risks for
the U.S. economy ................................................................. 21
CHAPTER 2: LONGSTANDING ECONOMIC INEQUALITIES
REQUIRE RENEWED PUBLIC INVESTMENT AND REAL
SOLUTIONS ................................................................................. 22
Black Americans have made significant economic progress,
but income and wealth gaps persist .................................... 23
Hispanic workers and business owners power economic
growth but face continued barriers to economic
opportunities ....................................................................... 25
Native American communities still face barriers to economic
opportunity .......................................................................... 26
Large economic disparities exist within Asian American and
Pacific Islander communities .............................................. 27
Further progress is needed to close the gender wage gap
and ensure greater economic opportunity for women ........ 29
Older workers face ongoing discrimination in the workforce
............................................................................................. 30
CHAPTER 3: PRUDENT PUBLIC INVESTMENTS SPUR LONG-TERM
ECONOMIC GROWTH AND CREATE ECONOMIC OPPORTUNITIES
FOR ALL ..................................................................................... 32
Investing in families and the care economy will create jobs
and reduce costs ..................................................................... 32
Investing in the care economy will help working families and
create long-term economic growth ..................................... 32
VI
Care economy investments will boost social mobility and
raise incomes for millions of people ................................... 34
The expanded Child Tax Credit proved to be an enormously
effective tool for helping families, children and the economy
............................................................................................. 34
Investments in infrastructure, innovation and manufacturing
will improve economic productivity and create jobs ............. 36
The bipartisan Infrastructure Investment and Jobs Act will
rebuild America’s crumbling infrastructure ....................... 36
Investing in innovation and research is essential for keeping
the United States economically competitive........................ 36
Addressing climate change is critical to safeguarding
America’s economic well being ............................................. 37
Climate change will have major social and economic
consequences for the United States. .................................... 38
Investments in clean energy will reduce costs for families
and fight climate change ..................................................... 38
CHAPTER 4: THE STRONG ECONOMIC RECOVERY AND A FAIRER
TAX CODE CREATE THE FISCAL SPACE FOR PUBLIC INVESTMENTS
.................................................................................................... 40
The U.S. fiscal picture has improved significantly under
President Biden ................................................................. 40
Making the tax code fairer would support strong economic
growth ................................................................................. 40
Asking big corporations to pay their fair share would level
the playing field of U.S. businesses ..................................... 41
Making the individual income tax code fairer would reduce
income inequality while promoting economic growth that is
broadly shared .................................................................... 42
Increased funding for tax enforcement will help raise
revenue and ensure greater tax fairness ............................. 43
CONCLUSION .............................................................................. 45
ENDNOTES .................................................................................. 46
VII
VIEWS OF RANKING MEMBER MIKE LEE ................................. 67
CHAPTER 1: THE IMPORTANCE OF DEFINED GOALS FOR SOUND
ECONOMIC POLICY .................................................................... 70
The JEC’s Legislative Mandate ............................................ 71
The Importance of Defined Goals in Economic and Fiscal
Policy ...................................................................................... 72
Defined Goals Allow Debate on the Means ........................ 74
Lost Economic Consensus in the 2022 Report ..................... 76
Breakdown of the Budget Process ......................................... 78
Refocusing on Measurable Economic Goals ........................ 81
CHAPTER 2: PURCHASING POWER ............................................ 83
Inflation Trends ..................................................................... 84
Inflation Hits its Highest Level in 40 Years ........................ 84
Markets Expect High Inflation to Persist ............................ 85
The Consequences of Inflation ............................................. 88
High Inflation Imposes Significant Costs on American
Families ............................................................................... 88
Americans Experience Inflation Differently Depending on
Where They Live.................................................................. 88
Inflation Costs Will Remain Even After Inflation Reverts to
Normal Levels ..................................................................... 90
Drivers of Inflation ................................................................ 92
Shifting Consumer Preferences and Supply Chain
Inefficiencies ....................................................................... 92
Government Policies Worsen Inflation ............................... 94
Alternate Explanations Fail to Explain the Rise of Inflation
........................................................................................... 104
Policy Solutions to Restore Purchasing Power................... 106
CHAPTER 3: EMPLOYMENT ..................................................... 109
The State of the Labor Market ............................................ 110
Employment Remains Below its Pre-Pandemic Trend ..... 110
Suppressed Employment is Due to Weak Labor Supply ... 113
Labor Market is Delivering Less to Families ................... 114
Policies That Have Contributed to Weak Labor Supply..... 116
Disincentives to Work ....................................................... 117
Enabling Non-Work .......................................................... 118
Making it More Difficult to Work ..................................... 120
Prohibitions on Work ........................................................ 120
VIII
Policies to Promote Full Employment ................................ 121
Conclusion............................................................................ 125
CHAPTER 4: PRODUCTION ....................................................... 126
Is Economic Growth Slowing? ............................................ 127
Growth of the Public Sector ................................................ 131
Consequences of an Expanding Public Sector ................... 137
Pursuing a Pro-Growth Agenda .......................................... 141
CHAPTER 5: SOCIAL CAPITAL ................................................. 146
Drug Overdose Deaths ......................................................... 147
Homicide and Violent Crime ............................................... 151
Learning Loss and Mental Health among Children and
Youth .................................................................................... 153
Teen Mental Health ........................................................... 155
Declining Family Formation ............................................... 158
Declining Marriage Rate .................................................. 158
Declining Fertility Rate .................................................... 161
Conclusion............................................................................ 162
ENDNOTES ................................................................................ 164
1
117th CONGRESS
2nd Session
}
HOUSE OF REPRESENTATIVES
{
REPORT
117-xxx
THE 2022 JOINT ECONOMIC REPORT
_____________
JUNE 23, 2022 – Committed to the Committee of the Whole House on the state of
the Union and ordered to be printed
_______________
MR. BEYER, from the Joint Economic Committee,
submitted the following
REPORT
Report of the Joint Economic Committee on the 2022 Economic Report of the
President
CHAIRMAN’S VIEWS
I am pleased to share the Joint Economic Committee (JEC)
Democratic response to the 2022 Economic Report of the
President. The JEC is required by law to submit findings and
recommendations in response to the Economic Report of the
President (the Report), which is prepared and released each year
by the Council of Economic Advisers (CEA). This year’s report,
released in April 2022, was the first published by the Biden
administration.
2
Under President Biden and the 117th Congress, the United States
has experienced a robust economic recovery and strong job gains.
Economic growth in 2021 reached 5.7%, the highest rate in 40
years. As of May 2022, the United States had added almost 8.7
million jobs under President Biden. The unemployment rate was
3.6%, a level not seen since before the coronavirus pandemic and
significantly below the 6.4% rate when President Biden took
office.
The passage of the American Rescue Plan and the Biden
administration’s successful rollout of coronavirus vaccines paved
the course for record-breaking job gains and robust economic
growth. And the bipartisan Infrastructure Investment and Jobs Act
makes critical fixes to America’s infrastructure, which will
support new jobs and sustain economic growth.
While the economic recovery has been strong, global supply chain
disruptions and worldwide price increases have strained family
budgets. Congress and the Biden administration have acted to
address inflation head-on and reduce out-of-pocket costs for
families, including releasing a record amount of oil from the
Strategic Petroleum Reserve, providing relief for energy bills,
lowering health insurance premiums for millions of families and
fixing supply chain bottlenecks, among other measures. Making
investments that improve productivity and increase labor force
participation, as well as ensuring the wealthy and big corporations
pay their fair share of taxes, will help bring down inflationary
pressures long term.
The coronavirus pandemic exacerbated long-standing economic
inequalities, and while coronavirus relief measures were effective
at helping families weather the impact of the pandemic, more is
needed to alleviate inequalities and create economic opportunity
3
for all. Workers of color were particularly hard-hit by the initial
wave of layoffs in spring 2020. Pandemic relief contained the
economic fallout, but even as unemployment has dropped, the
racial gaps in hiring, wages and wealth have persisted. This is
holding back workers of color, their families and the economy as
a whole. Through the American Rescue Plan, the Biden
administration and Congress have made historic investments in
building an equitable recovery that includes historically
disadvantaged communities, workers of color and minority-owned
small businesses. However, more must be done through effective
policy and new investments to fight long-standing economic
inequalities and create shared prosperity for all.
Women, who have historically received lower wages and had
lower labor force participation, also faced unique challenges as a
result of the pandemic and the resulting increase in care
responsibilities. Women continue to shoulder a disproportionate
share of care responsibilities, and the lack of family-friendly
workplace policies and affordable care options meant many
women were pushed out of the workforce during the worst of the
pandemic. The American Rescue Plan and earlier pandemic aid
provided direct relief to working families, such as through
investments in paid leave and child care and the expanded Child
Tax Credit to help address this gap, but long-term solutions are
needed to fully support women's participation in the labor market
and to fix the systemic devaluing of work done by women.
Congress should make new investments to help bolster household
economic security, spur long-term economic growth and transition
to a clean-energy economy. Building out U.S. care infrastructure
will reduce costs for families and help parents enter and remain in
the workforce. Investing in infrastructure, research and
manufacturing will improve productivity and create new jobs.
4
Transitioning the United States to clean, renewable energy will
bring down costs for families and small businesses, while reducing
dependence on foreign fossils fuels and insulating against the
rising costs of climate change.
The United States has the fiscal capacity to make investments that
create long-term economic growth. Under President Biden, the
federal budget deficit is expected to drop by a record amount this
year, and federal revenue has grown substantially thanks to the
economic recovery. Additional revenue from the wealthiest
Americans and big corporations can fund new investments to fix
long-standing problems, without putting additional tax burdens on
working Americans or negatively impacting economic growth.
This Congress and the Biden administration have an opportunity
to build an economy with sustained economic growth that works
for all U.S. workers and families.
DONALD S. BEYER JR.
CHAIRMAN
5
CHAPTER 1: THE ECONOMY REBOUNDED FASTER
THAN EXPECTED IN 2021 THANKS TO EFFORTS BY
CONGRESS AND THE BIDEN ADMINISTRATION, BUT
LONG-TERM CHALLENGES REMAIN
The U.S. has experienced a robust economic recovery, but global
events have pushed up prices, depriving workers of the full
benefits of the recovery
The U.S. experienced economic growth in 2021 not seen in four
decades, recovering faster than peer economies
Since January 2021, the U.S. has experienced a robust economic
recovery, thanks in large part to Congress and the Biden
administration passing the American Rescue Plan into law and the
successful roll out of coronavirus vaccinations. The U.S. economy
has bounced back from the economic impact of the coronavirus
and proven resilient in the face of emerging variants, global supply
chain disruptions pushing up prices and Putin’s invasion of
Ukraine creating geopolitical chaos.
The economy grew 5.7% in 2021—the fastest rate in nearly 40
years—and the United States has experienced the fastest economic
recovery among G7 economies.1 Not only has the U.S. surpassed
pre-pandemic GDP levels, it is one of the only major economies
worldwide that has recovered to its pre-pandemic trend of
economic growth. Across metrics, the United States is outpacing
its peer countries in its economic rebound from the coronavirus
recession. This year the U.S. economy is on track to grow faster
than China, which has not happened in over 40 years.2
6
Data continue to indicate economic strength in early 2022, as
consumption and business investment were both robust and
positive. While the economy did contract slightly in the first
quarter of 2022, the contraction was largely due to changes in
inventories and net exports that masked strong underlying
economic data.
President Biden has continued the trend of stronger economic
growth under Democratic presidents. From 1933 to 2020, the
economy grew at an average rate of 4.6% per year under
Democratic presidents, or nearly double the rate (2.4%) under
Republican presidents.3 The strong economic recovery under
President Biden is due in no small part to the successful passage
of the American Rescue Plan, which funded the distribution of the
coronavirus vaccines, supported state and local governments to
keep essential workers on the job and helped U.S. workers and
families weather the economic impact of the coronavirus
pandemic. As a result, the economy’s 5.7% growth rate in 2021
surpassed projections from before the passage of the Rescue Plan
7
from both the Federal Reserve, which forecast 4.2% growth, and
the Congressional Budget Office, which forecast 4.6% growth.4
The U.S. has added a record 8.7 million jobs under President
Biden and unemployment dropped to 3.6% in the spring of 2022
Just two-and-a-half years out from the beginning of the
coronavirus pandemic, the U.S. has recovered 96% of the jobs lost
and unemployment has declined to just 3.6%. The U.S. has added
nearly 8.7 million jobs under President Biden, with every state and
the District of Columbia experiencing net job gains. The U.S. has
recovered from the coronavirus recession far faster than recent
recessions and is on track to bring back every job lost during the
pandemic by the end of 2022.
Sectors critical to addressing ongoing supply chain disruptions
have experienced a robust recovery. Jobs in the construction and
transportation and warehousing sectors have exceeded prepandemic levels of employment. Funding from the bipartisan
8
Infrastructure Investment and Jobs Act signed into law by
President Biden in November 2021 has begun to flow and is
projected to support hundreds of thousands of jobs each year over
the next decade to support rebuilding infrastructure.5
In just under two years, the unemployment rate has fallen from
14.7% during the worst of the pandemic to 3.6%, which is the
same as the unemployment rate before the pandemic in December
2019. Currently, 15 states have unemployment rates at or below
previous record lows. Recently, new unemployment insurance
claims fell to their lowest level since 1968.
The U.S. has added over half a million new manufacturing jobs
under President Biden, reversing a decades-long decline in
manufacturing jobs
The U.S. has added 584,000 manufacturing jobs between when
President Biden took office in January 2021 and May 2022.6
Notably, almost every state and the District of Columbia added
9
manufacturing jobs over the first 15 months after President Biden
came into office.7 By comparison, the U.S. added just 2,000
manufacturing jobs in 2019. This rebound is helping to reverse a
decades-long decline in U.S. manufacturing employment.
Manufacturing has long been a core strength of the American
economy, but increasing global competition has threatened many
of these high-quality jobs. In the first two decades of the 21st
century, the United States lost more than a quarter of all domestic
manufacturing jobs, a decline of about 5 million.8 Increased
competition from China led to an estimated 985,000 American
manufacturing jobs lost between 1999 and 2011.9
Manufacturing jobs frequently provide better pay, more consistent
hours and stronger worker protections than retail or other service
industries.10 The loss of high-quality manufacturing jobs was a
major reason the median income of working-class men without a
secondary school diploma fell by 20% between 1990 and 2013.11
Wage growth has been strong, especially for the lowest earners
Strong demand in the labor market is helping workers secure better
jobs with higher pay, even as global inflation strains household
budgets. Average hourly earnings are up 5.2% over the last year.
The lowest-income workers have seen the largest gains. Over the
last 12 months, wages at the bottom of the income distribution
increased 6.7%, an indication that the strength of the U.S. recovery
is reaching workers who have been excluded from previous wage
gains. Job openings are also near record highs, bringing
marginalized workers back into the workforce and increasing
worker bargaining power to negotiate for higher wages.
10
Strong demand for labor means that workers are able to find new
jobs more easily, and they can negotiate for higher wages in that
new job. As a result, workers who switched jobs over the past 12
months saw median wage gains that were even higher than those
who stayed in their current jobs.
Business starts reached record levels in 2021
The U.S. experienced a business and entrepreneurship boom in
2021 as the number of new business applications reached a record
high.12 In total, Americans filed 5.4 million applications for new
businesses in 2021, 68% higher than the average number of filings
in the five years before the pandemic.13 Of these new applications,
1.8 million were for businesses of the type likely to become
employers, also a record high.14 In fact, the number of highpropensity business filings in 2021 was 42% higher than the
average number of applications in the five years before the
pandemic.15
11
Thanks to the American Rescue Plan and other emergency
measures, the Biden administration disbursed more than $400
billion in emergency assistance to well over 6 million businesses,
including those run by Black, Hispanic and Asian business owners
who were hit hard by the pandemic.16 These policies helped
existing businesses survive, and the robust economic recovery led
to a record number of new business applications in 2021.17
The record boom in business applications in 2021 took place all
across the country. Thirty-one states and the District of Columbia
saw over 50% more applications than the pre-pandemic annual
average, including six states where applications more than
doubled.18
Global events have pushed up prices worldwide, denying
American workers the full benefits of the economic recovery
While the U.S. has experienced a robust economic recovery under
President Biden, inflation is depriving U.S. workers and families
12
of the full benefits of higher wages and strong job gains. Around
the world, inflation remains elevated—a result of unprecedented
disruptions caused by the pandemic and, more recently,
exacerbated by Russia’s invasion of Ukraine. Inflation in the U.S.
over the last year climbed to 8.6% as of May 2022.19 By
comparison, Eurozone inflation reached 8.1% in the twelve
months ending in May.20
Investing in infrastructure and manufacturing will improve supply
chains and help insulate workers and families from price volatility
caused by global shocks. Investments that grow the economy by
expanding long-term productive capacity will reduce inflationary
pressure and ensure that the U.S. is producing goods here at home.
Failing to address the underlying causes of inflation will only
leave families vulnerable to similar shocks in the future.
The Biden administration and Congress took action to drive a
robust recovery and address economic challenges
The American Rescue Plan supported families and communities
through hardship caused by the coronavirus pandemic
The American Rescue Plan, signed into law in March 2021,
provided crucial support for families and helped set the U.S. on
the course to a strong recovery. The Rescue Plan included income
replacement for families and for workers who lost their jobs
through no fault of their own during the pandemic, including
expansion of the Child Tax Credit, continued supplemental
Unemployment Insurance benefits and direct payments to
households. The Rescue plan also provided funding for state and
local governments to keep essential workers on the job and to scale
up and distribute coronavirus vaccines, testing and treatment on
an equitable basis.
13
The expansion of the Child Tax Credit under the Rescue Plan was
one of the largest-ever, single-year tax cuts for families with
children. Qualifying families received monthly payments from
July through December 2021. Over 36 million families that
included more than 61 million children received a total of nearly
$93 billion in advance CTC payments. The expanded CTC was the
primary driver of record-low child poverty levels in 2021. The
expanded CTC alone reduced monthly child poverty by 30% and
kept 3.7 million children out of poverty.21 More than 80% of the
CTC’s poverty reduction came from making the credit fully
refundable, so that families with little or no income could receive
the full amount.22
Under President Biden, the federal government delivered more
than $400 billion in direct assistance from the Rescue Plan and
other emergency response measures to more than six million small
businesses, which kicked off a small business boom in 2021.23 The
Biden administration prioritized distributing small-business
funding to businesses with fewer than 20 employees and helped
businesses in low- and moderate-income areas.24
The American Rescue Plan included $122 billion to help K-12
schools reopen and address ongoing issues caused by the
coronavirus pandemic, including mental health concerns and
learning loss.25 In addition, the Rescue Plan delivered more than
$10 billion for community colleges and their students, including a
record $2.7 billion to Historically Black Colleges and Universities
(HBCUs) and their students.26
The American Rescue Plan also included funding streams to help
households manage costs and withstand the economic impact of
the coronavirus pandemic. The Rescue Plan helped make
healthcare more affordable, leading to record enrollment in
14
marketplace healthcare plans.27 The Rescue Plan more than
doubled funding for the Low-Income Home Energy Assistance
Program to $8 billion to help families with the cost of home
heating and cooling. 28 In addition, Rescue Plan funding helped 5
million renters remain housed, leading to below-average evictions
even after the end of the CDC’s eviction moratorium.29
The Biden administration has taken steps to raise wages and
protect workers
The Biden administration has acted aggressively to protect
workers and raise wages. Under President Biden, the U.S. Labor
Department is helping to ensure that more than 11 million
American workers attain the pay they deserve by improving the
guidelines for when employers can apply tips to meet minimum
wage laws.30 This action reverses Trump administration policies
that facilitated the underpayment of certain employees.
The Biden administration also implemented a $15 minimum wage
for federal contractors, up from the previous floor of $10.95.31
This raise will impact over 300,000 workers and aid many more.32
The minimum wage increase for federal contractors will also boost
the wages of those who do not work for federal contractors by
increasing competition for talent.33 Employers who compete with
federal contractors for workers will face pressure to also increase
wages to meet hiring needs, spurring broader wage increases.
The Biden administration was the first to use the Rapid Response
Mechanism in the U.S.-Mexico-Canada Agreement (USMCA) to
lift wages in the United States.34 Strong enforcement of the labor
provisions in the USMCA will ensure that companies can no
longer exploit workers in Mexico to save on labor costs.35 As a
result of this change in enforcement, companies will have less
15
incentive to cut American manufacturing jobs and wages and ship
jobs out of the country.
Biden administration actions alleviated supply chain disruptions
Global supply chains have faced repeated disruptions since the
start of the coronavirus pandemic.36 International factory
shutdowns due to coronavirus outbreaks, extreme weather events
and Russia’s invasion of Ukraine have all contributed to backlogs
and delays that strained the ability of U.S. ports, rail lines and
trucking routes to deliver goods to market.37
Though much of the global supply chain crunch is outside the
control of the U.S. alone, the Biden administration eased supply
chain issues by improving port operations and addressing
logistical holdups through legislative and regulatory action.38
Actions, including moving some of the country’s largest ports to
around-the-clock operations and utilizing off-peak hours to move
more cargo, reduced the amount of dwell time for containers at
ports.39 These efforts helped alleviate port backups and led to a
record number of shipping containers moving through the Ports of
Los Angeles in 2021. The Ports of LA moved a record amount of
cargo in 2021, 13% more cargo than the previous high set in
2018.40
In December 2021, the Biden administration awarded $241
million from the bipartisan Infrastructure Investment and Jobs Act
to improve 25 American port facilities that play especially
important roles in the U.S. supply chain ecosystem.41 The law
included a total of $17 billion to repair ports and waterways, which
is estimated to support over 23,000 jobs each year.42 Additionally,
the Biden administration launched the Trucking Action Plan to
address labor force issues and create a pipeline for high-quality
jobs in the trucking industry.43
16
Congress and the Biden administration are working to bring down
inflationary pressures and reduce costs
Congress and the Biden administration are implementing policies
to reduce inflationary pressures. To bring down energy prices, the
Biden administration coordinated the largest-ever releases of both
domestic and international oil reserves to aggressively expand oil
supply and temper gas price increases.44 President Biden also
directed the Federal Trade Commission to investigate whether oil
and gas companies are participating in illegal conduct to push up
gas prices.45 The Biden administration has also worked to lower
household food costs by boosting food production and expanding
meat processing capacity. Additionally, the Biden administration
prioritized ensuring that the institution best positioned to fight
inflation–the Federal Reserve Board–has a full slate of highly
qualified experts to combat inflation.
Congress and the Biden administration have also taken action to
reduce out-of-pocket costs for families. With the Affordable
Connectivity Program included in the bipartisan Infrastructure
Investment and Jobs Act, Congress and the administration
expanded broadband access and made it more affordable for lowincome families. The program provides up to $30 per month to
help eligible families get access to the internet and currently serves
over 10 million households. Congress and the Biden
administration also have lowered monthly premiums and out-ofpocket health care costs via the enhanced premium tax credits in
the American Rescue Plan.46 Many of the record 14.5 million
families who got their health insurance through the Affordable
Care Act marketplaces, during the 2022 open enrollment period,
are now spending less on health care than in 2020.
The Biden administration has also worked to solve supply chain
disruptions that have been a major driver of high prices. The
17
administration has made tremendous progress in working with
ports—particularly two of the largest U.S. ports in Los Angeles
and Long Beach—to clear container backlogs and ease supply
chain disruptions in order to get goods to consumers faster. 47
Additionally, the recently enacted bipartisan Infrastructure
Investment and Jobs Act will help lower long-term inflationary
pressures. Improving roads, bridges, rail, broadband, airports,
cargo ports and water pipelines will bring down costs for business,
make the economy more productive and drive economic growth
all of which reduce inflation over the long term.
The U.S. faces both long-standing and new economic challenges
The U.S. has enduring wealth and income disparities along racial
and gender lines
Structural racism and sexism have been present in the United
States since its founding. Since data were first collected on income
and wealth along gender and racial lines, there has been evidence
of inequality in the outcomes of women and people of color
relative to non-Hispanic white men.48 Disparities persist through
today. In the first quarter of 2022, white men working full-time
were earning more than $57,000 per year, considerably more than
white women ($48,000), Black men ($42,000), Black women
($38,000), Hispanic men ($39,000) and Hispanic women
($35,000).49
These differences in income, due to discrimination, occupational
segregation, gender socialization and more, have significant
effects over the course of lifetimes.50 Racial wealth gaps in
particular are the result of centuries of enslavement, property theft
and destruction and discrimination in the tax code, housing and
labor market.51 Structural solutions are necessary to proactively
support all families’ financial security and close these gaps. These
18
policies include universal child care, a fully refundable child tax
credit and wealth-building policies such as baby bonds.52
Working families face unaffordable costs caring for children
The coronavirus recession put enormous burdens on working
parents, especially mothers caring for children, and other
caretakers of loved ones. The U.S. was already facing a crisis as
the cost of care had grown enormously, even as care workers faced
persistently low wages.53 Recent national estimates find that child
care costs for a single child average between $9,200 and $9,600
per year.54 For a family with two young children, average child
care costs exceed the median cost of rent in every reporting state
and the District of Columbia.55 Investing in care infrastructure will
help parents re-engage the workforce and grow the economy.
Climate change poses a unique threat to society and economy but
investments in clean energy will reduce costs and support new jobs
Climate change is an existential threat to U.S. families,
communities and the economy. The economic impact of inaction
on climate change is large and growing: Extreme heat will
continue to decrease productivity, and extreme weather events will
cause more damage to communities. Low-income and
marginalized communities will see some of the largest economic
impacts of climate change but have the fewest resources to
withstand the negative impact of higher temperatures and extreme
weather.
Investments in clean energy do more than combat climate change,
they will lower energy costs, support new jobs and insulate family
budgets from volatile energy markets. Continued dependence on
fossil fuels will render families and businesses vulnerable to
shocks in the international energy supply, like Putin’s invasion of
Ukraine, which has pushed up the price of gas at the pump.
19
Transitioning to clean, renewable energy sources such as wind and
solar will protect families from drastic energy price increases
while fighting climate change.
Working families face barriers to finding stable, affordable
housing
The economic fallout from the coronavirus pandemic only
worsened the ongoing housing affordability crisis. Every state, and
the District of Columbia, lacks sufficient rental housing that is
affordable for the lowest-income renters, a problem that has been
exacerbated recently by pandemic-related supply chain
bottlenecks. These ongoing affordability crises highlight the need
for greater public investment to improve housing stability and
increase affordability for American families.
The American Rescue Plan included valuable investments in
housing stability that, together with other pandemic relief bills,
prevented the sort of massive housing crisis that the U.S. saw
during the Great Recession. This included the Emergency Rental
Assistance program, which has helped over 5 million families at
risk of eviction as of March 2022, while enabling states and
localities to run their own rental assistance programs.
Additionally, the combination of the Homeowner Assistance Fund
and the federal moratorium on foreclosures helped avoid the
devastating effects of the foreclosure wave during the Great
Recession.
Concentrated corporate power has reduced American
competitiveness, raising costs for families and lowering wages
Evidence shows that corporate concentration and power has grown
in recent decades, constraining healthy competitive markets while
reducing wages and pushing up prices for U.S. households. One
study found 60% of local labor markets in the United States are
20
now highly concentrated, which has reduced competition and
made it more difficult for small businesses to survive.56 Fewer
firms competing for business has pushed up prices for consumers,
and fewer firms, competing for workers, has reduced wages.
Concentrated corporate power also threatens innovation, as
businesses hand profits back to their shareholders instead of
investing in research and new technology.
Record corporate profits are another clear indication that markets
have become less competitive over the last twenty years.57 While
the profit share of GDP varies with the business cycle, it remained
relatively stable for the latter half of the 20th century and averaged
about 6%.58 But over the past two decades, profits have outpaced
economic growth, and the after-tax profit share has increased to
roughly 9%.59 Higher corporate profits have led to increased
payouts to shareholders, barriers to entry for new companies and
reduced economic dynamism, as dominant firms are less likely to
be replaced than they were two decades ago.60
Despite record profits, firms are investing less per dollar of profits
than they did decades ago. Between 1962 and 2001, firms invested
20 cents per dollar back into their businesses by spending on new
equipment and innovations.61 Today, firms are investing just half
of what they used to, which is limiting productivity and stifling
economic growth.62
Increasing concentration in the U.S. economy is also responsible
for at least a 7% increase in overall consumer prices over the last
17 years.63 Estimates show that increased monopoly rents have
cost the typical household approximately $3,700 every year.64
Rising market concentration is also linked to declining workers’
compensation and bargaining power. 65
21
New financial technology creates opportunities and risks for the
U.S. economy
Over the last 11 years, the market for cryptocurrencies and the
broader class of digital assets has grown from a niche industry to
a globally significant financial market. This asset class is notably
volatile, with the total digital asset market gaining and then losing
over one trillion dollars in value twice since January 2021.66 The
market has dropped steadily since its peak in November 2022,
contracting from nearly $3 trillion to only $1.2 trillion in May
2022. 67
While still a small share of the broader financial system compared
to stocks and bonds, the growth of digital assets poses the risk that
volatility and digital bank-runs on certain assets could disrupt
more mainstream financial institutions like pension funds or
mutual funds.68 Moreover, these assets pose significant consumer
protection risks given issues with financial fraud, hacks and
market manipulation.69 While all investments involve risk, the
lack of disclosure and reporting requirements in many parts of the
crypto asset industry tilt the playing field towards powerful
players who can potentially manipulate markets to their
advantage.70
The current financial regulatory framework has taken steps to
increase oversight and crack down on fraudulent actors, but
significant gaps remain.71 Updating the federal government’s
regulations through legislation and executive action to increase
oversight of crypto assets can help guide innovation that protects
investors and the integrity of financial markets.
22
CHAPTER 2: LONGSTANDING ECONOMIC
INEQUALITIES REQUIRE RENEWED PUBLIC
INVESTMENT AND REAL SOLUTIONS
In recent decades, progress had been made to close long-standing
inequities that persist along racial, ethnic, age and gender lines.
However, the onset of the coronavirus pandemic exacerbated these
pervasive gaps, highlighting the need for renewed public
investment and real policy solutions to create economic
opportunity for all U.S. workers and families. For example,
unemployment among Black and Hispanic workers, which has
been persistently higher than that of white workers, spiked
precipitously at the onset of the coronavirus pandemic. Native
American communities have long faced barriers to economic
opportunity and continue to lag behind their white counterparts as
the nation recovers from the economic impact of the pandemic.
Additionally, large economic inequalities persist among diverse
Asian American and Pacific Islander communities.
While overall unemployment numbers are strong, many workers
of color still experience unemployment rates that are higher than
average for white workers. In May 2022, the unemployment rate
was 6.2% for Black workers, 4.3% for Hispanic workers and 2.4%
for Asian workers.72 Unemployment among American Indian and
Alaska Native workers was 4.5% (not seasonally adjusted).73 The
persistence of economic inequality in unemployment, income and
wealth requires renewed public investment and real policy
solutions to create economic opportunities and fight
discrimination.
The gender pay gap has also persisted as women continue to face
barriers to full participation in the economy and discrimination in
the workplace. The pandemic increased caregiving
23
responsibilities, and women shouldered the majority of this
responsibility. This led to lower labor force participation rates than
that of their male counterparts, and women’s participation rates
have yet to rebound even as the nation recovers. Attacks on
reproductive rights will only restrict economic opportunities and
hinder progress for women and their families.
Finally, the coronavirus pandemic has had a disproportionate
impact on older workers, who are generally defined as those ages
55 and above. The pandemic shed new light on the struggles facing
older workers, including existing hiring and wage discrimination,
the physical toll of certain types of work and growing retirement
insecurity.
Black Americans have made significant economic progress, but
income and wealth gaps persist
While median incomes for workers of all races have mostly
increased since 1972, Black household income continues to lag
behind that of white households. Today, the typical Black
household earns 62 cents for every dollar earned by a white
household.74 The gap in incomes was smallest in 2000 but
widened during the Great Recession before only recently
beginning to narrow again.75 In 2019, the ratio of white to Black
wealth was nearly 8 to 1—a result of historical disparities in asset
ownership, unemployment, wages and intergenerational wealth
transfers.76
Many policymakers and commentators suggest education as a
panacea for eliminating racial income and wealth gaps. However,
evidence shows that increased educational attainment alone is not
enough to close employment, income and wealth gaps.77 Despite
enormous gains over the last 50 years in Black educational
attainment, the racial wealth gap between Black and white
24
households has actually increased. For example, Black college
graduates in their 30s have seen their wealth position drop by more
than 80% relative to their white peers compared to 30 years ago.78
Regardless of whether Black workers complete a postsecondary
program, their incomes remain substantially below that of white
workers, they are twice as likely to be unemployed and they earn
substantially less over their lifetimes. Almost 40% of Black
college graduates are underemployed—working jobs that do not
fully utilize their skills, experience and availability to work—
compared to 31% of white graduates.79 To achieve the same
socioeconomic status, Black students must go to school for longer
and earn more academic credentials than white students.80
At the onset of the pandemic recession, Black workers and
families were disproportionately impacted by the spread of the
coronavirus and the loss of millions of jobs across the United
States.81 The American Rescue Plan and actions by the Biden
administration were critical to helping Black families, small
businesses and communities weather the impact of the coronavirus
recession. The Rescue Plan expanded the Child Tax Credit,
extended supplemental unemployment insurance benefits and sent
direct payments to households. It also included a historic $2.7
billion investment in Historically Black Colleges and Universities
(HBCUs) and their students.82 The Biden administration disbursed
more than $400 billion in relief to small business, prioritizing
businesses with under 20 employees and creating a $1 billion fund
for sole proprietorships in low-to-moderate income areas.83
Congress can do more to create economic opportunity for Black
communities and fight discrimination against Black workers.
Investing in care infrastructure will help parents who face
difficulty finding care for their children, reduce costs for families
25
and raise wages for care workers, who typically receive low wages
and are disproportionately women of color. Investments in clean
energy and climate resilience will help protect the health and
safety of Black communities, which are disproportionately
impacted by fossil-fuel energy production and are more vulnerable
to extreme weather. Further investments in HBCUs and policies
that fight racial discrimination in the workplace will provide
greater economic opportunities to Black students and workers.
Hispanic workers and business owners power economic growth
but face continued barriers to economic opportunities
Hispanic workers and small-business owners are a critical part of
the U.S. economy, helping carry the economy through the
pandemic and into recovery. Nearly 5 million Hispanic-owned
businesses contribute over $800 billion to the American economy
every year, and about one-quarter of new businesses are Hispanic
owned.84 Hispanic-owned businesses are powering job creation,
employing about 3 million workers, and Hispanic entrepreneurs
have built successful businesses despite barriers to accessing
capital. 85
Across industries, Hispanic workers played a pivotal role in
supporting the U.S. economy during the pandemic, including in
jobs that often placed them and their families at risk.86 Hispanics
comprised a large share of workers in jobs that required close
contact with sick and high-risk individuals and were more likely
to become hospitalized or die at the onset of the coronavirus
pandemic.87 Even before the pandemic, occupational segregation
hurt Hispanic workers’ earnings and resulted in poorer working
conditions.88 For example, over half of all Hispanic women in the
workforce were in low-paying occupations near the end of 2021.89
26
A renewed focus on creating economic opportunities and fighting
discrimination is necessary to ensure that Hispanic workers,
businesses and families can share in the prosperity that they help
create. The American Rescue Plan took important steps, including
funding for colleges and universities that included about $11
billion for Hispanic-Serving Institutions.90 Congressional support
for small businesses helped create a small business boom in 2021,
and Hispanic business formation that year was 23% higher than
before the pandemic.91 Additional investments in the care
economy and manufacturing jobs will create economic
opportunities for Hispanic workers and their families.
Native American communities still face barriers to economic
opportunity
The legacy of violent removal, forced assimilation and unmet
obligations are reflected in the nature and magnitude of pervasive
structural disparities that threaten the economic security and
opportunity of Native American communities.92 Native people are
held back by persistent disparities in employment, income and
education. By early 2022, the labor force participation rate of
Native Americans remained below the national rate.93 Native
Americans are also more likely to earn less than non-Hispanic
white Americans.94 These disparities contribute to a cycle of
intergenerational poverty. Native Americans are more likely to
live in poverty than individuals of other minority groups,
irrespective of age.95 Climbing the ladder of economic mobility is
further complicated by disparities in education, as just one in five
Native Americans over the age of 25 has attained a bachelor’s
degree.
Barriers to wealth-building and financing also limit the economic
security of Native Americans. The typical white family has more
than twice the wealth of the typical American Indian and Alaska
27
Native (AIAN) families.96 Because wealth serves as an enabler of
opportunity, these disparities translate into inequities in housing,
access to education and economic outcomes. Despite a strong
preference for owning a home, a smaller share of Native
households owned homes in 2020 than in 2000.97 Similarly,
Native entrepreneurs are more likely than their counterparts to
face barriers to obtaining credit and report a greater reliance on
informal financing.98
The American Rescue Plan and the bipartisan Infrastructure
Investment and Jobs Act directly addressed long-standing
economic issues facing Native communities. The Rescue Plan, for
example, included the largest-ever funding for the Low-Income
Home Energy Assistance Program (LIHEAP), assistance that is
critical for Native American households that face
disproportionately high energy bills.99 The bipartisan
infrastructure act invests over $11 billion in Native communities,
including funding for broadband, water and transportation
infrastructure.100 Additional investments are necessary to create
equitable economic opportunities for Native communities.
Large economic disparities exist within Asian American and
Pacific Islander communities
The Asian American, Native Hawaiian and Pacific Islander
(AANHPI) population in the U.S. is among the fastest-growing
and the most diverse, encompassing a large number of origin
groups.101 The AANHPI community was hit hard by the pandemic
and the economic recession that followed but has made a strong
recovery thanks to pandemic relief. Discrimination, fear of
violence and high death rates took a toll on the quality of life and
economic state of the AANHPI community during the
pandemic.102 Yet, assistance in the American Rescue Plan and
other pandemic relief provided necessary support and spurred a
28
broad-based economic recovery.103 By early 2022, the
unemployment rate for Asian Americans had fallen to 2.8%, after
peaking at 14.3% in 2020. Similarly, only 3.8% of Native
Hawaiians and Pacific Islanders were unemployed by early 2022,
compared to 9.3% at the pandemic’s peak.104
Aggregate measures of economic well-being mask the diversity of
the AANHPI community, causing them to seem uniformly
prosperous despite having the highest level of income inequality
of any major racial group.105 For example, Indian Americans’
median family income is nearly twice the national median, while
refugee populations, such as Malaysian Americans, and colonized
populations, such as Native Hawaiians and the indigenous people
of the Pacific Islands, are significantly poorer.106 Similarly,
aggregate statistics of educational achievement obscure the low
rates of college graduation for Native Hawaiians and Pacific
Islanders.107
The American Rescue Plan included funding that helped Asian
Americans, Native Hawaiians and Pacific Islanders, including
about $5 billion in higher education funding for Asian American
and Native American Pacific Islander-serving institutions.108
Expanded premium tax credits under the Rescue Plan helped
almost 200,000 previously uninsured Asian Americans, Native
Hawaiians and Pacific Islanders once again purchase health
insurance.109
Policies that fight discrimination, further the transition to clean
energy and advance research, innovation and manufacturing will
help create jobs and economic opportunities for Asian Americans,
Native Hawaiians and Pacific Islanders.
29
Further progress is needed to close the gender wage gap and
ensure greater economic opportunity for women
In 2020, women earned 83 cents for every $1 that men earned on
average.110 While the gender pay gap has narrowed in the last 60
years, with the largest improvement occurring during the 1980s,
progress has stagnated.111 This is particularly true for higher-skill
and higher-pay workers. In the last three decades, the U.S. has
made as much progress in closing the gender wage gap as was
made in the 1980s alone.112
The gender pay gap is even greater for women of color. While the
gender wage gap ratio indicates that women earn 83 cents for each
dollar earned by a man, this figure, which refers to the pay
disparity between the average man and the average woman,
obscures the vast differences in the earnings of women of different
races and ethnicities. Black and Hispanic women have the widest
pay gap ratio relative to white men, at 63% for Black women and
57% for Hispanic women. White women’s gender pay gap ratio is
just below the average for all women at 79%.113
While the gender wage gap has narrowed over the past 60 years,
progress towards closing it has stalled, even as vast racial and
ethnic disparities remain. Structural solutions that ensure all
workers have the care infrastructure they need in order to
participate fully in the labor market and that address the systemic
devaluing of work done by women will be necessary to fully
address this gap.
Access to safe and legal abortion, in addition to being an issue of
bodily autonomy and reproductive rights, is also a matter of
economic equality and opportunity for women. Many states put
unnecessary restrictions on women seeking abortions, restrictions
that have no basis in medical science and imperil women’s health
30
and well-being.114 Access to safe and legal abortion increased
women’s probability of graduating college by 72%.115 The effect
was even larger for Black women, whose chances of completing
college increased two- to three-fold. Being able to delay
motherhood by one year due to access to legal abortion increased
women’s wages by 11% on average.116 Access to abortion enables
people to make the decisions that are right for them and their
financial security, which is also essential for advancing broadly
shared economic growth.
Older workers face ongoing discrimination in the workforce
Older workers, generally defined as those 55 and above, made up
a quarter of the workforce in 2020, but the coronavirus pandemic
has pushed a disproportionate share of these workers out of the
workforce.117 From April to September of 2020, for the first time
in 50 years, the unemployment rate for older workers (55+) was
higher than that of mid-career workers (age 35 to 54) in a sixmonth rolling average.118 In 2021, there were still more than one
million unemployed older workers, and nearly half had been
looking for work for more than 27 weeks.119
The pandemic also shed light on the erosion in earnings and job
quality that older workers had already experienced in recent
decades. By 2016, the wage premium for an additional year of
tenure had fallen by nearly half from its 2000 peak, and nearly
30% of workers 55 to 64 reported working jobs that required “lots
of physical effort” most or all the time.120 These outcomes and the
growing retirement insecurity that erodes the bargaining power of
older workers are exacerbated by age discrimination.121
Age discrimination not only creates unlawful barriers for older
workers in their employment, it also hurts the economy as a whole.
Preconceived notions about the capacities and expenses associated
31
with older workers can make it harder for them to find and retain
work.122 In 2018, age discrimination of all types is estimated to
have cost the United States $850 billion.123 Without intervention,
this cost is estimated to reach nearly $4 trillion by 2050.124
Creating an Older Workers Bureau at the Department of Labor,
enhancing retirement security for older workers and enforcing
laws against age discrimination would assist older workers and
help them continue contributing their talents and wisdom in the
workplace.
32
CHAPTER 3: PRUDENT PUBLIC INVESTMENTS SPUR
LONG-TERM ECONOMIC GROWTH AND CREATE
ECONOMIC OPPORTUNITIES FOR ALL
The American Rescue Plan was essential to help families weather
the immediate impact of the coronavirus pandemic and to
jumpstart the economic recovery, but additional investments are
needed to sustain long-term economic growth and build shared
prosperity for all U.S. workers and families. Investing in child care
would reduce costs for families, help parents enter the workforce
and improve social mobility. For example, the expanded Child
Tax Credit included in the Rescue Plan demonstrated the
effectiveness of investments in families for fighting poverty and
creating economic opportunities for parents and children.
Investment in infrastructure, innovation and manufacturing will
also power long-term economic growth and bring down
inflationary pressures. The bipartisan Infrastructure Investment
and Jobs Act will help re-build critical infrastructure, creating
jobs, reducing costs for businesses and making U.S. infrastructure
more resilient to the impact of climate change. Additional funding
in research and manufacturing will help spur innovation and
continue the boom in manufacturing jobs that started under
President Biden. Finally, investments in clean energy will create
new jobs, reduce U.S. dependence on fossil fuels and fight the ongoing impact of climate change.
Investing in families and the care economy will create jobs and
reduce costs
Investing in the care economy will help working families and
create long-term economic growth
33
Strong labor force participation is a key input to economic growth,
but the labor force participation rate in the United States among
both men and women has fallen in recent decades.125 A critical
cause of the decline among women is the lack of structural support
for their full economic participation. Because responsibility for
providing care continues to fall disproportionately on women,
policies such as paid leave and affordable child care would
increase women’s labor force participation.
Historically, boosting women’s labor force participation has had a
profound and positive impact on individual, family and overall
economic conditions. As more women entered the labor force over
the 20th century, a parallel trend emerged: wages for low-income
workers fell and stagnated for middle-income workers.126
Women’s greater participation in the formal labor market has been
crucial to making up for this lost household income.127 Data from
before the coronavirus pandemic showed that two-thirds of
mothers in married couples and three-quarters of unmarried
mothers were employed outside the home.128 Policies that support
families and women’s full participation in the labor market, such
as paid leave and child care, are crucial to strong, stable economic
growth.
Investments that boost women’s labor force participation rates
would generate not just stronger economic outcomes for their
families, but the entire economy. Estimates show that investing in
early childhood education alone can have large economic returns,
yielding up to $9 in future gains for every $1 invested in the
current system and creating significant benefits both for
participating families and the economy as a whole.129 Inadequate
access to paid leave and affordable child care reduces U.S. GDP
by $650 billion—2.9% of total GDP—every year because women
34
are kept back from the workforce, according to analysis by the
National Partnership for Women and Families.130
Care economy investments will boost social mobility and raise
incomes for millions of people
Investing in affordable child care is not only important for
boosting labor force participation today, it is also important for
improving workforce productivity and workers’ wages in the
future.
Ensuring that children receive quality care, attention and
education in their early years sets them on a path to better
educational, health and economic outcomes far into the future.
Investment in early childhood supports the social and cognitive
developments that underlie the skills that are rewarded in life.131
Research has found that children who attend preschool grow up to
be healthier, better educated and more productive workers who
pay more in taxes and are less likely to be involved in the criminal
justice system or to access income support programs than those
who did not attend preschool.132 Preschool attendees also have
higher lifetime earnings, a key metric of upward mobility, and go
on to earn as much as 60% more than their peers who did not
attend preschool.133
The expanded Child Tax Credit proved to be an enormously
effective tool for helping families, children and the economy
The Child Tax Credit (CTC) expansion included in the American
Rescue Plan was one of the largest-ever single-year tax cuts for
families with children. The Rescue Plan made the CTC fully
refundable and dramatically increased the value of the credit from
$2,000 per child to up to $3,600 per child under age 6 and $3,000
per child between ages 6 and 17. Advance payments of the
expanded CTC, paid out in monthly installments for six months in
35
2021, helped more than 61 million children from over 36 million
families.134 Changes to the CTC made under the Rescue Plan
enabled many previously ineligible low-income families to
receive the full credit and put money in the pockets of working
families to pay for household expenses.
The expanded CTC was the primary driver of record-low child
poverty levels in 2021. The expanded CTC, alone, reduced
monthly child poverty by 30% and is credited with keeping 3.7
million children out of poverty while the policy was in effect.135
More than 80% of the CTC’s poverty reduction came from making
the credit fully refundable for families with little or no income.136
Real-time Census Household Pulse Survey data showed that
advance CTC payments provided much-needed income support to
families. Most spent their advance CTC payments immediately on
household necessities, such as food and rent, or used the payments
to pay off debt. Similarly, families who received the CTC portions
of their 2021 federal tax refunds used the funds to pay off debt or
cover household necessities soon after receiving them.137
Economic research has shown how the CTC would generate
economic benefits for society as a whole if made permanent.
Columbia University researchers found that child allowance
policies, including the expanded CTC, generate “very high net
returns for the U.S. population.”138 The researchers also estimated
that a permanent expansion of the CTC would cost $97 billion per
year and generate social benefits of $982 billion per year—or $10
in benefits for every $1 of investment.
36
Investments in infrastructure, innovation and manufacturing
will improve economic productivity and create jobs
The bipartisan Infrastructure Investment and Jobs Act will rebuild
America’s crumbling infrastructure
Investments in infrastructure, innovation and manufacturing will
help power long-term economic growth and bring down
inflationary pressures. The bipartisan Infrastructure Investment
and Jobs Act, which President Biden signed into law in November
2021, will help create jobs and strengthen the economy by
facilitating these types of investments.
The bipartisan infrastructure law invests $550 billion to help
reverse decades of underinvestment in American infrastructure.
Recent Joint Economic Committee analysis showed that federal
infrastructure investment over the past two decades regularly fell
below 3% of total federal spending. In comparison, federal
investment in infrastructure often exceeded or came close to 5%
of total federal spending before 1980.139
According to the Economic Policy Institute, over the next decade,
the bipartisan infrastructure law will support approximately
772,000 jobs per year.140 Investments in roads, bridges, freight
rail, airports and cargo ports will strengthen supply chains and
improve productivity, which will advance sustained economic
growth and reduce long-term inflation.
Investing in innovation and research is essential for keeping the
United States economically competitive
Congress is also considering bipartisan innovation legislation—
the America COMPETES Act passed by the House and the United
States Innovation and Competition Act (USICA) passed by the
Senate—that would make critical investments for U.S. economic
37
growth and for U.S. competitiveness in the global economy.141
The bipartisan innovation bills would address vulnerabilities in
U.S. supply chains that were highlighted by the coronavirus
pandemic. This legislation would invest in supply chains for
critical technologies, such as semi-conductors, and would support
all stages of critical technology production in the United States,
beginning with cutting-edge research and continuing through to
domestic manufacturing. The bills would also improve the United
States’ competitive edge internationally by spurring innovation
and harnessing it to create new jobs, companies and industries.
Research and technological innovation, especially in areas such as
advanced manufacturing, are foundational for future economic
growth.142 From basic research to technological development to
entrepreneurship, new products and approaches can support new
businesses or entire industries, which leads to improved living
standards and economic development. The bipartisan innovation
legislation would help keep the United States on the cutting edge
of technological development, which includes developments in
artificial intelligence, quantum computing, biotechnology and
advanced energy.
Addressing climate change is critical to safeguarding America’s
economic well being
Addressing climate change will help drive economic growth,
while also protecting families from the dangers and costs of
extreme weather. Dramatically cheaper clean technology, along
with energy security concerns, amplify the economic benefits of
transitioning away from fossil fuels. The cost of inaction rises each
year, and the benefits of acting on climate change have never been
greater than they are today.
38
Climate change will have major social and economic
consequences for the United States.
The economic cost of inaction on climate change is large and
growing. Climate change is already making costly extreme
weather events more common: In 2020, extreme weather disasters
cost almost $100 billion and, in 2021, extreme weather costs
increased almost 50% to nearly $150 billion.143 Warmer
temperatures also weaken major drivers of economic growth by
lowering labor supply, constricting workers’ productivity and
cutting family incomes.144 Extreme weather also creates feedback
effects that destabilize energy markets and raise costs for heating
and electricity.145
Inaction on climate has already exacerbated the number of
incidences of extreme weather and will lead to more devastating
impacts on communities across the United States,
disproportionately harming marginalized and low-income
communities. Hispanic Americans face disproportionate earnings
risk from climate change, while Black Americans are 40% more
likely to live in areas with the greatest expected increases in
mortality due to climate change.146
Investments in clean energy will reduce costs for families and fight
climate change
Innovation in clean energy technology has dramatically reduced
the cost of transitioning away from fossil fuels, which is necessary
to lowering costs for families and increasing energy security. The
cost of solar power has gone down significantly in the past decade;
while wind power is already one of the lowest-cost energy sources
available.147 As global supply chain disruptions and Putin’s
invasion of Ukraine have pushed up energy prices around the
world, the cost advantages of clean energy have only grown.148
39
Investments in clean energy production and transmission will
allow for more clean energy to reach families, while electrifying
homes will reduce costs and bring down carbon emissions.149
Moving towards clean-energy transportation will help reduce
costs for families while fighting climate change. Investments in
electric vehicle charging infrastructure will allow more families to
drive without emitting climate warming fumes or paying for gas.
Electric vehicles insulate drivers from gas price volatility and are
already reducing oil consumption by 1.5 million barrels per day
worldwide.150 The battery technology that has been a choke point
for electric vehicle expansion has also seen dramatic cost declines
over the last decade, with Lithium battery prices falling 89% since
2010.151
The bipartisan Infrastructure Investment and Jobs Act makes
enormous strides in clean energy transmission, climate resilience
and clean transportation. The bipartisan legislation will invest $73
billion in clean energy transmission, which includes researching,
building and expanding resilient transmission and electricity
distribution technologies and clean renewable energy.152 The
Economic Policy Institute estimated that the bipartisan legislation
will support more than 81,000 jobs each year related to power
infrastructure.153 The legislation also invests $39 billion to expand
and modernize public transit, $7.5 billion to build out a national
network of electric vehicle chargers and $5 billion to deliver zero
and low emission school buses nationwide. 154
40
CHAPTER 4: THE STRONG ECONOMIC RECOVERY AND
A FAIRER TAX CODE CREATE THE FISCAL SPACE FOR
PUBLIC INVESTMENTS
The U.S. fiscal picture has improved significantly under President
Biden
Under President Biden, the federal government’s budget deficit
has been reduced, and the U.S. fiscal picture has improved
significantly. In just the first year of the Biden administration, the
federal budget deficit was reduced by more than $350 billion.
According to estimates from the Treasury Department, the budget
deficit is expected to fall by $1.5 trillion in fiscal year 2022, which
would be the largest one-year decrease in the deficit in U.S.
history. The Treasury Department expects to pay down the
national debt held by the public this quarter, which has not
occurred since 2016.155
Recent analysis from the Congressional Budget Office (CBO)
showed that the budget deficit during the initial seven months of
fiscal year 2022 was approximately one-fifth of the level during
the same time frame in the previous fiscal year, with revenues up
39% ($843 billion) and outlays down 18% ($729 billion).156 CBO
projects that the budget deficit will drop from $2.8 trillion to $1.0
trillion in 2022, and will continue to decrease in 2023.157
Making the tax code fairer would support strong economic
growth
Increasing the taxes that big corporations and the wealthy pay
would help drive economic growth by funding investments in
infrastructure and working families, while incentivizing
reinvestment of capital in more economically productive
activities.158 A fairer tax code would lower costs for middle- and
41
lower-income households, increase productivity and bring down
inflationary pressure.
Economic data and research clearly show that revenue-raising tax
provisions that make the tax code fair and progressive are
consistent with strong, broadly shared economic growth.
Similarly, evidence from tax cuts on the wealthy and big
corporations have failed to produce additional investment or wage
growth.159 This holds true because investors continue to look for
the highest return, and economic growth is not affected by
increased taxes on capital.160 Data from U.S. states show that tax
cuts at the federal level for the bottom 90% of earners can boost
job growth, but tax cuts for the top 10% do not.161
The U.S. income tax code violates many of the basic tenets of a
fair tax system, allowing many big corporations and wealthy
individuals to get away with paying little to nothing in federal
income taxes. For example, the Institute on Taxation and
Economic Policy found that 55 of the largest U.S.
corporations paid no federal corporate income taxes in 2020.
Similarly, reporting from ProPublica revealed that the
country’s wealthiest individuals pay little to nothing in personal
income taxes.162 A fair tax system would ensure low- and middleincome Americans do not pay more in taxes than many big
corporations or wealthy individuals.
Asking big corporations to pay their fair share would level the
playing field of U.S. businesses
To make the tax code fairer, the Biden administration has proposed
changes to corporate income taxes. Notably, President Biden
proposed increasing the corporate income tax rate from 21% to
28%.163 The President’s proposed rate is still substantially lower
than the 35% top corporate tax rate that was in place for several
42
decades, including during the economic boom of the 1990s.
Raising the corporate income tax rate will increase tax
progressivity and reduce income inequality, while raising revenue
for infrastructure and other proposals that are needed to sustain
broadly shared economic growth.
Additionally, the Biden administration won international backing
from nearly 140 countries for a 15% global minimum tax.164 The
agreement would prevent large companies from shifting their
profits to tax havens by requiring them to pay taxes in the places
where their products are sold. The global minimum tax of 15%,
instituted on a country-by-country basis, would end incentives for
U.S. corporations to shift profits and jobs abroad. This outcome is
ensured by other countries’ commitments to abide by the
agreement. These tax changes would level the playing for
domestic businesses to compete with large, multinational
corporations and would end the race to the bottom in international
corporate taxation.
Making the individual income tax code fairer would reduce
income inequality while promoting economic growth that is
broadly shared
President Biden has also proposed a number of changes to the
individual income tax code to ensure that the wealthy pay their fair
share. Last year, the Office of Management and Budget and the
Council of Economic Advisers estimated that billionaires paid an
average federal tax rate of just 8.2% between 2010 and 2018.165
To make the federal income tax more fair, the President proposed
a billionaire minimum income tax, which would impose a 20%
minimum tax on households with more than $100 million in
assets.166 In addition, President Biden’s proposal would tax both
wage income and unrealized gains, such as stock growth.167 If
enacted, this tax would fall largely on the country’s more than 700
43
billionaires. The White House estimates that this proposal would
raise $360 billion in new revenue over the next 10 years.168
President Biden also proposed taxing unrealized gains at death to
prevent the wealthiest Americans from sidestepping billions of
dollars in taxes and to stop incentivizing the holding of assets for
tax avoidance.169
Increased funding for tax enforcement will help raise revenue and
ensure greater tax fairness
Increasing enforcement of federal tax policies will help ensure that
all taxpayers, regardless of income, actually pay what they owe.
The complexity of the current tax system has made it easier for
wealthy taxpayers to hide portions of their income from the
Internal Revenue Service (IRS), thereby facilitating tax avoidance.
As a result, the tax burden in this country falls disproportionately
on those whose income is derived largely from wages because
wage information is reported automatically to the IRS. Taxpayers
who derive income from other sources, such as capital gains, tend
to be the wealthiest Americans and are better positioned to
underreport their income to avoid paying taxes. The gap between
federal tax owed and what is actually paid—called the tax gap—is
estimated to cost the federal government approximately $600
billion a year.170
As a result of chronic disinvestment in the IRS, audit rates on those
making over $1 million per year have fallen by more than 60%
over the last decade.171 This low audit rate has led to a two-tiered
tax system: one for the wealthiest Americans and one for
everybody else. Investing in additional enforcement would enable
the IRS to focus on pursuing only those with income greater than
$400,000, as the President has proposed.172 President Biden has
called for providing the IRS with additional enforcement power
and an extra $80 billion over the next 10 years to help crack down
44
on tax evasion by high-earners and large corporations.173 Studies
have shown that investments of this magnitude could generate
more than $2 trillion over the next two decades.174 The Treasury
Department specifically found that these reforms would raise $1.6
trillion in the second decade because investments in the IRS would
need several years to reach their ultimate payoff.175 In addition,
reforms that protect, empower and reward whistleblowers who
report tax fraud would complement the enforcement powers of the
IRS and deter tax evasion. Revenue raised through increased tax
enforcement would bring down the federal budget deficit and
would be spent on programs that would dampen long-term
inflationary pressures.
45
CONCLUSION
The United States has experienced a strong economic recovery
from the coronavirus pandemic, but long-standing economic
disparities remain and new challenges to broad-based economic
growth lie ahead. Because of the strength of the recovery, the
United States is well positioned to overcome current and future
challenges to build shared economic prosperity for all. Policies
that invest in the care economy, rebuild infrastructure, spur
innovation and transition the United States to clean, renewable
energy will sustain economic growth over the long term and
address real problems facing U.S. workers and families.
46
ENDNOTES
Joint Economic Committee, “President Biden Continues the Trend Of Strong
Economic Growth and Job Creation Under Democratic Presidents,” March 8,
2022, https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ContentRecord_id=223AA56C-B749-4062-8339-875469DD6C53;
Algernon Austin, Dean Baker, Dan Beeton, Hayley Brown, Julie Yixia Cai,
Kevin Cashman, Shawn Fremstad, Michael Galant, Jake Johnston, Brett Heinz
and Alexander Main, “Assessing the First Year of Biden, in Graphs,” Center
for Economic and Policy Research, February 25, 2022,
https://cepr.net/report/sotu-2022/.
1
Joseph R. Biden Jr., “Joe Biden: My Plan for Fighting Inflation,” Wall Street
Journal, May 30, 2020, https://www.wsj.com/articles/my-plan-for-fightinginflation-joe-biden-gas-prices-economy-unemployment-jobs-covid11653940654.
2
Joint Economic Committee, “President Biden Continues the Trend Of Strong
Economic Growth and Job Creation Under Democratic Presidents,” March 8,
2022, https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ContentRecord_id=223AA56C-B749-4062-8339-875469DD6C53.
3
Federal Reserve Bank, “Summary of Economic Projections,” December 16,
2020,
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20201216.p
df; Congressional Budget Office, “The Budget and Economic Outlook,”
February 2021, https://www.cbo.gov/publication/56991.
4
Adam S. Hersh, “‘Build Back Better’ agenda will ensure strong, stable
recovery in coming years,” Economic Policy Institute, September 16, 2021,
https://www.epi.org/publication/iija-budget-reconciliationjobs/?chartshare=235936-235941#Table-2.
5
6
Federal Reserve Economic Data, Federal Reserve Bank of St. Louis, All
Employees, Manufacturing, https://fred.stlouisfed.org/graph/?g=PCfs.
Joint Economic Committee, “March Update: The U.S. Added Manufacturing
Jobs Across the Country Under President Biden,” March 21, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=B82EFEA7-739E-43ED-8E0C-1D8F0FD1FCA1.
7
Joint Economic Committee, “Decades of Manufacturing Decline and
Outsourcing Left U.S. Supply Chains Vulnerable to Disruption,” February 1,
2022, https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=ADE35C29-19AD-499B-9D0A-C0DDBD5B3C41.
8
47
David H. Autor, David Dorn and Gordon H. Hanson, “The China Shock:
Learning from Labor Market Adjustment to Large Changes in Trade,” NBER
Working Paper, January 2016, https://www.nber.org/papers/w21906.
9
Alex Rowell, “What Everyone Should Know About America’s Diverse
Working Class,” Center for American Progress Action Fund, December 11,
2017, https://www.americanprogressaction.org/article/everyone-knowamericas-diverse-working-class/.
10
William B. Bonvillian, “US manufacturing decline and the rise of new
production innovation paradigms,” Organisation for Economic Co-operation
and Development, 2017, https://www.oecd.org/unitedstates/us-manufacturingdecline-and-the-rise-of-new-production-innovationparadigms.htm#:~:text=Between%202000%20and,income%20inequality%20
problem.%C2%A0.
11
Joint Economic Committee, “New Businesses Boomed Across the Country
and Reached Record Highs Under President Biden,” May 4, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=C9C6A482-76CB-4D02-99F6-02A637FE7A12.
12
Joint Economic Committee, “New Businesses Boomed Across the Country
and Reached Record Highs Under President Biden,” May 4, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=C9C6A482-76CB-4D02-99F6-02A637FE7A12.
13
Joint Economic Committee, “New Businesses Boomed Across the Country
and Reached Record Highs Under President Biden,” May 4, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=C9C6A482-76CB-4D02-99F6-02A637FE7A12.
14
Joint Economic Committee, “New Businesses Boomed Across the Country
and Reached Record Highs Under President Biden,” May 4, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=C9C6A482-76CB-4D02-99F6-02A637FE7A12.
15
Joint Economic Committee, “Building an Economy that Embraces and
Empowers Black Entrepreneurship,” February 22, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/2/building-aneconomy-that-embraces-and-empowers-black-entrepreneurship; Federal
Reserve Bank, “Small Business Credit Survey: 2021 Report on Firms Owned
by People of Color,” 2021,
https://www.fedsmallbusiness.org/medialibrary/FedSmallBusiness/files/2021/
sbcs-report-on-firms-owned-by-people-of-color.
16
The White House, “Fact Sheet: The New Small Business Boom Under the
Biden-Harris Administration,” January 25, 2022,
https://www.whitehouse.gov/briefing-room/statements17
48
releases/2022/01/25/fact-sheet-the-new-small-business-boom-under-thebiden-harris-administration/; The White House, “The Small Business Boom
Under the Biden-Harris Administration,” April 2022,
https://www.whitehouse.gov/wp-content/uploads/2022/04/President-BidenSmall-Biz-Boom-full-report-2022.04.28.pdf.
Joint Economic Committee, “New Businesses Boomed Across the Country
and Reached Record Highs Under President Biden,” May 4, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=C9C6A482-76CB-4D02-99F6-02A637FE7A12.
18
Bureau of Labor Statistics, “Consumer Price Index – May 2022,” June 10,
2022, https://www.bls.gov/news.release/pdf/cpi.pdf.
19
Martin Arnold, “Eurozone Inflation Hits Record 8.1%,” Financial Times,
May 31, 2022, https://www.ft.com/content/ea6597bf-9bcd-414a-959c6806f7c65fab.
20
Joint Economic Committee, “New Data and Studies Confirm the Enormous
Economic Benefits Provided by the Expanded Child Tax Credit,” April 14,
2022, https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=02FF0E7B-B179-45D4-AA71-28A353105572.
21
Joint Economic Committee, “New Data and Studies Confirm the Enormous
Economic Benefits Provided by the Expanded Child Tax Credit,” April 14,
2022, https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=02FF0E7B-B179-45D4-AA71-28A353105572.
22
Joint Economic Committee, “New Businesses Boomed Across the Country
and Reached Record Highs in 2021 Under President Biden,” May 4, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=C9C6A482-76CB-4D02-99F6-02A637FE7A12.
23
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan,’” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
24
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan,’” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
25
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan,’” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statements26
49
releases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan,’” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
27
The White House, “White House Announces Additional Actions to Help
Families Afford Energy Bills, Building on Historic Investments,” February 1,
2022, https://www.whitehouse.gov/briefing-room/statementsreleases/2022/02/01/white-house-announces-additional-actions-to-helpfamilies-afford-energy-bills-building-on-historic-investments/.
28
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan,’” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescueplan/#:~:text=Made%20PPP%20available,Through%20the%20PPP.
29
Amara Omeokwe, “Biden Administration Moves to Tilt Pay and Power
Towards Workers,” The Wall Street Journal, July 21, 2021,
https://www.wsj.com/articles/biden-administration-moves-to-tilt-pay-andpower-toward-workers-11627378380.
30
The White House, “FACT SHEET: Biden-Harris Administration Issues an
Executive Order to Raise the Minimum Wage to $15 for Federal Contractors,”
April 27, 2021, https://www.whitehouse.gov/briefing-room/statementsreleases/2021/04/27/fact-sheet-biden-harris-administration-issues-anexecutive-order-to-raise-the-minimum-wage-to-15-for-federal-contractors/.
31
Amara Omeokwe, “Biden Administration Moves to Tilt Pay and Power
Towards Workers,” The Wall Street Journal, July 21, 2021,
https://www.wsj.com/articles/biden-administration-moves-to-tilt-pay-andpower-toward-workers-11627378380.
32
Ellora Derenoncourt, Clemens Noelke and David Weil, “Spillover Effects
from Voluntary Employer Minimum Wages,” SSRN, February 28, 2021,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793677.
33
34
Office of the United States Trade Representative, Executive Office of the
President, “FACT SHEET: Biden Administration Reaches Agreement with
Mexico on GM Silao Rapid Response Action and Delivers Results for
Workers,” July 8, 2021, https://ustr.gov/about-us/policy-offices/pressoffice/fact-sheets/2021/july/fact-sheet-biden-administration-reachesagreement-mexico-gm-silao-rapid-response-action-and-delivers.
50
35
Office of the United States Trade Representative, Executive Office of the
President, “FACT SHEET: Biden Administration Reaches Agreement with
Mexico on GM Silao Rapid Response Action and Delivers Results for
Workers,” July 8, 2021, https://ustr.gov/about-us/policy-offices/pressoffice/fact-sheets/2021/july/fact-sheet-biden-administration-reachesagreement-mexico-gm-silao-rapid-response-action-and-delivers.
Federal Reserve Bank of New York, “Global Supply Chain Pressure Index
(GSCPI),” May 18, 2022,
https://www.newyorkfed.org/research/policy/gscpi#/interactive.
36
Reuters, “U.S. oil wells, refineries shut as winter storm hits energy sector,”
February 15, 2022, https://www.cnbc.com/2021/02/15/oil-refineries-shut-astexas-energy-industry-reels-from-deep-freeze.html; Congressional Research
Service, “Supply Disruptions and the U.S. Economy,” May 13, 2022,
https://crsreports.congress.gov/product/pdf/IN/IN11926.
37
Congressional Research Service, “Summary of Selected Biden
Administration Actions on Supply Chains,” May 13, 2022.
https://crsreports.congress.gov/product/pdf/IN/IN11927.
38
David J. Lynch, “Biden sees gains in supply chain battle, but the fight isn’t
over,” The Washington Post, November 26, 2022,
https://www.washingtonpost.com/us-policy/2021/11/26/biden-supply chainports/.
39
Vanessa Yurkevich, “Port of Los Angeles traffic sets record in 2021,” CNN,
January 4, 2022, https://www.cnn.com/2022/01/04/business/traffic-losangeles-port-record/index.html.
40
Hope Yen, “Buttigieg doles out $241M to US ports to boost supply chain,”
December 23, 2021, https://www.cnn.com/2022/01/04/business/traffic-losangeles-port-record/index.html.
41
White House, “FACT SHEET: The Biden-Harris Action Plan for America’s
Ports and Waterways,” November 9, 2021,
https://www.whitehouse.gov/briefing-room/statementsreleases/2021/11/09/fact-sheet-the-biden-harris-action-plan-for-americasports-and-waterways/. Adam S. Hersh, “‘Build Back Better’ agenda will
ensure strong, stable recovery in coming years,” September 16, 2021,
https://www.epi.org/publication/iija-budget-reconciliationjobs/?chartshare=235936-235941#Table-2.
42
White House, “FACT SHEET: The Biden-Harris Administration Trucking
Action Plan to Strengthen America’s Trucking Workforce,” December 16,
2021, https://www.whitehouse.gov/briefing-room/statementsreleases/2021/12/16/fact-sheet-the-biden-%E2%81%A0harris-administrationtrucking-action-plan-to-strengthen-americas-trucking-workforce/.
43
51
Joint Economic Committee, “Democrats are Working to Fight Inflation,
Lower Costs and Address Supply Shortages,” June 2, 2022,
https://www.jec.senate.gov/public/_cache/files/5d97e2eb-860c-4112-afbc77138fb52414/democrats-are-working-to-fight-inflation-and-lower-costsfinal.pdf.
44
Joint Economic Committee, “Democrats are Working to Fight Inflation,
Lower Costs and Address Supply Shortages,” June 2, 2022,
https://www.jec.senate.gov/public/_cache/files/5d97e2eb-860c-4112-afbc77138fb52414/democrats-are-working-to-fight-inflation-and-lower-costsfinal.pdf.
45
Joint Economic Committee, “Democrats are Working to Fight Inflation,
Lower Costs and Address Supply Shortages,” June 2, 2022,
https://www.jec.senate.gov/public/_cache/files/5d97e2eb-860c-4112-afbc77138fb52414/democrats-are-working-to-fight-inflation-and-lower-costsfinal.pdf.
46
Joint Economic Committee, “Democrats are Working to Fight Inflation,
Lower Costs and Address Supply Shortages,” June 2, 2022,
https://www.jec.senate.gov/public/_cache/files/5d97e2eb-860c-4112-afbc77138fb52414/democrats-are-working-to-fight-inflation-and-lower-costsfinal.pdf.
47
Joint Economic Committee, “The Economic Status of Black Americans:
National and State Level Data,” February 2022,
https://www.jec.senate.gov/public/_cache/files/12df308c-d416-4376-b19d17e277f65117/02172022-bhmchartpack-final.pdf.
48
49
Joint Economic Committee calculation from median usual weekly earnings
of full-time wage and salary workers by selected characteristics, Bureau of
Labor Statistics, April 15, 2022,
https://www.bls.gov/news.release/pdf/wkyeng.pdf.
Michelle Holder, “Testimony before the U.S. Congress Joint Economic
Committee,” June 9, 2021,
https://www.jec.senate.gov/public/_cache/files/cb0d2bd5-5820-4293-8dadc820fee2e831/2021-michelle-holder-testimony-jec-gender-wage-gap-hearingjune-9.pdf.
50
Joint Economic Committee, “The Economic Legacy of the 1921 Tulsa Race
Massacre: Today’s Racial Wealth Gap,” May 27, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/5/the-economiclegacy-of-the-1921-tulsa-race-massacre-today-s-racial-wealth-gap.
51
Joint Economic Committee, “The Economic Legacy of the 1921 Tulsa Race
Massacre: Today’s Racial Wealth Gap,” May 27, 2021,
52
52
https://www.jec.senate.gov/public/index.cfm/democrats/2021/5/the-economiclegacy-of-the-1921-tulsa-race-massacre-today-s-racial-wealth-gap.
Joint Economic Committee, “Child Care Investment Is Crucial for Future
Economic Growth,” October 20, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=1C53E82A-490A-4E41-B82F-9E42EF27C50C.
53
Joint Economic Committee, “Child Care Investment Is Crucial for Future
Economic Growth,” October 20, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=1C53E82A-490A-4E41-B82F-9E42EF27C50C.
54
Joint Economic Committee, “Child Care Investment Is Crucial for Future
Economic Growth,” October 20, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=1C53E82A-490A-4E41-B82F-9E42EF27C50C.
55
Kate Bahn, “Testimony Before the Joint Economic Committee Hearing on
‘A Second Golden Age: How Concentrated Corporate Power Undermines
Shared Prosperity,’” July 14, 2021,
https://www.jec.senate.gov/public/_cache/files/1e865f12-64e0-4afe-867689a7725e1888/kate-bahn-testimony.pdf
56
57
Thomas Philippon, The Great Reversal: How America Gave Up on Free
Markets, Harvard University Press, 2019.
58
Thomas Philippon, The Great Reversal: How America Gave Up on Free
Markets, Harvard University Press, 2019.
59
Thomas Philippon, The Great Reversal: How America Gave Up on Free
Markets, Harvard University Press, 2019.
Joint Economic Committee, “Concentrated Corporate Power is Holding
Back Our Economy and Undermining Shared Prosperity,” August 16, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=4289DCF0-EEA6-48D8-98FC-2AE20A821789
60
61
Thomas Philippon, The Great Reversal: How America Gave Up on Free
Markets, Harvard University Press, 2019.
Thomas Philippon, “Testimony to the Joint Economic Committee
Regarding the Concentration of Corporate Power,” July 14, 2021,
https://www.jec.senate.gov/public/_cache/files/22348c0a-8ab1-402b-90d240a216d8462b/testimony-philippon-v2.pdf.
62
63
Thomas Philippon, The Great Reversal: How America Gave Up on Free
Markets, Harvard University Press, 2019.
64
Thomas Philippon, The Great Reversal: How America Gave Up on Free
Markets, Harvard University Press, 2019.
53
Joint Economic Committee, “Concentrated Corporate Power is Holding
Back Our Economy and Undermining Shared Prosperity,” August 16, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=4289DCF0-EEA6-48D8-98FC-2AE20A821789.
65
Coinmarketcap.com, “Total Cryptocurrency Market Cap,” May 19, 2022,
https://coinmarketcap.com/charts/.
66
Coinmarketcap.com, “Total Cryptocurrency Market Cap,” May 19, 2022,
https://coinmarketcap.com/charts/.
67
Matt Levine, “Crypto Could Be Contagious,” Bloomberg Opinion, May 12,
2022, https://www.bloomberg.com/opinion/articles/2022-05-12/crypto-crashcontagion-could-go-beyond-bitcoin-ethereum-tether.
68
Gary Gensler, “Remarks Before the Aspen Security Forum,” August 3,
2021, https://www.sec.gov/news/public-statement/gensler-aspen-securityforum-2021-0803#:~:text=This%20asset%20class%20is,and%20sold%20as%20securities.
69
Deloitte, “Market Manipulation in Digital Assets,” March, 2021,
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/FinancialServices/gx-design-market-manipulation-in-digital-assets-whitepaper-v21.pdf.
70
Chris Matthews, “Crypto entrepreneurs have engaged in regulatory
‘arbitrage’ to avoid oversight, says SEC’s Gensler,” Marketwatch, October 21,
2021, https://www.marketwatch.com/story/crypto-entrepreneurs-haveengaged-in-regulatory-arbitrage-to-avoid-oversight-says-secs-gensler11634825783; Michael Hsu, “Cryptocurrencies, Decentralized Finance, and
Key Lessons from the 2008 Financial Crisis,” September 21, 2021,
https://www.occ.gov/news-issuances/speeches/2021/pub-speech-2021101.pdf.
71
Bureau of Labor Statistics, “The Employment Situation – May 2022,” June
3, 2022, https://www.bls.gov/news.release/archives/empsit_06032022.pdf.
72
Bureau of Labor Statistics, “Unemployment rate – American Indian or
Alaska Native,”
https://beta.bls.gov/dataViewer/view/timeseries/LNU04035243.
73
Joint Economic Committee, “The Economic Status of Black Americans:
National and State Level Data,” February 17, 2022,
https://www.jec.senate.gov/public/_cache/files/12df308c-d416-4376-b19d17e277f65117/02172022-bhmchartpack-final.pdf.
74
Joint Economic Committee, “The Economic Status of Black Americans:
National and State Level Data,” February 17, 2022,
75
54
https://www.jec.senate.gov/public/_cache/files/12df308c-d416-4376-b19d17e277f65117/02172022-bhmchartpack-final.pdf.
Joint Economic Committee, “The Economic Status of Black Americans:
National and State Level Data,” February 17, 2022,
https://www.jec.senate.gov/public/_cache/files/12df308c-d416-4376-b19d17e277f65117/02172022-bhmchartpack-final.pdf.
76
Joint Economic Committee, “Education Can Help Narrow the Racial
Wealth Gap, but Structural Solutions Are Needed to Close It,” October 1,
2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/10/educationcan-help-narrow-the-racial-wealth-gap-but-structural-solutions-are-needed-toclose-it.
77
Joint Economic Committee, “Education Can Help Narrow the Racial
Wealth Gap, but Structural Solutions Are Needed to Close It,” October 1,
2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/10/educationcan-help-narrow-the-racial-wealth-gap-but-structural-solutions-are-needed-toclose-it.
78
Jhacova Williams and Valerie Wilson, “Black workers endure persistent
racial disparities in employment outcomes,” August 27, 2019,
https://www.epi.org/publication/labor-day-2019-racial-disparities-inemployment/.
79
William A. Darity, “Testimony before the House Committee on Financial
Services Subcommittee on Oversight and Investigations,” February 24, 2021,
https://financialservices.house.gov/uploadedfiles/hhrg-117-ba09-wstatedarityw-20210224.pdf.
80
Elise Gould and Valerie Wilson, “Black workers face two of the most lethal
preexisting conditions for coronavirus—racism and economic inequality,”
Economic Policy Institute, June 1, 2020,
https://www.epi.org/publication/black-workers-covid/.
81
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan’,” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
82
The White House, “Fact Sheet: The New Small Business Boom Under the
Biden-Harris Administration,” January 25, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/01/25/fact-sheet-the-new-small-business-boom-under-thebiden-harris-administration/; The White House, “FACT SHEET: Biden-Harris
83
55
Report: ‘Advancing Equity Through the American Rescue Plan’,” May 24,
2022, https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
Joint Economic Committee, “Hispanic Entrepreneurs and Businesses Are
Helping to Drive the Economy’s Entrepreneurial Growth and Job Creation,”
November 4, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/11/hispanicentrepreneurs-and-businesses-are-helping-to-drive-the-economy-sentrepreneurial-growth-and-job-creation.
85
Joint Economic Committee, “Hispanic Entrepreneurs and Businesses Are
Helping to Drive the Economy’s Entrepreneurial Growth and Job Creation,”
November 4, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/11/hispanicentrepreneurs-and-businesses-are-helping-to-drive-the-economy-sentrepreneurial-growth-and-job-creation.
86
Joint Economic Committee, “Hispanic Workers Kept the U.S. Economy
Moving During the Coronavirus Pandemic but Face Lower Wages and Poor
Working Conditions,” September 15, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/9/hispanicworkers-kept-the-u-s-economy-moving-during-the-coronavirus-pandemic-butface-lower-wages-and-poor-working-conditions.
84
Bureau of Labor Statistics, “Employed Persons by Detailed Occupation,
Sex, Race, and Hispanic or Latino Ethnicity,”
https://www.bls.gov/cps/cpsaat11.htm; Ryan Zamarripa and Lorena Roque,
“Latinos Face Disproportionate Health and Economic Impacts From COVID19,” Center for American Progress, March 5, 2021,
https://www.americanprogress.org/article/latinos-face-disproportionatehealth-economic-impacts-covid-19/.
87
Joint Economic Committee, “Hispanic Workers Kept the U.S. Economy
Moving During the Coronavirus Pandemic but Face Lower Wages and Poor
Working Conditions,” September 15, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/9/hispanicworkers-kept-the-u-s-economy-moving-during-the-coronavirus-pandemic-butface-lower-wages-and-poor-working-conditions.
88
Joint Economic Committee, “Hispanic Workers Kept the U.S. Economy
Moving During the Coronavirus Pandemic but Face Lower Wages and Poor
Working Conditions,” September 15, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/2021/9/hispanicworkers-kept-the-u-s-economy-moving-during-the-coronavirus-pandemic-butface-lower-wages-and-poor-working-conditions.
89
56
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan’,” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
90
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan’,” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
91
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
92
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
93
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
94
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
95
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
96
Patrice H. Kunesh, “Testimony before the United States Senate Committee
on Indian Affairs,” October 16, 2019,
https://www.minneapolisfed.org/~/media/assets/speeches/2019/us-senatetestimony-lending-opportunities/kunesh-scia-testimony-10112019.pdf?la=en.
97
57
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
98
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan’,” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
99
Joint Economic Committee, “Native American Communities Continue to
Face Barriers to Opportunity that Stifle Economic Mobility,” May 13, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/2022/5/nativeamerican-communities-continue-to-face-barriers-to-opportunity-that-stifleeconomic-mobility.
100
Joint Economic Committee, “The Economic State of Asian Americans,
Native Hawaiians and Pacific Islanders in the United States”, May 26, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=D99173B7-E744-4854-9E13-429C1FB75F6E.
101
Joint Economic Committee, “The Economic State of Asian Americans,
Native Hawaiians and Pacific Islanders in the United States”, May 26, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=D99173B7-E744-4854-9E13-429C1FB75F6E.
102
The White House, “Fact Sheet: Biden-Harris Administration Advances
Equity and Opportunity for Asian American, Native Hawaiian, and Pacific
Islander Communities Across the Country,” January 20, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/01/20/fact-sheet-biden-harris-administration-advances-equityand-opportunity-for-asian-american-native-hawaiian-and-pacific-islandercommunities-across-the-country.
103
104
Data are three-month averages due to small sample sizes. Joint Economic
Committee, “The Economic State of Asian Americans, Native Hawaiians and
Pacific Islanders in the United States”, May 26, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=D99173B7-E744-4854-9E13-429C1FB75F6E.
Rakesh Kochhar and Anthony Cilluffo, “Income Inequality in the U.S. Is
Rising Most Rapidly Among Asians,” Pew Research Center, July 12, 2018,
https://www.pewresearch.org/social-trends/2018/07/12/income-inequality-inthe-u-s-is-rising-most-rapidly-among-asians.
105
58
Joint Economic Committee, “The Economic State of Asian Americans,
Native Hawaiians and Pacific Islanders in the United States”, May 26, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=D99173B7-E744-4854-9E13-429C1FB75F6E.
106
Joint Economic Committee, “The Economic State of Asian Americans,
Native Hawaiians and Pacific Islanders in the United States”, May 26, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=D99173B7-E744-4854-9E13-429C1FB75F6E.
107
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan’,” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
108
The White House, “FACT SHEET: Biden-Harris Report: ‘Advancing
Equity Through the American Rescue Plan’,” May 24, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/05/24/fact-sheet-biden-harris-report-advancing-equity-throughthe-american-rescue-plan/.
109
United States Census Bureau, “Equal Pay Day: March 15, 2022,” March
15, 2022, https://www.census.gov/newsroom/stories/equal-pay-day.html.
110
Francine D. Blau and Lawrence M. Kahn, “The Gender Wage Gap: Extent,
Trends, and Explanations,” Journal of Economic Literature, Vol. 55, No. 3,
September 2017, https://www.aeaweb.org/articles?id=10.1257/jel.20160995.
111
Joint Economic Committee, “Women’s Equal Pay Day Shows Progress
Has Been Made but Further Progress is Needed,” March 11, 2022,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=1D18E7C3-C584-4648-BF2B-6E7F6080021A.
112
113
JEC staff calculations based on data from the U.S. Census Bureau, Current
Population Survey, 1968 to 2021 Annual Social and Economic Supplements
(CPS ASEC), https://www.census.gov/data/tables/time-series/demo/incomepoverty/historical-income-people.html.
Anusha Ravi, “Limiting Abortion Access Contributes to Poor Maternal
Health Outcomes,” Center for American Progress, June 13, 2018,
https://www.americanprogress.org/article/limiting-abortion-accesscontributes-poor-maternal-health-outcomes/.
114
Kelly Jones, “At a Crossroads: The impact of abortion access on future
economic outcomes,” 2021,
https://econpapers.repec.org/paper/amuwpaper/2021-02.htm.
115
59
Ali Abboud, “The Impact of Early Fertility Shocks on Women's Fertility
and Labor Market Outcomes,” SSRN, November 22, 2019,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3512913.
116
Bureau of Labor Statistics, “Civilian labor force by age, sex, race, and
ethnicity, 2000, 2010, 2020, and projected 2030,”
https://www.bls.gov/emp/tables/civilian-labor-force-summary.htm; Owen
Davis, Bridget Fisher, Teresa Ghilarducci and Siavash Radpour, “A First in
Nearly 50 Years, Older Workers Face Higher Unemployment Than MidCareer Workers,” Schwartz Center for Economic Policy Analysis, October 20,
2020, https://www.economicpolicyresearch.org/jobs-report/a-first-in-nearly50-years-older-workers-face-higher-unemployment-than-mid-career-workers.
117
Owen Davis, Bridget Fisher, Teresa Ghilarducci and Siavash Radpour, “A
First in Nearly 50 Years, Older Workers Face Higher Unemployment Than
Mid-Career Workers,” Schwartz Center for Economic Policy Analysis,
October 20, 2020, https://www.economicpolicyresearch.org/jobs-report/afirst-in-nearly-50-years-older-workers-face-higher-unemployment-than-midcareer-workers.
118
119
Bureau of Labor Statistics, "Unemployed persons by occupation, industry,
and duration of unemployment," https://www.bls.gov/cps/cpsaat32.pdf.
Schwartz Center for Economic Policy Analysis, “Chartbook: Retirement
Insecurity and Falling Bargaining Power Among Older Workers,” May 26,
2020, https://www.economicpolicyresearch.org/resource-library/chartbookretirement-insecurity-and-falling-bargaining-power-among-older-workers.
120
Aida Farmand and Teresa Ghilarducci, “Why American Older Workers
Have Lost Bargaining Power,” Schwartz Center for Economic Policy
Analysis, May 2019,
https://www.economicpolicyresearch.org/images/docs/research/retirement_sec
urity/bargaining-power-wp.pdf.
121
U.S. Equal Employment Opportunity Commission, “Age Discrimination,”
https://www.eeoc.gov/age-discrimination.
122
AARP, “The Economic Impact of Age Discrimination,” 2020,
https://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2020/
impact-of-age-discrimination.doi.10.26419-2Fint.00042.003.pdf.
123
AARP, “The Economic Impact of Age Discrimination,” 2020,
https://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2020/
impact-of-age-discrimination.doi.10.26419-2Fint.00042.003.pdf.
124
Isabel V. Sawhill, Richard V. Reeves and Sarah Nzau, “Paid Leave as Fuel
for Economic Growth,” The Brookings Institution, June 27, 2019,
https://www.brookings.edu/blog/up-front/2019/06/27/paid-leave-as-fuel-foreconomic-growth/.
125
60
Lawrence Mishel, Elise Gould and Josh Bivens, “Wage Stagnation in Nine
Charts,” Economic Policy Institute, January 6, 2015,
https://www.epi.org/publication/charting-wage-stagnation/.
126
Heather Boushey and Kavya Vaghul, “Women Have Made the Difference
for Family Economic Security,” Washington Center for Equitable Growth,
April 4, 2016, https://equitablegrowth.org/women-have-made-the-differencefor-family-economic-security/.
127
Sarah Jane Glynn, “Breadwinning Mothers Continue To Be the U.S.
Norm,” Center for American Progress, May 10, 2019,
https://www.americanprogress.org/article/breadwinning-mothers-continue-us-norm/.
128
Joint Economic Committee, “Child Care Investment Is Crucial For Future
Economic Growth,” October 10, 2021,
,https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=1C53E82A-490A-4E41-B82F-9E42EF27C50C.
129
Amanda Novello, “The Cost of Inaction: How a Lack of Family Care
Policies Burdens the U.S. Economy and Families,” National Partnership for
Women & Families, July 2021, https://www.nationalpartnership.org/ourwork/resources/economic-justice/other/cost-of-inaction-lack-of-family-careburdens-families.pdf.
130
Council of Economic Advisers, Executive Office of the President, “The
Economics of Early Childhood Investments,” January 2015,
https://obamawhitehouse.archives.gov/sites/default/files/docs/early_childhood
_report_update_final_non-embargo.pdf.
131
Joint Economic Committee, “Child Care Investment Is Crucial For Future
Economic Growth,” October 10, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?ID=1C53E82A-490A-4E41-B82F-9E42EF27C50C.
132
Council of Economic Advisers, Executive Office of the President, “The
Economics of Early Childhood Investments,” January 2015,
https://obamawhitehouse.archives.gov/sites/default/files/docs/early_childhood
_report_update_final_non-embargo.pdf.
133
Joint Economic Committee, “Update: Six Months of Advance CTC
Payments Have Dramatically Reduced Childhood Poverty and Improve
Family Finances,” December 14, 2021,
https://www.jec.senate.gov/public/index.cfm/democrats/issuebriefs?id=1EC0DEE5-7A94-4C8B-9F77-885DC691C92F.
134
Zachary Parolin, Sophie Collyer and Megan A. Curran, “Sixth Child Tax
Credit Payment Kept 3.7 Million Children Out of Poverty in December,”
Columbia University Center on Poverty and Social Policy, January 18, 2022,
135
61
https://static1.squarespace.com/static/610831a16c95260dbd68934a/t/61ea099
26280d03df62aa31d/1642727841927/Monthly-poverty-December-2021CPSP.pdf.
Arloc Sherman, Chuck Marr and Stephanie Hingtgen, “Earnings
Requirement Would Undermine Child Tax Credit’s Poverty-Reducing Impact
While Doing Virtually Nothing to Boost Parents’ Employment,” Center on
Budget and Policy Priorities, September 23, 2021,
https://www.cbpp.org/research/federal-tax/earnings-requirement-wouldundermine-child-tax-credits-poverty-reducing-impact#_ednref3.
136
Chuck Marr, “Rising Food and Energy Prices Underscore the Urgency of
Acting on the Child Tax Credit,” Center on Budget and Policy Priorities,
March 28, 2022, https://www.cbpp.org/blog/rising-food-and-energy-pricesunderscore-the-urgency-of-acting-on-the-child-tax-credit; Joint Economic
Committee, “New Data and Studies Confirm the Enormous Economic
Benefits by the Expanded Child Tax Credit,” April 14, 2022,
https://www.jec.senate.gov/public/_cache/files/94aad47c-5fbb-4f52-8c1699c6477ed988/new-data-and-studies-confirm-the-enormous-economicbenefits-provided-by-the-expanded-child-tax-credit-final.pdf.
137
138
Irwin Garfinkel, Laurel Sariscsany, Elizabeth Ananat, Sophie M. Collyer,
Robert Paul Hartley, Buyi Wang and Christopher Wimer, “The Benefits and
Costs of a U.S. Child Allowance,” National Bureau of Economic Research,
Working Paper 29854,
https://www.nber.org/papers/w29854?utm_campaign=ntwh&utm_medium=e
mail&utm_source=ntwg17.
Joint Economic Committee, “The Bipartisan Infrastructure Investment and
Jobs Act Will Create Jobs, Strengthen the Economy and Reduce Inflationary
Pressures,” November 29, 2021,
https://www.jec.senate.gov/public/_cache/files/d1342923-d8e8-4c82-b1ea6818a9253e25/econ-benefits-of-bipartisan-infra-deal-fact-sheet.pdf.
139
Adam S. Hersh, “The Build Back Better Act Will Support 2.3 Million Jobs
Per Year in its First Five Years,” Economic Policy Institute, November 10,
2021, https://www.epi.org/blog/the-build-back-better-act-will-support-2-3million-jobs-per-year-in-its-first-five-years/.
140
Joint Economic Committee, “The America COMPETES Act Would Invest
in Cutting-Edge Science and Technology to Protect Critical Supply Chains,
Support Manufacturing Jobs, and Maintain America’s Competitive Edge,”
February 3, 2022, https://www.jec.senate.gov/public/_cache/files/0ebd74554191-4448-8b89-b509ca751d5c/competes-act-fact-sheet-final-feb.pdf.
141
Joint Economic Committee, “The America COMPETES Act Would Invest
in Cutting-Edge Science and Technology to Protect Critical Supply Chains,
Support Manufacturing Jobs, and Maintain America’s Competitive Edge,”
142
62
February 3, 2022, https://www.jec.senate.gov/public/_cache/files/0ebd74554191-4448-8b89-b509ca751d5c/competes-act-fact-sheet-final-feb.pdf.
Adam B. Smith, “2020 U.S. Billion-Dollar Weather and Climate Disasters
in Historical Context,” Climate.gov, January 8, 2021,
https://www.climate.gov/disasters2020; Adam B. Smith, “2021 U.S. BillionDollar Weather and Climate Disasters in Historical Context,” Climate.gov,
January 24, 2022, https://www.climate.gov/news-features/blogs/beyonddata/2021-us-billion-dollar-weather-and-climate-disasters-historical; National
Centers for Environmental Information, “U.S. Billion-Dollar Weather and
Climate Disasters,” 2022, https://www.ncei.noaa.gov/access/billions/.
143
Joshua Graff Zivin and Matthew Neidell, “Temperature and the Allocation
of Time: Implications for Climate Change,” Journal of Labor Economics, Vol.
32, No. 1, January 2014, https://www.jstor.org/stable/10.1086/671766;
Melissa Dell, Benjamin F. Jones and Benjamin A. Olken, “What Do We
Learn from the Weather? The New Climate–Economy Literature,” Journal of
Economic Literature, Vol. 52, No. 3, September 2014,
http://dx.doi.org/10.1257/jel.52.3.740.
144
International Energy Agency, “Gas Market Report, Q4 2021,” October
2021, https://www.iea.org/reports/gas-market-report-q4-2021.
145
U.S. Environmental Protection Agency, “Climate Change and Social
Vulnerability in the United States: A Focus on Six Impacts,” September 2021,
https://www.epa.gov/cira/social-vulnerability-report.
146
147
David Feldman, Vignesh Ramasamy, Ran Fu, Ashwin Ramdas, Jal Desai
and Robert Margolis, “U.S. Solar Photovoltaic System and Energy Storage
Cost Benchmark: Q1 2020,” National Renewable Energy Laboratory, January
2021, https://www.nrel.gov/docs/fy21osti/77324.pdf; U.S. Department of
Energy, “Advantages and Challenges of Wind Energy,”
https://www.energy.gov/eere/wind/advantages-and-challenges-wind-energy.
Ana Swanson, “Ukrainian Invasion Adds to Chaos for Global Supply
Chains,” The New York Times, March 1, 2022,
https://www.nytimes.com/2022/03/01/business/economy/ukraine-russiasupply chains.html.
148
Joint Economic Committee, “How Electrifying Homes Will Reduce
Energy Costs for Families and Help Communities Transition to Clean
Energy,” April 19, 2022,
https://www.jec.senate.gov/public/_cache/files/861f0cd0-dd6c-4b5a-9fc8d0634701f7bf/electrification-fact-sheet-final.pdf.
149
150
Ben Geman, "EVs are shoving aside real volumes of oil", Axios, May 18,
2022, https://www.axios.com/2022/05/18/evs-are-shoving-aside-realvolumes-of-oil.
63
Veronika Henze, “Battery Pack Prices Fall to an Average of $132/kWh,
But Rising Commodity Prices Start to Bite,” BloombergNEF, November 30,
2021, https://about.bnef.com/blog/battery-pack-prices-fall-to-an-average-of132-kwh-but-rising-commodity-prices-start-to-bite/.
151
Joint Economic Committee, “The bipartisan Infrastructure Investment and
Jobs Act will create jobs, strengthen the economy and reduce inflationary
pressures,” November 29, 2021,
https://www.jec.senate.gov/public/_cache/files/d1342923-d8e8-4c82-b1ea6818a9253e25/econ-benefits-of-bipartisan-infra-deal-fact-sheet.pdf.
152
Adam S. Hersh, “‘Build Back Better’ agenda will ensure strong, stable
recovery in coming year,” September 16, 2021.
https://www.epi.org/publication/iija-budget-reconciliationjobs/?chartshare=235936-235941.
153
Joint Economic Committee, “The bipartisan Infrastructure Investment and
Jobs Act will create jobs, strengthen the economy and reduce inflationary
pressures,” November 29, 2021,
https://www.jec.senate.gov/public/_cache/files/d1342923-d8e8-4c82-b1ea6818a9253e25/econ-benefits-of-bipartisan-infra-deal-fact-sheet.pdf.
154
President Joe Biden, “Remarks by President Biden On Economic Growth,
Jobs, and Deficit Reduction,” The White House, May 4, 2022,
https://www.whitehouse.gov/briefing-room/speechesremarks/2022/05/04/remarks-by-president-biden-on-economic-growth-jobsand-deficit-reduction/.
155
Congressional Budget Office, “Monthly Budget Review: April 2022,” May
9, 2022, https://www.cbo.gov/system/files/2022-05/57974-MBR.pdf.
157
Congressional Budget Office, “The Budget and Economic Outlook: 2022
to 2032,” May 2022,
https://www.cbo.gov/publication/58147#_idTextAnchor211.
156
158
Chuck Marr, Samantha Jacoby, George Fenton and Sam Washington,
“Corporate Rate Increase Would Make Taxes Fairer, Help Fund Equitable
Recovery,” Center on Budget and Policy Priorities, May 25, 2021,
https://www.cbpp.org/research/federal-tax/corporate-rate-increase-wouldmake-taxes-fairer-help-fund-equitable-recovery.
Corey Husak, “The relationship between taxation and U.S. economic
growth,” Washington Center for Equitable Growth, June 30, 3021,
https://equitablegrowth.org/the-relationship-between-taxation-and-u-seconomic-growth; Danny Yagan, “Capital Tax Reform and the Real
Economy: The Effects of the 2003 Dividend Tax Cut,” American Economic
Review, Vol. 105, No. 12, December 2015,
https://www.aeaweb.org/articles?id=10.1257/aer.20130098; Ludwig Straub
and Iván Werning, “Positive Long Run Capital Taxation: Chamley-Judd
159
64
Revisited,” National Bureau of Economic Research, Working Paper 20441,
https://www.nber.org/papers/w20441; Danny Yagan, “Capital Tax Reform
and the Real Economy: The Effects of the 2003 Dividend Tax Cut,” American
Economic Review, Vol. 105, No. 12, December 2015,
https://www.aeaweb.org/articles?id=10.1257/aer.20130098.
Jane G. Gravelle and Donald J. Marples, “Tax Rates and Economic
Growth,” Congressional Research Service, January 2, 2014,
https://sgp.fas.org/crs/misc/R42111.pdf.
160
Owen M. Zidar, “Tax Cuts For Whom? Heterogeneous Effects of Income
Tax Changes on Growth and Employment,” National Bureau of Economic
Research, Working Paper 21035, https://www.nber.org/papers/w21035.
161
Matthew Gardner and Steve Wamhoff, “55 Corporations Paid $0 in Federal
Taxes on 2020 Profits,” Institute on Taxation and Economic Policy, April 2,
2021, https://itep.org/55-profitable-corporations-zero-corporate-tax/; Jesse
Eisinger, Jeff Ernsthausen and Paul Kiel, “The Secret IRS Files: Trove of
Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax,”
ProPublica, June 8, 2021, https://www.propublica.org/article/the-secret-irsfiles-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoidincome-tax.
162
U.S. Department of the Treasury, “General Explanations of the
Administration’s Fiscal Year 2023 Revenue Proposals,” March 2022,
https://home.treasury.gov/system/files/131/General-Explanations-FY2023.pdf.
163
Jeff Stein and Seung Min Kim, “Biden, other G-20 world leaders formally
endorse groundbreaking global corporate minimum tax,” The Washington
Post, October 30, 2021, https://www.washingtonpost.com/uspolicy/2021/10/30/biden-g20-global-minimum-tax/.
164
Greg Leiserson and Danny Yagan, “What Is the Average Federal
Individual Income Tax Rate on the Wealthiest Americans?” The White House,
September 23, 2021, https://www.whitehouse.gov/cea/writtenmaterials/2021/09/23/what-is-the-average-federal-individual-income-tax-rateon-the-wealthiest-americans/.
165
U.S. Department of the Treasury, “General Explanations of the
Administration’s Fiscal Year 2023 Revenue Proposals,” March 2022,
https://home.treasury.gov/system/files/131/General-Explanations-FY2023.pdf;
Jeff Stein, “President Biden to unveil new minimum tax on billionaires in
budget,” The Washington Post, March 26, 2022,
https://www.washingtonpost.com/us-policy/2022/03/26/billionaire-taxbudget-biden/; Justin Sink, “Biden to Propose 20% Tax Aimed at Billionaires,
Unrealized Gains,” Bloomberg, March 26, 2022,
166
65
https://www.bloomberg.com/news/articles/2022-03-26/biden-to-propose-20tax-aimed-at-billionaires-unrealized-gains.
Steven M. Rosenthal, “Biden’s New Taxes for Billionaires: One Is Hard,
One Is Easy,” Tax Policy Center, March 31, 2022,
https://www.taxpolicycenter.org/taxvox/bidens-new-taxes-billionaires-onehard-one-easy.
167
The White House, “President’s Budget Rewards Work, Not Wealth with
New Billionaire Minimum Income Tax,”
https://drive.google.com/file/d/1w50t6QtLMNwbdTnuZ_tBxVXMgOoshFw1
/view.
168
U.S. Department of the Treasury, “General Explanations of the
Administration’s Fiscal Year 2023 Revenue Proposals,” March 2022,
https://home.treasury.gov/system/files/131/General-Explanations-FY2023.pdf.
169
Natasha Sarin, “The Case for a Robust Attack on the Tax Gap,” U.S.
Department of Treasury, September 7, 2021,
https://home.treasury.gov/news/featured-stories/the-case-for-a-robust-attackon-the-tax-gap.
170
President Joe Biden, “President Biden Announces the Build Back Better
Framework,” The White House, October 28, 2021,
https://www.whitehouse.gov/briefing-room/statementsreleases/2021/10/28/president-biden-announces-the-build-back-betterframework/.
171
President Joe Biden, “President Biden Announces the Build Back Better
Framework,” The White House, October 28, 2021,
https://www.whitehouse.gov/briefing-room/statementsreleases/2021/10/28/president-biden-announces-the-build-back-betterframework/.
172
U.S. Department of the Treasury, “The American Families Plan Tax
Compliance Agenda,” May 2021,
https://home.treasury.gov/system/files/136/The-American-Families-Plan-TaxCompliance-Agenda.pdf.
173
Natasha Sarin and Larry Summers, “Shrinking the Tax Gap: Approaches
and Revenue Potential,” National Bureau of Economic Research, Working
Paper 26475, November 2019, https://www.nber.org/papers/w26475; Charles
O. Rossotti, Natasha Sarin and Lawrence H. Summers, “Shrinking the Tax
Gap: A Comprehensive Approach,” Taxnotes, December 15, 2020,
https://www.taxnotes.com/featured-analysis/shrinking-tax-gapcomprehensive-approach/2020/11/25/2d7ht.
174
U.S. Department of the Treasury, “The American Families Plan Tax
Compliance Agenda,” May 2021,
https://home.treasury.gov/system/files/136/The-American-Families-Plan-TaxCompliance-Agenda.pdf.
175
66
67
VIEWS OF RANKING MEMBER MIKE LEE
The Employment Act of 1946 created the Joint Economic
Committee and tasked it with promoting “maximum employment,
production, and purchasing power” as the central goals of
economic policymaking. Constrained by the limited Government
set up by our Constitution and guided by free and competitive
enterprise, these goals are the bedrock of a sound economic and
fiscal policy—they are essential to the American pursuit of a more
prosperous future.
In 2021, President Biden’s incoming Administration implemented
policies that slowed employment, stalled production, and eroded
purchasing power—in short, policies that achieved precisely the
opposite of these stated policy goals. The 2022 Economic Report
of the President deflects responsibility for the harm these policies
unleashed on American families through rising prices, suppressed
employment, and insufficient economic growth. It instead
articulates an explicitly political agenda that is at odds with once
shared goals for allowing the American economy to thrive. Our
Response to the Economic Report of the President assesses the
state of the economy and reviews the policy choices that shaped
the current state of inflation, employment, growth, and related
measures of social well-being.
Beginning in 2021, the Biden Administration’s excessive and
reckless fiscal policy stoked the highest inflation rate the United
States has seen in four decades. Inflation gnawed away at
Americans’ wages, savings, and aspirations as households faced
rising costs for groceries, housing, gasoline, and other basic goods.
These surging prices did the most harm to poor and middle-class
households who spend the greatest share of their income on
essentials. As of April 2022, the inflation that has occurred will
68
cost the average American household more than $6,800 over the
next year.
The same policy choices obstructed Americans’ reentry into the
labor market and slowed the return to full employment following
the COVID-19 recession. Expanded benefits across a range of
pandemic programs discouraged Americans from reconnecting to
work. Vaccine mandates prohibited work for some unvaccinated
Americans, school closures made it more difficult for parents to
work, and cash transfers enabled non-work. Low-wage workers
and historically disadvantaged Americans, who enjoyed
unprecedented gains in the pre-pandemic economy, once again fell
behind. Measured against the pre-pandemic trend, more than 6
million workers are currently missing from the labor market due
to policies that discouraged work.
Policies that expanded the size and scope of Government and its
involvement in private sector decision-making held back the pace
of economic production. The Administration’s agenda of
increasingly costly regulations, spending, and taxes stifled new
growth, halted investment, and diminished business confidence.
These policy choices ignored the lessons of the pre-pandemic
economy, where tax cuts and deregulation led to sustained
economic growth, record high median income, and record low
poverty rates for every race and ethnic group.
Equally concerning, policies that proliferated economic and social
restrictions in the wake of the pandemic took a dramatic toll on
America’s institutions of social capital. Social capital is an oftenoverlooked foundation for economic growth and strong labor
markets, describing the strength of relationships across family,
communities, and workplaces. Many Americans lost access to the
social support networks that come from schools, churches,
volunteer organizations, and community groups. Drug overdose
69
deaths spiked, violent crime rose, and marriage rates fell. School
closures caused learning losses that disproportionately harmed the
youngest and lowest-income students.
I have tasked my staff at the Joint Economic Committee with
advising Congress on policies to increase social capital through
reconnecting Americans to work, improving investment in youth,
making it more affordable to raise a family, increasing family
stability, and rebuilding civil society. Our Response assesses the
ways that the Biden Administration’s agenda impoverished these
dimensions of our economic, social, and institutional life.
The Biden Administration’s harmful policy choices highlight an
important truth—Americans benefit from a climate of lower taxes,
less regulation, and more freedom. The current state of the
economy leaves no question that we must rein in the Government
spending that erodes Americans’ purchasing power, remove the
disincentives that discourage Americans from work, reduce the
regulatory barriers that slow the pace of growth, and enable more
people to reconnect with the social relationships that provide life
with meaning and purpose.
I hope the recommendations contained in this Response will serve
as a starting point for policymakers on how we can remove
Government barriers to Americans’ freedom, restore full
employment, production, and purchasing power, and empower
Americans to achieve a future where families of all types prosper.
70
CHAPTER 1: THE IMPORTANCE OF DEFINED GOALS
FOR SOUND ECONOMIC POLICY
The economic policy of the United States should be grounded in
common goals rooted in the American ethos. The Council of
Economic Advisers (CEA) and the Joint Economic Committee
(JEC) are institutions designed to do just that, promote the once
near universally shared goals of maximum employment,
production, and purchasing power. Agreement on these goals
allows Congress and the President to formulate a coherent fiscal
policy for the nation.
To this end, our Response to the Economic Report of the President
(hereafter “Response”) assesses progress in achieving each of the
goals set forth in the Employment Act of 1946 (hereafter
“Employment Act”). Chapters 2–4 focus on the goals of the
Employment Act to promote employment, production, and
purchasing power. Chapter 5 highlights recent trends in social
capital, a central but often overlooked factor underlying economic
growth and general well-being. Social capital describes the
strength of relationships across family, communities, and
workplaces that are the foundation of prosperous nations.1
While economic policy has always been fraught with
disagreements on how to achieve a more prosperous future, until
recently, debates were bounded by the measurable, shared goals
of the Employment Act. After being late in their submission to
Congress, the President’s Budget and the Economic Report of the
President (hereafter “Report”) represent a concerning departure
from the Employment Act’s defined economic policy goals. By no
longer conforming to the consensus goals for economic policy,
Congress and the President have very little to guide the budget
process and the resulting fiscal policy of the nation.
This chapter outlines the history of JEC’s legislative mandate and
the important role the Committee plays in the budget process and
71
informing economic policy more broadly. It then describes how
attention to the goals of the Employment Act has diminished in
recent decades, contributing to persistent budget deficits, a broken
budget process, and incoherent economic policy. Returning to
measurable economic policy goals is key to setting up Americans
for a future of robust economic growth.
The JEC’s Legislative Mandate
In 1946, President Harry S. Truman signed the Employment Act,
establishing a national policy focused on promoting employment,
production, and purchasing power:
The Congress hereby declares that it is the continuing
policy and responsibility of the Federal
Government...to coordinate and utilize all its plans,
functions, and resources for the purpose of creating
and maintaining, in a manner calculated to foster and
promote free competitive enterprise and the general
welfare, conditions under which there will be afforded
useful employment opportunities, including selfemployment, for those able, willing, and seeking to
work, and to promote maximum employment,
production, and purchasing power.2
The Employment Act requires the President to transmit to
Congress the Report each year, reporting on progress in promoting
employment, production, purchasing power, and the policies that
could further these goals. The Employment Act established two
new agencies to carry out this function: The CEA advises the
President in drafting the Report and in recommending policies that
promote the objectives of the Employment Act; the JEC,
comprised of members of the Senate and House, evaluates the
Report and advises Congress on policies that promote the
objectives of the Employment Act.3
72
The Employment Act was later amended by the Full Employment
and Balanced Growth Act of 1978 (also known as the HumphreyHawkins Act). This act supplements the Employment Act with
additional goals, including increasing real income, achieving
balanced growth, reducing the Federal deficit, and improving the
trade balance by increasing exports through free and fair
international trade. The JEC is directed to continue its role in
informing Congress, through hearings and reports, and evaluating
the policies set forth in the Report.4 This is in addition to the
responsibility of the JEC to provide its “views and estimates” of
the President’s Budget as set forth by the Congressional Budget
Act of 1974.
The Importance of Defined Goals in Economic and Fiscal Policy
The Employment Act marked a turning point for U.S. economic
and fiscal policymaking. The first 150 years of American
budgeting was characterized by balanced budgets. Following the
Great Depression and World War II, balanced budgets were
replaced with a mandate for macroeconomic management to meet
the goals of maximum employment, production, and purchasing
power. For more than half a century since the Employment Act
was passed in 1946, these defined goals helped guide economic
policy and helped constrain the Federal Budget.
The early era of balanced budgets was the product of at least two
forces. Throughout the 19th century, U.S. debt was still considered
relatively risky and was thus a costly way to finance Government
operations.5 It was also widely believed that Government debt
enriched the wealthy who purchased the bonds, at the expense of
the taxpayers who have to pay back the debts.6 In the early 1900s,
these two forces began to break down. U.S. debt became a
relatively attractive asset in the early 20th century that was then
solidified in 1944 as part of the Bretton Woods system.7 This
lowered the cost of Federal borrowing around the same time public
opinion became more accepting of Federal debt.
73
Figure 1-1 shows U.S. budget deficits and surpluses between 1820
and 2021. Before the Great Depression, deficits were rare,
occurring in only one-third of years, primarily due to wars. There
was a clear shift in the 1930s, after which deficits became
increasingly more prevalent and the surpluses necessary to pay
down the accumulated debt became less prevalent. After 1930, the
Federal Government ran a deficit in 86 percent of years.
Figure 1-1: Federal Deficits and Surpluses as Percent of GDP,
1820-2021
Source: JEC Calculations; Office of Management and Budget, Historical Tables, Table 1.2, Budget
of the United States Government: Fiscal Year 2023; Cambridge University Press, Historical
Statistics of the United States, Millennial Edition Online, 2006.
Government debt lost some of its taboo as a new school of
economic thought advanced by John Maynard Keynes gained
popularity in the 1930s. The pre-Keynesian norm was that
Government spending should be financed by contemporaneous
taxation and that debt was only to be used in extraordinary
circumstances. Keynes advocated for more active macroeconomic
management. He prescribed running budget deficits during
recessions to increase aggregate demand and reduce fluctuations
within the business cycle.8 Beginning in the Great Depression, the
74
Keynesian economic theory was put into practice. President
Franklin D. Roosevelt’s 1940 budget explains that he would
deliberately use “Government funds and Government credit to
energize private enterprise.”9 Embracing Government spending as
a tool of economic management further undermined the political
consensus against systemic Government debt.
Following the Keynesian revolution, U.S. budgeting became a tool
for business cycle management. Widespread fears of mass
unemployment following soldiers’ return from World War II set
the stage for what would become the Employment Act. In
committing the Federal Government to managing the economy,
the Employment Act officially abandoned the historical constraint
on deficit spending but replaced it with agreed upon, measurable
goals for fiscal policy: stable prices, full employment, and
economic growth. The Employment Act also created two
institutions (the JEC and CEA) to help measure, study, and
promote these goals. While not as binding as a political preference
for balanced budgets, shared economic goals can nonetheless
provide some concrete criteria by which to decide which policies
the nation should pursue.
Defined Goals Allow Debate on the Means
Business cycle management creates competing camps of
economic policymaking, with different prescriptions for reaching
the defined economic goals. The Employment Act’s legislative
evolution illustrates how there can be consensus around a goal,
like full employment, while disagreeing on the best means to get
there: Government guarantees on the one hand, or reliance on the
private sector on the other. For example, the original legislative
proposal for the Employment Act aimed to establish full
employment as a “right” to be guaranteed by the Federal
Government.10 The resulting legislative compromise removed
language that committed the Federal Government to providing
jobs, focusing instead on meeting the goal of maximum
75
employment “in a manner calculated to foster and promote free
competitive enterprise.”11 The later amendment of the
Employment Act by the Humphrey-Hawkins Act shows a similar
agreement on the core economic goals while still disagreeing over
the means of attaining them.12 By setting goals rather than
describing the means, the legislation allows the debate over how
best to reach the goals set out in the Employment Act to become
an empirical question, not necessarily one of values or world view.
The history of the JEC itself has also often demonstrated how the
debate over the best ways to meet economic policy goals changes
over time, as evidence evolves and political preferences shift. In
the 1950s, the JEC was known as a “hotbed of Keynesian
economics.”13 However, in 1979 and 1980 the JEC released
annual reports with all Majority and Minority members signing on
to shared economic policy priorities. In the face of high inflation,
these reports departed from Keynesian orthodoxy and advanced
bipartisan support for supply-side tax cuts, “a steady
reduction…of government spending,” and a “deemphasis of
macroeconomic fine tuning” to meet the Employment Act goals.
The Democrat views in the following year’s 1981 report (which
returned to the norm of separate Majority and Minority sections),
were still interpreted as supporting President Ronald Reagan’s
proposed tax cuts, according to 1983 JEC Executive Director
Bruce Bartlett.14 These episodes illustrate that when guided by
concrete and measurable goals, competing economic policy
models can coexist, and even shift back and forth as economic
conditions, theory, and evidence change.
All of this is not to claim that agreement on the goals of economic
policymaking is sufficient on its own to successfully implement
policies that promote maximum employment, production, and
purchasing power. Countercyclical macroeconomic management
to promote full employment and price stability necessarily runs
deficits in times of crisis and surpluses in later years to balance the
budget over time. Persistent post-1930 budget deficits show that
76
countercyclical economic management can be difficult to
implement successfully because politicians face strong incentives
against cutting spending and raising taxes to pay down
Government debt, even in times of economic growth.15 Thus, for
policymakers who prize free markets and a limited Federal
Government, the Employment Act is a sort of Faustian bargain
that traded the system that had previously constrained the growth
of Government for one that is biased in favor of a more active and
powerful state. However, the concrete goals for economic policy
in the Employment Act did provide a new type of constraint that,
when followed, can help manage the impulse to deficit spend.
Lost Economic Consensus in the 2022 Report
Over the past couple of decades, the economic policy consensus
represented in the goals of the Employment Act has slowly eroded.
Without shared goals, Congress and the President have very little
to guide economic policy and even less to constrain the budget
process. Instead, politicians increasingly view economic policy as
a cudgel against disfavored activities and a subsidy for things they
want to promote. One symptom of this lost consensus can be seen
in the quickly ballooning deficits after 2001, what economist and
budget historian Paul Winfree calls “the real end to balanced
budgets.”16
The Report exemplifies this lost consensus on the economic goals
of inflation, employment, and economic growth. For example, the
Report largely ignores the causes and consequences of the
persistently high inflation rate that was apparent a full year before
publication (Chapter 2). It does discuss the labor market but in
misdiagnosing the key challenges American workers are facing,
the Report largely ignores the fact that the labor market is not yet
back to full employment due to weak labor supply (Chapter 3). On
economic growth, the Report frames the Administration’s overall
agenda as one that will “improve U.S. economic outcomes and
expand U.S. productive capacity, both now and over generations
77
to come.”17 However, the Report is most focused on goals that are
often at odds with, and at best adjacent to, the goals agreed upon
in the Employment Act (Chapter 4).
The Report focuses largely on metrics of race, gender, equity of
outcomes, and environmental indicators. A search of the text
reveals that race (95 instances), gender (127 instances), inequality
(147 instances), and carbon (105 instances) are each mentioned
more often than inflation (86 instances). The Report’s section on
“Progressive and Equitable Tax Policy” considers significantly
higher taxes on investment income to meet goals of “racial and
ethnic equity in the tax code.”18 Nowhere does it consider the
economic consensus that tax increases reduce economic growth.19
Even more brazenly, the Report’s section on “Accelerating and
Smoothing the Clean Energy Transition” identifies a goal that it
explicitly acknowledges will have large and unequal economic
costs to communities across the United States from penalizing
industries that rely on carbon-based energy sources. The Report
claims the costs of reaching its goal of decarbonization can be
offset by other policies. However, by pursuing a goal that does not
enjoy consensus and, more importantly, that would undermine the
consensus goals of the Employment Act, the Report turns
economic policymaking into a political instrument rather than a
shared tool for maximizing production, employment, and
purchasing power.
In conjunction with veering away from the consensus goals of
economic policymaking in the Report, the Biden Administration
has failed to provide the specific information needed to evaluate
the core economic policies in its Budget. The Administration’s
Build Back Better agenda is conspicuously missing from the
President’s Budget proposal. Instead, it includes a nondescript
deficit-neutral reserve fund that obscures the difficult political,
economic, and budgetary decisions involved in detailing specific
proposals. Because the Budget does not describe a specific set of
policies or the anticipated effects of its proposals on revenues and
78
outlays, it renders the Budget uninformative for assessing the
economic impact of the President’s agenda.
Other than a general desire to expand the Federal Government, the
Budget and the Report present no coherent theory for why the
Federal Government should spend $5.8 trillion in 2023 or a
limiting principle for why we would not spend an additional $5.8
trillion or more. Until recently, politicians in both parties relied on
similar economic goals to provide criteria by which to weigh the
costs and benefits of fiscal policy. Without shared goals, the
budget and fiscal policymaking process breaks down.
Breakdown of the Budget Process
Another symptom of the lost consensus on the shared economic
policy goals enumerated in the Employment Act is the breakdown
of the Congressional budget process.
The Constitution delegates the “power of the purse” to Congress
but the process by which Congress formulates the annual budget
is the product of a long historical evolution of different laws, rules,
and customs. Under the Congressional Budget and Impoundment
Control Act of 1974, the President initiates the budget process by
submitting a budget to Congress no later than the first Monday in
February.20 The President’s Budget lays out the Administration’s
priorities but is only a request to Congress, not a binding
document. The Report is intended to be a supporting document to
the President’s Budget, explaining how the Budget assures the
goals of the Employment Act are met. The Response and the JEC’s
views and estimates of the Budget are intended to inform how
Congress proceeds with its budget process.
Following the President’s proposal, Congress then adopts a
concurrent resolution on the budget to establish the Federal
Government’s aggregate spending and revenue policies. The
Budget and the accompanying Report and Response are intended
to explain the economic policy for the country and provide a
79
framework for the annual appropriations process, revenue
measures, direct spending legislation, and debt management.
Unfortunately, the budget process has broken down over the past
several decades. Congress has relied on “deeming provisions” to
set enforceable spending levels instead of completing the more
deliberative traditional budget process.21
Missed deadlines are one example of the broken budget process
and illustrative of the lost consensus around the need to set a
coherent national economic policy. A timely budget is reflective
of current economic conditions and affords policymakers and the
public the opportunity to evaluate its assumptions and
effectiveness at meeting its goals. Before 1989, the budget was late
only two times. Since then, late budgets have increased in
frequency and length of delay, as shown in Figure 1-2.
80
Figure 1-2: Budget Deadline, Submission of Budget, and
Submission of Economic Report of the President, by Number of
Days into Calendar Year, 1948–2023
Source: White House Council of Economic Advisers, Economic Report of the President, 19472022; United States Office of Management and Budget. Budget of the United States Government,
1947-2022; Congressional Research Service, 2016: “The President’s Budget: Overview of
Structure and Timing of Submission to Congress.”
Notes: ERP is Economic Report of the President. Presidential transition years (Fiscal Years 1954,
1962, 1970, 1978, 1982, 1990, 1994, 2002, 2010, 2018, and 2022) are not shown.
President Biden submitted his Budget for Fiscal Year 2023 on
March 28, 2022, nearly two months after it was due. Excluding
presidential transition years, the 2023 Budget is the second-latest
budget in history. President Biden transmitted his 2022 Report on
April 14, 2022, delivering the Report later in the year than any
other. The 17 days between the release of the Budget and the
Economic Report also violated statute requiring the President to
transmit the Economic Report no more than 10 days after filing
the budget (see 15 U.S. Code Section 1022). This was the third
time the 10-day deadline for transmitting the Report was missed
since being imposed starting in Fiscal Year 1992, with deadlines
also missed in Fiscal Years 2017 (13 days) and 2016 (17 days).
81
Economic policy has always been fraught with disagreements on
the means of achieving a more prosperous future. The JEC and
CEA have played an important and sometimes pivotal role in
informing those debates. But increasingly, policymakers have
ignored the pursuit of the measurable, agreed upon goals of the
past and instead seek to use economic policy to advance more
partisan ends. To help refocus Congress on sound economic
policymaking, Winfree suggests that the Report and the Response
could be more formally incorporated into the budget process,
requiring Congress to agree on its shared economic goals before
drafting the budget resolution.22 Without regaining a consensus on
the core goals of economic and fiscal policy, we risk undermining
the good faith and credit of the United States Government and the
foundation that makes America the strongest and most prosperous
economy in the world.
Refocusing on Measurable Economic Goals
In our response to the Report, we seek to refocus the economic
policy debate around the core goals of the Employment Act:
promoting purchasing power, employment, and production. In
doing so, we follow the precedent set following the Employment
Act’s passage in 1946. President Harry Truman organized the very
first Economic Report in 1948 around the themes of purchasing
power, employment, and production. Later in 1962, President John
F. Kennedy reasserted the importance of focusing on these core
goals in his first Report:
The framers of the Employment Act were wise to
choose the promotion of "maximum employment,
production, and purchasing power" as the keystone of
national economic policy. They were confident that
these objectives can be effectively promoted "in a
manner calculated to foster and promote free
competitive enterprise and the general welfare." 23
82
Refocusing on these goals is especially urgent this year given the
challenges faced across all dimensions of the U.S. economy.
Inflation reached its highest level in over 40 years, the labor
market is more than 6 million workers short of the pre-pandemic
trend, and economic production is at serious risk of a contraction
due to the inflationary consequences of poorly timed fiscal
stimulus. The failure of the Report to fully acknowledge these
challenges or the role of the Biden Administration’s policies in
fueling them is troubling. Our response analyzes these problems,
their causes, and ways to address them.
The Response also recognizes a central but often ignored factor
underlying economic progress: social capital. Social capital is the
strength of relationships across family, communities and
workplaces that allow individuals and the economy to thrive.
During the pandemic, social capital has taken a major hit, in part
due to Government policies. Homicides increased by 27 percent
in 2020. During the 12-month period ending October 2021, more
than 104,000 people died of a drug overdose, the highest level ever
recorded. Children were kept out of schools, and core community
institutions have weakened. Because social capital is
indispensable to the goals of economic policy, including
employment and economic growth, we focus on this oftenoverlooked factor in the Response.
Our Response proceeds as follows: Chapter 2 reviews purchasing
power. Chapter 3 reviews employment. Chapter 4 reviews
production. Chapter 5 reviews social capital.
83
CHAPTER 2: PURCHASING POWER
In the first Response written in 1948, the JEC warned President
Truman and his CEA to consider the inflationary consequences of
large Government spending packages. In the JEC’s words:
It is interesting to us both here and throughout the
report the President wholly fails to give any weight to
the tremendous impact of Government spending … No
account is taken anywhere in the report of the
inflationary aspect of such expenditures, for the most
part made without any direct increase in the
production of goods and services.24
Nearly 75 years later, the JEC has precisely the same concerns.
The Employment Act of 1946 directed the Federal Government to
prioritize the promotion of purchasing power, in addition to
employment and production (see Chapter 3 and Chapter 4).25 Yet
in 2021, Congress, the Administration, and the Federal Reserve
pursued policies that achieved the opposite, none of which is
acknowledged in the Report.
First, expansionary fiscal and monetary policy overcorrected for
the COVID-19 recession, boosting consumer demand beyond
what suppliers could meet. Congress then pursued policies that
directly reduced supply by disincentivizing work and threatening
future tax increases. Coupled with supply chain challenges in the
United States and around the world, these policy missteps stoked
an average annual inflation rate of 4.7 percent in 2021 and 8.0
percent in Q1 2022, almost four times the 2000-2019 average
inflation rate of 2.2 percent. 26
Chapter 2 of the Response documents these trends and quantifies
the costs that inflation (since January 2021) has imposed on
American families, estimated to be $569 per household in April
84
2022 alone.27 It goes on to identify the policy errors that worsened
inflation in the United States relative to other countries, which
include a fiscal and monetary overcorrection, regulations that
reduced supply chain efficiency, and Congressional legislation
that disincentivized work. The Chapter concludes with policy
solutions that would restore Americans’ purchasing power by
lifting barriers to trade, employment, and production.
Inflation Trends
Inflation Hits its Highest Level in 40 Years
The rapid pace of inflation in 2021 and 2022 was atypical;
Americans faced the highest—and fastest climbing—inflation
rates in four decades. Inflation measured as the annual percent
change in the Consumer Price Index (CPI) averaged 3.4 percent in
the first half of 2021 and 6.0 percent in the second half.28 By
March 2022, the annual inflation rate would reach 8.5 percent, its
highest level since December 1981 when the Federal Reserve was
taking drastic economic measures to battle the Great Inflation.
Inflation remained elevated in April 2022 at 8.3 percent, far above
historical norms.
To visualize recent inflation trends, Figure 2-1 displays annual
CPI growth rates for each month since the turn of the century. The
pace of inflation in 2021 and 2022 had a much greater effect on
Americans’ purchasing power compared to other post-recession
expansions. As of April 2022, Americans in the post-COVID
expansion (May 2020-April 2022) faced an average annual
inflation rate of 4.0 percent compared to 2.7 percent in the post2001 expansion (December 2001-December 2007) and 1.7 percent
in the post-2008/09 expansion (July 2009-February 2020).29
The Federal Reserve’s preferred inflation measure, the Personal
Consumption Expenditures Price Index (PCEPI), was similarly
85
high. Compared to the 2000-2019 average of 1.7 percent, annual
percent changes in the PCEPI averaged 2.8 percent in the first half
of 2021, 4.9 percent in the second half, and was 6.3 percent by
April 2022.30 Even the CPI and PCEPI core measures, which
exclude volatile items in the food and energy sectors, rose
rapidly—increasing 6.2 percent and 4.9 percent annually in April
2022, respectively.31
Figure 2-1: Annual Percent Change in the Consumer Price Index,
Monthly, January 2000-April 2022
Source: Bureau of Labor Statistics, retrieved from the Federal Reserve Bank of St. Louis
Notes: Annual growth rates in the Consumer Price Index for All Urban Consumers (CPI-U). Grey
bars indicate recessions as defined by the National Bureau of Economic Research.
Markets Expect High Inflation to Persist
While the Report documents the high inflation Americans
experienced in 2021, it argues that inflation will be temporary,
presenting relatively anchored long-term market and expert
86
inflation expectations as of November and December 2021.32 Yet,
after inflation continued to accelerate in 2022, forecasters revised
up their expectations and market participants began pricing in
expectations of sustained inflation.
Based on the same survey cited in the Report, professional
forecasters’ expectations of CPI inflation over the next five years
increased from 2.7 percent in the Q1 2022 survey to 3.4 percent in
Q2 2022.33 Market indicators have similarly increased, including
the Treasury Inflation-Protected Securities (TIPS) five-year
spread shown in Figure 2-2.34
The five-year TIPS spread is the difference between the yield on
five-year Treasury securities and five-year TIPS. TIPS are
considered to be very low-risk investments because the principal
is adjusted to account for the cost of inflation; however, their low
risk decreases their yields. As such, the difference between these
bond yields is an indicator of what markets expect inflation to be
on average over the next five years.
From 2010 to 2019, the market’s five-year inflation expectations
held relatively steady, averaging 1.7 percent. Then, after falling
during the COVID-19 recession, inflation expectations began
steadily rising. After recovering to 2.0 percent in January 2021,
inflation expectations hovered around 2.5 percent during the
second and third quarters of 2021 and exceeded 3.5 percent within
the first quarter of 2022.35
As of May 2022, investors’ longer-term inflation expectations
over the next ten years remain slightly elevated but still relatively
anchored at 2.7 percent, suggesting that investors do not expect
the current period of high and rapidly rising inflation to last for a
decade.36 Yet, as revealed in Figure 2-2, investors also do not
believe the Federal Reserve will achieve its two percent inflation
target within the next five years, indicating that the Report
87
misdiagnosed the threat of elevated inflation over the medium
term.
Figure 2-2: Inflation Rate Expected Over the Next Five Years as
Indicated by the TIPS Spread, Daily, January 2010-May 2022
Source: Federal Reserve Bank of St. Louis
Notes: The five-year TIPS spread reflects what market participants expect inflation to be in the next
five years, on average. It is calculated by taking the difference between the 5-year market yield on
U.S. Treasury securities at constant maturity and the 5-year market yield on inflation-indexed U.S.
Treasury securities at constant maturity. Grey bars indicate recessions as defined by the National
Bureau of Economic Research.
88
The Consequences of Inflation
High Inflation Imposes Significant Costs on American Families
The Report briefly describes the challenge of inflation. However,
it makes no attempt to quantify the burdens inflation has imposed
on American families, nor does it acknowledge that the United
States is experiencing higher inflation rates than most other
nations.
This year, the JEC launched a State Inflation Tracker to quantify
the added costs American households faced each month due to the
high inflationary environment that began in early 2021.37 Monthly
inflation costs are defined as the additional expenditures the
average household must make in a given month to attain the same
standard of living it did in January 2021, when CPI inflation was
still within historical norms at a 1.4 percent annual rate.38
The average American household faced a 10.5 percent price
increase between January 2021 and April 2022. This implies that
the average household would have had to spend an extra $569 in
April to afford the same goods and services it purchased in January
2021.39
Americans Experience Inflation Differently Depending on Where
They Live
Although inflation was high everywhere in 2021 and 2022,
inflation rates were not uniform across the country. Figure 2-3
shows this variation using a map of the United States in which
States with higher inflation costs are shaded darker.
Families in the Mountain West (Arizona, Colorado, Idaho,
Montana, Nevada, New Mexico, Utah, and Wyoming) faced the
highest inflation rates, with prices in April 2022 12.7 percent
higher than in January 2021.40 What set apart inflation in the
89
Mountain West was rapidly rising home and rent prices as
measured by the CPI for shelter, which increased 10.2 percent
from January 2021 to April 2022.41
Inflation costs in April 2022 were especially high for families in
Colorado ($774), Utah ($751), and Arizona ($688).42 Families in
Washington, DC, who have the highest average spending levels in
the nation, experienced even greater inflation costs of $806.43
Figure 2-3: Average Inflation Costs per State, April 2022, Relative
to January 2021 Price Levels
Source: JEC Calculations using: Bureau of Economic Analysis, Personal Consumption
Expenditures; Bureau of Labor Statistics, Consumer Expenditure Survey; Census Bureau,
American Community Survey.
Notes: Inflation costs reflect how much more the average U.S. household must pay in the current
month for the same goods and services it purchased in January 2021. See methodology for a detailed
explanation of these calculations; Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation
Tracker: Methodology,” U.S. Congress Joint Economic Committee Republicans, April 12, 2022.
90
Due to lower average household spending, families in West
Virginia, Mississippi, and Arkansas faced the lowest inflation
costs. However, these costs were still substantial. In April 2022,
households in these States would have had to spend an additional
$442, $446, and $452, respectively, to afford the same goods and
services they purchased in January 2021.44
Inflation Costs Will Remain Even After Inflation Reverts to
Normal Levels
As price levels rose throughout 2021 and the first four months of
2022, so did the monthly costs to American families. Figure 2-4
displays average monthly inflation costs over time for all fifty
States and Washington, DC.
For the average U.S. household, inflation costs rose from $0 in
January 2021 (the base month) to $356 in December 2021. In April
2022, inflation cost the average American household an extra $569
to purchase the same goods and services it did in January 2021.45
American families will face these costs in perpetuity even after
inflation returns to normal levels, as the inflation that has already
occurred represents a permanent increase in the price level. If
prices were to completely stop increasing after April 2022, the
price increases that already occurred would cost the average
American household $6,829 over the following 12 months.46
91
Figure 2-4: Average Monthly Household Inflation Costs by State,
Relative to January 2021 Price Levels, January 2021-April 2022
Source: JEC Calculations using: Bureau of Economic Analysis, Personal Consumption
Expenditures; Bureau of Labor Statistics, Consumer Expenditure Survey; Census Bureau,
American Community Survey.
Notes: Inflation costs reflect how much more the average U.S. household must pay for the same
goods and services it purchased in January 2021. See methodology for a detailed explanation of
these calculations; Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
Methodology,” U.S. Congress Joint Economic Committee Republicans, April 12, 2022.
These inflation costs act as a regressive tax, disproportionately
harming less affluent families. Lower-income households spend a
larger portion of their budgets on food, energy, and shelter, which
drove price increases in 2021.47 Research also finds that inflation
reduces poor individuals’ lifetime consumption opportunities
more than that of their wealthier counterparts,48 and that rising gas
prices specifically increase the cost of living for rural Americans
significantly more than for wealthier Americans living in urban
areas.49
92
Drivers of Inflation
COVID-related challenges set the stage for high inflation in the
United States and around the world. Consumers dramatically
shifted their demand toward goods, increasing stress on
production, transportation, and supply chains. At the same time,
producers faced increased costs and shortages of intermediate
inputs as global production was slow to recover from the COVID19 shutdowns.
These demand and supply factors interacted with one another to
fuel globally-elevated inflation. However, policies enacted by the
Administration and other levels of Government created inflation
challenges unique to the United States. U.S. policy decisions
further boosted already-high demand for goods by incentivizing
consumer spending, and further restricted the supply of goods by
reducing the size of the workforce and increasing the cost of trade
and production. Together, these policy choices worsened U.S.
inflation compared to the rest of the world.
Shifting Consumer Preferences and Supply Chain Inefficiencies
Shifting consumer preferences presented a significant economic
challenge during the COVID-19 recovery. Americans, hesitant to
engage in in-person interactions, flocked to goods consumption
throughout 2021. The result was a 20 percent increase in inflationadjusted goods consumption by March 2021 relative to preCOVID levels.50 Goods consumption remained elevated
throughout 2021 and 2022 even in the face of high inflation, with
real spending on goods 16 percent higher in April 2022 than in
February 2020. 51
Figure 2-5 shows the stark contrast between goods consumption
and services consumption following the COVID-19 recession,
which contributed to high inflation for goods.
93
Figure 2-5: Real Annualized Personal Consumption Expenditures,
Goods vs. Services, Monthly, January 2002-April 2022
Source: U.S. Bureau of Economic Analysis via Federal Reserve Bank of St. Louis.
Notes: Grey bars indicate recessions as defined by the National Bureau of Economic Research.
These post-COVID consumption trends were unique. Following
the onset of the Great Recession, it took a full 50 months (over
four years) for inflation-adjusted goods consumption to recover,
compared to just four months after the COVID shock.52
The sudden uptick in U.S. consumer demand for goods in early
2021, specifically imports, placed significant stress on supply
chains. As the Report documents, U.S. imports rose faster than
port capacity could process them, leading to unprecedented
shipping backlogs.53 Ports became so backlogged that container
ships were forced to sit at anchor for days while they waited for
unloading space, a highly unusual occurrence before the
pandemic. By the end of the year, it was common for over 100
94
container ships to be waiting at anchor outside the ports of Los
Angeles and Long Beach at once.54 While the number of ships at
anchor has fallen in 2022, reports suggest that container ship
backlogs have continued.55
Elevated consumer demand coupled with port congestion
increased stress on truck and rail cargo shipping and put upward
pressure on shipping prices.56 One measure of shipping costs, the
Cass Transportation Index’s Inferred Freight Rates, increased 33
percent from December 2020 to December 2021, compared to a 2
percent increase from December 2018 to December 2019.57
While ports were struggling to process large cargo volumes and
shipping delays were growing, businesses also faced product
shortages. The sudden shutdowns in 2020 caused many factories
around the world to shut down, scale back production, or retool
their production facilities to meet a different need, leading to
global commodity shortages and rising prices for items like steel
and lumber.58 In some cases, these shortages are expected to last
for years; producers who use foreign-made semiconductor chips
in their manufacturing processes expect semiconductor shortages
to last into late 2022 or 2023.59
A lack of willing transportation workers also worsened supply
chain challenges and increased inflationary pressure. Not only did
weak labor supply reduce the number of available people working
to get goods into consumers’ hands,60 it also put upward pressure
on nominal wages for those workers,61 further increasing
employer costs.
Government Policies Worsen Inflation
The Report asserts that inflation in the United States was strictly a
global phenomenon caused by post-COVID reopening interacting
with global supply chain challenges. It uses international
95
comparisons to make this point, suggesting that “the fact that
inflation has accelerated in so many countries underscores its
common drivers.”62
The Report is partly correct in identifying the global factors that
drove inflation in the United States and elsewhere, like shifting
consumer preferences. However, global factors alone cannot fully
explain the magnitude of U.S. inflation.
To demonstrate, Figure 2-6 compares core price increases in the
United States and the Euro area. It reveals that inflation in the
United States relative to Euro-using countries sharply increased in
March 2021, after decades of largely comparable inflation trends.
Figure 2-6: Annual Percent Change in the Harmonized Index of
Core Consumer Prices, Monthly, January 2003-March 2022
Source: U.S. data are retrieved from the Bureau of Labor Statistics via Haver Analytics; Euro Area
data are retrieved from Eurostat via Federal Reserve Bank of St. Louis.
Notes: Harmonized Index of Core Consumer Prices (HICP) for the United States excludes food and
energy; HICP for the Euro Area excludes food, energy, alcohol, and tobacco.
96
The deviation in inflation trends was largely driven by four U.S.
policy decisions: (1) an excessive fiscal response that over-fueled
consumer demand, (2) an excessive monetary response that further
boosted demand, (3) Government regulations that decreased
supply chain efficiency, and (4) work disincentives that reduced
the supply of willing workers.
FISCAL RESPONSE
The Report and the President’s Budget propose new social
spending goals without acknowledging the inflationary effect of
prior Government spending. While one could justify the spending
packages passed in early 2020 as hedging against the risk of a
virus that was going to have unknown consequences on
Americans’ health and material wellbeing, the American Rescue
Plan Act (ARP) was a $2 trillion overcorrection made 11 months
into the recovery.
In March 2021, Congress passed the ARP, fueling consumer
demand far above what the market could supply and even further
above its would-be natural level. The ARP’s last major round of
stimulus was delivered three months after consumer spending had
fully returned to pre-COVID levels, and its size equaled almost
300 percent of the estimated output gap over the subsequent three
years.63 As shown in Figure 2-6, this policy choice coincided with
a stark divergence in U.S. inflation compared to similar nations.
In total, U.S. COVID spending packages represented the largest
fiscal response in the world as a share of Gross Domestic Product
(GDP): more than double that of similarly developed countries
like the U.K., Norway, and New Zealand, and 80 percent greater
than Spain, Poland, and Belgium.64
Congress and the Administration enacted policies that over-fueled
demand in the face of supply chain challenges. The Advanced
97
Child Tax Credit (CTC), in effect through the end of 2021,
provided parents with direct transfers of up to $300 per child each
month and simultaneously eliminated the related work incentives.
Likewise, the Administration’s decision to extend paused student
loan payments, interest, and collections through at least August
2022 incentivized 70 percent of borrowers to move into
forbearance as of December 2021, up from 8 percent in December
2019.65 Disposable-income for these 27 million borrowers
increased temporarily, further contributing to inflationary
pressures.
These policy choices led to an accumulation of excess savings,
detailed on page 58 of the Report, which inflated consumer
spending. Aggregate personal saving spiked at three distinct
times—in April 2020, January 2021, and March 2021—each
corresponding to a different round of COVID spending bills and
Economic Impact Payments made to households.66 According to
JEC estimates, American households accumulated $2.5 trillion in
excess savings by the end of 2021, consistent with other
estimates67 and roughly in line with the Report’s estimate of $2.7
trillion.68
It was not until Q1 2022 that Americans started drawing down on
these savings, spending $43 billion more than they earned in the
first three months of the year.69 This level of dissaving, however,
represents less than two percent of the total excess savings
accumulated in 2021.70 Assuming this level of dissaving holds
constant, it would take 169 months—over 14 years—for
Americans to spend the entirety of their excess savings, signifying
14 years of potential elevated consumer demand which could add
to inflationary pressures.
Researchers have estimated the inflationary impact of the ARP,
finding that the stimulus added 2.5 to 3.0 percentage points to U.S.
98
inflation in 2021.71 Researchers from the Federal Reserve Board
and the Federal Reserve Bank of St. Louis further estimate that
U.S.-driven inflation spilled over to other nations through
international trade, increasing inflation in Q4 2021 by 1.5
percentage point in Canada and by 0.5 percentage point in the
United Kingdom.72
MONETARY RESPONSE
While Congress was pursuing an excessive COVID fiscal
response, the Federal Reserve simultaneously enacted easy money
policies to stimulate market demand. In March 2020, the Federal
Reserve reduced the federal funds rate to zero percent, began a
new round of quantitative easing, and flooded the economy with
liquidity by enacting hundreds of billions of dollars of new lending
programs.73
Since then, the size of the Federal Reserve’s balance sheet has
more than doubled, with asset holdings increasing from $4.2
trillion in March 2020 to $8.9 trillion in May 2022.74
Confronted with elevated inflation rates in mid-2021, the Federal
Reserve Open Market Committee (FOMC) stayed committed to
the view that inflation was transitory and kept on the path of
accommodative monetary policy.75 By December, annual growth
in core PCEPI reached 5.8 percent76 and the FOMC began scaling
back its asset purchases.77 Yet, the FOMC did not decide to raise
the federal funds rate until March 2022, at which time core PCEPI
inflation had reached 6.6 percent.78
In March, the FOMC increased the target interest rate by 25 basis
points, citing Russia’s invasion of Ukraine and the threat to global
oil prices.79 The FOMC again raised the target rate in May, this
time by 50 basis points,80 and simultaneously announced that it
would begin gradually reducing the size of its balance sheet.81
99
The slow pace of FOMC action to counter inflation may have
made inflation worse. The federal funds rate was kept at zero
throughout the entirety of 2021, incentivizing additional
borrowing and spending while consumers were already
accumulating $2.5 trillion of excess saving from Congress’s
expansionary fiscal policy.82
If the federal funds rate was responsive to market conditions
instead of FOMC discretion, it would have increased at a much
faster pace to stave off inflation. For example, the Taylor Rule—
a formula that determines the optimal federal funds rate based on
a desired rate of inflation and the gap between real GDP and
potential GDP—suggests that the federal funds rate should have
been close to six percent in the fourth quarter of 2021. 83
GOVERNMENT INTERVENTION IN SUPPLY CHAINS
The Report acknowledges the productivity enhancing benefits of
international trade, recognizing that “modern supply chains have
driven down consumer prices for many goods,” and that
international trade “can lead to the development of highly
specialized and innovative suppliers.”84 Yet, it argues that supply
chains failed in 2021, and makes the case that Government
intervention is necessary to ensure supply chain resiliency.
The Report is correct in identifying the productivity-enhancing
benefits of open markets. International trade reduces prices for
producers and consumers, results in net job creation, productivity
growth, and economic growth, and increases Americans’ standard
of living.85 Unfortunately, the Report mistakenly blames supply
chain challenges on U.S. dependence on imports, and makes no
mention of the significant costs imposed by Government
intervention in trade and production (detailed in Box 2-1 and Box
4-2).
100
At the same time, recent supply chain challenges have revealed
inefficiencies in the U.S. trade and transportation sectors, largely
driven by Government regulations that decrease the efficiency and
functionality of U.S. supply chains. But the key to supply chain
resiliency is not more Government intervention; it is less.
As detailed in the Report, the increase in consumer demand for
imported goods in 2021 overwhelmed U.S. ports. There were
simply not enough dock workers, unloading space, or warehousing
space to process such a substantial increase in imports. More
productive ports may have been better able to process higher
volumes, but the United States ranks among the lowest in the
world for port productivity.86
Increased automation would likely help to improve port
productivity; however, dockworkers unions supported by the
Administration—like the International Longshore and Warehouse
Union, which represents most workers on the West Coast—have
largely resisted moves toward automation and increased
efficiency.87
As ports struggled to process large amounts of cargo, reforming
Federal and local regulations would also have helped to ease
bottlenecks. For example, dual-transaction rules made it harder for
truck drivers to pick up cargo by mandating that trucks drop off
and pick up containers within the same terminal, as did port rules
restricting which types of chassis can be used at which terminals.88
Similarly, local zoning regulations in Los Angeles worsened
supply chain challenges by reducing container storage capacity
and forcing ships to sit longer while they waited to drop off their
cargo.89
101
Box 2-1. Misguided Policies That Would Worsen Inflation
The Report argues that fragile supply chains were the leading
cause of economic woes in 2021. While it does not recommend
many concrete policy solutions beyond information sharing and
increasing Government subsidies to manufacturers, it touts prior
policies that restricted trade and raised domestic content
requirements for Federally-purchased goods.90
These proposed trade barriers would not increase supply chain
resiliency. Instead, they would reduce U.S. productivity, increase
the cost of domestic manufacturing, and further raise prices of
consumer goods in an already-high inflationary environment. 91
Additionally, the Report makes no mention of tariffs currently in
place on nearly $270 billion of imports from China which are
actively increasing producer and consumer costs.92 While the
President did not impose these tariffs, he chose to keep them in
place, likely to protect domestic workers from foreign
competition. However, tariffs make it costlier to manufacture in
America by increasing the cost of inputs, as over 60 percent of
imports are used by American manufacturers in domestic
production.93 Instead of protecting U.S. workers, tariffs harm more
workers than they help.
Take, for instance, the national security tariffs on steel and
aluminum imposed in 2018. By increasing the cost of foreign steel
and aluminum relative to U.S.-made products, the national
security tariffs were predicted to add roughly 26,000 jobs to the
U.S. steel and aluminum manufacturing sectors. Yet by increasing
the price of steel and aluminum, either because businesses were
forced to pay the tariff or switch to higher-priced U.S.-made
products, they were also predicted to eliminate nearly 500,000
jobs in the rest of the economy—harming U.S. manufacturers and
102
service providers, like construction companies, that utilize
imported steel and aluminum in production.94
Other studies have confirmed the harm that tariffs impose on
domestic manufacturers, finding that the entire cost of U.S. tariffs
on steel and aluminum were borne by U.S. importers.95 When
combined with retaliatory tariffs from other nations, these tariffs
triggered net decreases in manufacturing employment in the
United States.96
Perhaps most relevant to current economic challenges, tariffs raise
prices for American consumers and producers. Estimates suggest
that removing recently imposed tariffs on imports from China,
steel and aluminum imports, and Canadian lumber imports could
deliver a one-time inflation reduction of 1.3 percentage point.97
Congress has also enacted regulations through legislation that
decreased the functionality of U.S. supply chains. The Foreign
Dredge Act of 1906 prevents foreign built, owned, or operated
boats from dredging in the United States, i.e., the process by which
ports are built and expanded. As a result, the United States has
access to only 15 hopper dredges—the most efficient dredging
vessels available—11 of which are more than 20 years old.98 These
laws discourage the expansion of ports by making dredging more
costly, and the prohibitive cost of dredging is a key reason why the
ports of Los Angeles and Long Beach are the only ports currently
large enough to fit many of the vessels that transport goods to the
United States.
Similar to the Foreign Dredge Act, the Merchant Marine Act of
1920, also known as the Jones Act, prevents any foreign built,
owned, operated, or crewed vessel from sailing between U.S.
ports. Not only does this legislation make sea-based shipping
103
unnecessarily expensive—daily operating costs for U.S. owned
vessels are 2.7 times greater than for foreign-owned vessels99—
but it also reduces shipping options during supply chain crises,
increasing stress on trucks and trains.
Finally, tariffs imposed on chassis (the metal support structures
that trucks use to carry cargo) and semiconductor chips drove up
prices and reduced the availability of goods that are essential to
the trade and transportation industries. Industry reports suggest
that tariffs imposed on chassis from China triggered shortages in
the United States as U.S. chassis producers struggled to meet
demand.100 Likewise, tariffs on semiconductor parts likely
contributed to U.S. auto shortages in 2021.101
WORK DISINCENTIVES
While Americans were facing rapidly rising prices and shortages,
the Administration enacted policies that actively disincentivized
work and worsened supply-side issues. In turn, U.S. production
significantly lagged consumer demand.
As of Q1 2022, real U.S. industrial production was only 1.9
percent above its pre-pandemic level in Q4 2019, not nearly high
enough to meet demand.102 Inflation-adjusted goods consumption
jumped 15.6 percent during the same time frame.103
Consumers bridged this gap by turning to imports.104 However,
lagging U.S. production was still problematic, driven in part by the
lagging U.S. job recovery. As of May 2022, the U.S. labor force
was missing 6.3 million workers measured against pre-pandemic
trends.105
Chief among the Administration’s anti-work policies was the
ARP’s continuation of Federal Pandemic Unemployment
Compensation (FPUC) through September 2021. FPUC
disincentivized employment by paying many Americans more
104
money to stay unemployed than return to work.106 In turn,
removing these perverse incentives was found to reduce the
number of Americans filing for unemployment insurance107 and
increase the number moving into employment.108
The expanded CTC, another ARP policy, had similar effects. By
increasing incomes and eliminating work requirements for
recipients, the expanded CTC was predicted to reduce the size of
the labor force by 1.5 million workers in the long run.109
Looking forward, economic consensus suggests that the tax
increases in the Build Back Better Act—the Administration’s
principal policy aim—would likely depress investment and reduce
hiring.110 Further reducing output and labor supply in this way
would only add to inflationary pressures.
Chapter 3 of the Response provides more information about the
Administration’s policies that reduced the size of the labor force
in 2021.
Alternate Explanations Fail to Explain the Rise of Inflation
Aside from the macroeconomic demand shifts that spurred
inflation following the COVID-19 shutdowns, and the
Government policies that worsened it by boosting consumer
demand and restricting the supply of goods, services, and labor,
the President has offered alternative theories to explain the high
inflationary environment in 2021 and 2022. For example, the
President has attributed the rise in inflation to international
conflicts, calling it “Putin’s price hike.” The President has also
blamed oil and gas companies, suggesting high gas prices are the
product of anti-competitive, greedy behavior.111 However, these
narratives cannot explain a substantial portion of the recent U.S.
inflation experience.
105
First, while the President’s budget largely ignores high U.S.
inflation, it attributes the “uncertainty” in its inflation assumptions
to Russia’s invasion of Ukraine112—similar to the FOMC in their
March 2022 meeting.113 Yet, inflation in the United States was
climbing long before the Russia-Ukraine conflict began in
March,114 and the pace of price increases would have only been
modestly slower if Russia had never invaded Ukraine. Assuming
that energy prices in March would have increased at the same rate
they did in February (by 3.5 percent instead of 11.0 percent),
overall prices measured using CPI still would have increased by
7.9 percent year-over-year, instead of their actual rate of 8.5
percent.115
The President also has argued that corporate greed and corporate
concentration are driving the uptick in gas prices. In November
2021, the President asked the Federal Trade Commission to
investigate oil and gas companies for anti-competitive behavior,
evidenced by the divergence between gas prices and crude oil
prices.116 Congress followed suit, and in May 2022 the House of
Representatives passed legislation that would make it unlawful for
wholesale or retail gas providers to sell consumer fuel at
“unconscionably excessive” prices during an energy
emergency.117 Aside from distracting from the root causes of
inflation, price controls would cause substantial harm to
consumers who would face shortages for goods they need.
In reality, the recent divergence in gas and oil price trends is a
relatively common occurrence, known in the economics literature
as “rockets and feathers,” in which prices fall slower than they rise
in commodity markets. While there is no definite conclusion for
why this phenomenon exists, it occurs across multiple markets—
like oil, beef, and pork—and there is no evidence that it is
explained by corporate greed.118 Rising gas prices are also unlikely
to be the product of corporate concentration because the United
106
States has one of the least concentrated oil and gas sectors in the
world.119
Policy Solutions to Restore Purchasing Power
Although Government-enacted policies worsened the inflation
situation in 2021 and early 2022, the Government could pursue
policy solutions to help alleviate inflation moving forward. First
and foremost, the Administration and Congress should not pursue
expansionary fiscal policy or additional stimulus while inflation
challenges persist. Providing households with more subsidies and
cash transfers would elevate consumer demand at a time when
production cannot keep up due to weak labor supply and supply
chain issues.
As such, the President’s Build Back Better plan carries significant
inflationary risks. The President’s Budget proposes $1.4 trillion in
additional spending from 2022 to 2032 along with an estimated
$1.6 trillion of new spending to support the Build Back Better
agenda.
Not accounting for indirect effects, new Government spending by
definition increases GDP. However, economic research has
identified a fiscal multiplier range of 0.6 to 1.0, with a multiplier
less than one signifying that Government spending raises GDP but
does not stimulate additional economic activity in the private
sector.120 Furthermore, the Congressional Budget Office (CBO)
estimates that real GDP exceeded potential GDP as of Q3 2021,
implying that any additional spending would be inflationary.
Therefore, under the conservative assumption of a fiscal multiplier
equal to 0.6, the increases in spending proposed in the President’s
policy agenda can be expected to increase annual inflation by 0.3
percentage point in 2022 and 0.3 percentage point in 2023.121
107
Second, the Federal Reserve’s hesitancy to move away from its
accommodative monetary stance while inflation was rising at its
fastest pace in decades makes the case for a humbler, marketdriven monetary authority. The FOMC could combine their dual
mandate of price stability and maximum stable employment into a
single mandate of Nominal GDP (NGDP) level targeting, which
targets a stable growth rate of all spending in the economy.122
By targeting the growth rate of NGDP, this approach is easily able
to distinguish between demand shocks (in the negative case, where
NGDP falls due to decreasing prices and quantities) and supply
shocks (in the negative case, where NGDP is stable due to
decreasing quantities and increasing prices), setting the
appropriate path of monetary policy in each case. Perhaps most
importantly, NGDP level targeting would provide markets with
stable expectations, reducing the weight of FOMC discretion and
lowering the chances of negative market reactions to monetary
policy decisions. Indeed, research suggests that NGDP level
targeting would have elicited a faster GDP recovery following the
Great Recession, albeit with slightly higher short-term inflation
levels.123
Third, if the United States wants to prepare for potential future
supply-driven crises—which may begin at home or abroad—it
should seek to diversify its supply of essential goods. The
Government should remove barriers to efficient supply chains,
including regulations that needlessly drive up the cost of sea
transportation and port expansions and hinder the United States’
ability to effectively process imports. Similarly, recently imposed
tariffs on chassis and semiconductors—inputs that are essential to
the trade and transportation industries—should be removed, as
they raise costs and worsen shortages.
108
Fourth, the Government should pursue policy reforms to increase
the size and quality of the workforce. Valuable reforms may
include: removing barriers to school choice programs, reforming
Federal apprenticeship programs, removing regulations that
discourage flexible work, and removing labor regulations, such as
occupational licensing requirements, that keep would-be willing
workers from participating in the labor force.
Fifth, policy reforms should encourage more domestic production.
Removing tariffs on lumber from Canada and intermediate and
capital goods imports from China may have the most immediate
impact by reducing the cost of U.S. manufacturing. Regulatory
reform, as detailed further in Chapter 4, would also accomplish
this goal by reducing barriers to business creation, spurring
investment, and stimulating economic growth. Similarly,
removing regulatory barriers to U.S. oil and gas production would
spur greater domestic energy supply and put downward pressure
on energy prices.
Finally, to bring down the cost of housing, State and local
Governments should pursue zoning reform to allow more housing
construction and more multifamily housing units in areas of high
demand. The Federal Government could also allow State and local
Governments to repurpose Federal land in order to expand housing
supply and increase affordability. While not comprehensive,
enacting these reforms would be a meaningful step toward
restoring Americans’ purchasing power.
109
CHAPTER 3: EMPLOYMENT
The Employment Act of 1946 charges the Federal Government
with promoting “free and competitive enterprise and the general
welfare, conditions under which there will be afforded useful
employment for those able, willing, and seeking work, and to
promote maximum employment,”124 in addition to its other two
goals of promoting production and purchasing power. During the
Biden Administration, employment was poised for a full recovery
from the pandemic-induced recession but fell short due to policies
that held back labor supply.
The COVID-19 pandemic resulted in a historic shock to the labor
market in the United States. Between February and April 2020, 22
million workers left the workforce.125 Unfortunately, Government
policies during the Biden Administration have kept the U.S. from
returning to full employment. Policies have disincentivized work
with the expansion of unemployment compensation and changes
to the Child Tax Credit (CTC), threatened to prohibit work with
vaccine mandates, made it more difficult to work due to school
and childcare closures, and enabled non-work through cash
transfers in the form of Economic Impact Payments and student
loan forbearance.
Taken together, these policies played a major role in keeping
employment 6.3 million workers short of the pre-pandemic trend
as of May 2022. Because of misguided policy, the American
economy is further away from the Employment Act’s goal of full
employment.
This chapter documents the current state of the labor market in
which weak labor supply is holding back employment. It then
describes the role of policies in suppressing labor supply. Finally,
it describes how future policies could strengthen labor supply and
bring the American economy closer to full employment.
110
The State of the Labor Market
Prior to the COVID-19 pandemic, the U.S. labor market was
especially strong, with increases in the labor force participation
rate, employment to population ratio, real wages, and a reduction
in poverty, particularly for historically disadvantaged groups. The
pandemic disrupted these gains, but the country was in a position,
at least early on, to quickly return to its pre-pandemic trend.
Unfortunately, following what was initially a rapid jobs recovery
through late 2020, the Administration-championed American
Rescue Plan Act (ARP) became law in March 2021, adding $1.9
trillion in new Federal spending.126 The ARP extended earlier
COVID policies and added new programs that together weakened
labor supply, and as a result, stalled the labor market recovery.
Consequently, the legislation suppressed labor market gains for
American families and held back their economic well-being.
Employment Remains Below its Pre-Pandemic Trend
Prior to 2015, labor force participation had been declining for
nearly two decades, particularly among prime age workers (ages
25 to 54). In October 2013 and again in September 2015, prime
age labor force participation fell to 80.6 percent—its lowest rate
in 30 years.127 Labor force participation declines were seen across
demographic and gender groups with prime age men in particular
seeing significant declines.128
However, pro-growth policies beginning in 2017 and 2018—
namely deregulation and lower taxes via the Tax Cuts and Jobs
Act—strengthened the labor market. These policies helped sustain
and further boost labor force participation, with the largest (preCOVID) annual growth occurring from 2018 to 2019. In January
2020, prime age labor force participation reached 83.1 percent, a
12-year high. This growth was driven not only by new young
workers and changes in population, but also by individuals who
were previously disconnected from work entering the labor
market. The total share of individuals who were working increased
111
across all major demographic groups. The employment to
population ratio for Black Americans, for example, rose 8.4
percentage points from the lowest point after the Great Recession
(July 2011) to February 2020.129
Pro-growth policies also fueled wage increases by increasing
productivity and demand for workers. Starting in Q4 2017, real
wages rose every quarter until the start of the pandemic, with
larger gains for historically disadvantaged populations and
workers at the bottom of the wage distribution.130
Unfortunately, the pandemic and subsequent policy response in
2020 and 2021 interrupted the labor market gains for many
workers and stood in the way of a return to pre-pandemic trends.
As of May 2022, 6.3 million workers remain out of the workforce
measured against the pre-pandemic employment trend established
in prior years (see Figure 3-1).
112
Figure 3-1: Number of Workers by Month, Including PrePandemic Trend, Monthly, January 2010-May 2022
Source: JEC Calculations; Basic Monthly Current Population Survey data; Bureau of Labor
Statistics, All Employees, Total Nonfarm.
The introduction and passage of the ARP likely slowed
employment growth in 2021 by disincentivizing work. Figure 3-2
compares the employment recovery immediately following the
initial pandemic shock with the recovery following the passage of
the ARP. Following the initial employment decline of 22 million
workers between February 2020 and April 2020, 14 million of
those workers returned in the 11-month period through March
2021, the month ARP became law.131 Rather than allow
emergency-era programs to expire, the ARP extended them,
continuing the pandemic policies of subsidizing non-work. Only 7
million jobs were added during the 13-month period after the ARP
was implemented, between April 2021 and May 2022.
113
Figure 3-2: Employment Loss and Recovery Pre and Post
American Rescue Plan, February 2020-May 2022
Source: Basic Monthly Current Population Survey data; Bureau of Labor Statistics, All Employees,
Total Nonfarm.
Suppressed Employment is Due to Weak Labor Supply
The cause of suppressed employment levels is not weak labor
demand. The workers who are available and looking for work are
being hired. As of May 2022, the unemployment rate was 3.6
percent, just slightly higher than the pre-COVID level of 3.5
percent in February 2020.132 Rather, suppressed employment
levels are due to weak labor supply.
Strong labor demand in conjunction with weak labor supply is
evidenced by the growing gap between job openings and new hires
by employers. By May 2022, there were 4.8 million more job
openings than hires (Figure 3-3).
114
Figure 3-3: Job Openings and Hires, Monthly, January 2016-May
2022, Millions of Jobs
Source: U.S. Bureau of Labor Statistics, Job Openings: Total Nonfarm [JTSJOL], retrieved from
FRED, Federal Reserve Bank of St. Louis; U.S. Bureau of Labor Statistics, Hires: Total Nonfarm
[JTSHIL], retrieved from FRED, Federal Reserve Bank of St. Louis.
While new jobs are going unfilled at record rates, more workers
are also voluntarily leaving their existing jobs, in what has become
known as the “Great Resignation.”133 While the Report notes that
voluntary quits are generally viewed “as a sign of labor market
confidence,” the record breaking number of quits in 2021 may be
less a sign of labor market confidence than an indicator of the high
excess savings attained over the pandemic (see more in Chapter
2). Not all of the individuals who left their jobs intend to return,
which has held back labor supply.
Labor Market is Delivering Less to Families
During the years immediately preceding the pandemic, real wages
were rising, especially for low-wage workers. Rising wages fueled
real median household income growth of a record 6.8 percent to
115
an all-time high of $69,560 in 2019.134 Income gains driven by
employment and wage growth—particularly for women and
minorities—caused poverty to fall to a record low for every racial
and ethnic group in 2019.135
The labor market has not delivered the same prosperity to families
during the Biden Administration. After an initial spike in real
median earnings when lower wage workers lost their jobs at the
height of the pandemic, real median earnings fell consistently
since Q3 2020. The initial decline was largely good news,
signaling the return of lower-wage workers to the workforce.
However, large real earnings decline since the second half of 2021
was primarily the product of inflation eroding all workers’ wages.
In real terms, the average weekly earnings of production and nonsupervisory employees in April 2022 were 3.1 percent lower than
they were a year prior.136 When looking at all private industry
employees, real average weekly earnings in April 2022 were
nearly 3.4 percent lower than the year prior.137
When factoring in lower overall employment levels relative to the
pre-pandemic trend (the 6.3 million missing workers) and reduced
real earnings of workers, the recovery of aggregate inflationadjusted earnings received by all employed Americans fell even
further below the pre-pandemic trend. Figure 3-4 shows real
aggregated weekly earnings for all workers from January 2017 to
April 2022. Compared to the pre-pandemic economy, aggregate
real earnings in April 2022 were 7.5 percent below where they
should be. Lower total earnings also persisted among most
demographic groups, with women and Asian workers the furthest
behind.138 Since earnings make up the majority of market income
for most households, below-trend real aggregate earnings
suppressed market incomes for American families making them
less well off than they should be.
116
Figure 3-4: Aggregate Real Weekly Earnings for All Workers,
Billions of 2022 Dollars, Monthly, January 2017-April 2022
Source: JEC Calculations; Basic Monthly Current Population Survey data; Bureau of Labor
Statistics.
Notes: JEC calculations with linear trendline fitted based on data from January 2017 through
February 2020. Earnings adjusted to 2022 dollars using the Consumer Price Index–Urban Series.
Policies That Have Contributed to Weak Labor Supply
The 6.3 million worker shortfall as of May 2022 is largely a result
of policy choices during the Biden Administration that
unnecessarily weakened labor supply. These policies
disincentivized work, enabled non-work, made it more difficult to
work, and in some cases prohibited work altogether. While some
of the policies have expired, their effects continue to shape a labor
market that remains far removed from the trends established
before the pandemic.
117
Disincentives to Work
Work disincentives make work less rewarding by shrinking the
difference between an individual’s income when working and
when not working. The ARP weakened work incentives through
enhanced unemployment compensation and changes to the CTC.
ENHANCED UNEMPLOYMENT COMPENSATION
In 2021, pandemic unemployment programs were extended by the
ARP well beyond their early, emergency justification.
Federal Pandemic Unemployment Compensation (FPUC) is the
COVID-era program that likely provided the largest work
disincentive. In its original form as part of the Coronavirus Aid,
Relief, and Economic Security (CARES) Act, FPUC provided
unemployment claimants with an additional $600 per week on top
of regular State unemployment benefits. This created a significant
anti-work incentive by paying many people more to remain
unemployed than to return to work. Peter Ganong, Pascal Noel,
and Joseph S. Vavra from the University of Chicago estimate that
unemployment benefits exceeded potential wages for nearly 70
percent of eligible unemployment claimants.139
By 2021, the FPUC was paying out $300 per week in additional
unemployment compensation on top of regular State benefits.
Rather than allow the program to expire in order to facilitate the
economic recovery, the ARP extended the FPUC and eligibility to
workers who would otherwise not be covered. American Action
Forum research found that with $300 in additional weekly
benefits, 37 percent of the entire U.S. workforce would receive
more from unemployment benefits than from working.140
The FPUC expired in September 2021. Some States, however,
chose to end the FPUC benefit prior to the Federal deadline. The
24 States that eliminated the $300 FPUC early experienced on
average a 14 percent reduction in initial unemployment claims and
118
a 5 percent reduction in continuing claims.141 Research from Harry
Holzer, Glenn Hubbard, and Michael Strain found that
unemployed workers who lost access to supplemental
unemployment assistance were more likely to move into
employment when benefits were ended.142 These findings provide
additional evidence that enhanced unemployment programs kept
individuals out of the workforce in 2021.
EXPANDED CTC
The ARP made significant changes to the CTC by removing the
earnings requirement, making 17-year-old dependents eligible,
and increasing the maximum amount of the credit from $2,000 per
child to up to $3,600 per child. The prior version of the CTC
encouraged parents to participate in the workforce because
earnings or taxable income were required to receive it. The prior
version of the CTC also encouraged additional hours of work for
some parents because of the phase-in design. However, the
expanded CTC made all parents eligible for the full CTC amount
regardless of work. This incentivized some parents to stay out of
the workforce entirely and incentivized other working parents to
work fewer hours than they otherwise would.143
Kevin Corinth, Bruce D. Meyer, Matthew Stadnicki, and Derek
Wu from the University of Chicago estimate that a permanent
CTC without an earnings or taxable income requirement would
lead 1.5 million workers (or 2.6 percent of all working parents) to
leave the workforce.144 As a result of workforce exits, child
poverty would fall by less than advertised and deep child poverty
would not fall under the expanded CTC.145
Enabling Non-Work
The fiscal response to COVID–19 enabled the subsidization of
non-work through excess savings. Expanded unemployment, as
mentioned above, played a significant role in keeping individuals
from returning to or looking for work, while policies like
119
Economic Impact Payments and student loan forbearance further
increased savings likely prolonging workforce detachment.
During the COVID-19 pandemic the Government issued three
Economic Impact Payments: $1,200 (+$500 per eligible child) in
April 2020 under the CARES Act, $600 (+$600 per eligible child)
in December 2020 as part of the Tax Relief Act, and $1,400
(+$1,400 for each qualifying dependent) in March 2021 under the
ARP. Typically, single individuals with Adjusted Gross Income
below $75,000 and married couples with Adjusted Gross Income
below $150,000 were entitled to the full payment amounts.146
Across all three rounds of Economic Impact Payments, a single
adult with one child could receive up to $5,700, and a married
couple with two children could receive up to $11,400, regardless
of employment status or need. These direct cash transfers
decreased the need to return to work if the individual was not
employed or to pursue additional work hours if employed.
Student loan forbearance contributed to the excess savings of
Americans as well. Research done by Tom Lee at the American
Action Forum explored the effect that student loan forbearance
had on borrowers’ choice to continue making regular payments.
Prior to the pandemic in Q1 2020, nearly 50 percent of borrowers
were making regular payments. Following the passage of the
CARES Act, which contained the original loan forbearance
provision, the percent of borrowers making regular payments
dropped sharply. Since Q3 2020, the percent of borrowers making
regular payments has remained relatively stable at 1.1 percent.147
By continuing to extend loan forbearance, individuals retained as
savings what they would have been spending on their regular
payments. Pre-pandemic data show that the average required
monthly payment was between $200 and $300 per month. For the
average individual who stopped making regular payments on their
student loans starting in April 2020, following the passage of the
CARES Act, by the end of May 2022 they would have
120
accumulated $5,200 to $7,800 in excess funds that they otherwise
would have put toward loan repayment.
Making it More Difficult to Work
Child care closures and the switch from in-person to virtual
schooling made work more difficult for parents. Parents who
typically worked outside the home had to make the choice to leave
their children by themselves or not work.
Child care costs rose significantly during the COVID pandemic
and access to child care options became even more challenging
due to the high number of center closures that occurred following
the steep drop in demand in the early days of the pandemic.
According to the National Association for the Education of Young
Children and the Early Care and Education Consortium, daily
child care attendance initially dropped by more than 70 percent
leading over 35 percent of providers to remain closed as of April
2021.148
Compounding the problem of child care closures, schools turned
to virtual schooling. The Centers for Disease Control (CDC) did
not declare it safe to open schools until February 2021. Even then,
CDC guidance recommended masking indoors, maintaining
distance, and limiting supplementary activities like fully
reopening cafeterias or extra-curriculars. Despite reduced severity
of infection among children, some States and localities decided to
extend or implement regulations on schools and child care centers
even after the CDC recommendation for reopening. Washington
DC, for example, limited class size in schools until March 2021,
and restrictions on the number of children in child care centers
were still in place in May 2021.149
Prohibitions on Work
Beginning in 2021, the Federal Government attempted to impose
sweeping vaccine mandates on workers. Universal vaccine
121
mandates would have effectively prohibited the 45 million
Americans (or 30 percent of the civilian labor force) who remained
unvaccinated as of December 2021 from working.150 The JEC
estimates that at the time, between 2.1 and 6.8 million workers
would have been at risk of leaving their jobs under a Federal
vaccine mandate.151
While the mandate imposed by the Biden Administration was
struck down in court, around 40 percent of employers (as of March
2022) chose to require vaccination or regular testing, in some cases
in anticipation of being subject to the Biden Administration’s
Federal mandate.152 These private mandates, along with the
Federal vaccine mandate on hospital workers and Federal workers,
forced some people who did not get the vaccine to leave their
jobs.153
Policies to Promote Full Employment
The Report fails to recognize that suppressed labor supply is
holding back the labor market, due in large part to the Biden
Administration’s policies. Future policies intended to promote full
employment must focus on increasing labor supply.
First and foremost, future policies should not add or expand
disincentives to work. Cancelling any portion of student loans, and
pushing through provisions of the proposed Build Back Better Act
including the expanded CTC, national paid leave, and vague
promises to address climate change by requiring union labor
would ultimately do more harm to the already distorted labor
market. Such policies would further weaken labor supply and
should be avoided.
In addition to avoiding further harm, policymakers can also take
proactive steps to boost labor supply.
122
Box 3-1. The Productivity-Pay Gap Myth
In an attempt to highlight inequities in the U.S. economy, the
Report points to the oft-cited “productivity-pay gap,” shown
below in Figure 3-5.154
Figure 3-5: Productivity Pay Gap Myth
Source: Report 159.
The premise of this argument is that over time the value that
workers provide to the economy (productivity) disassociates with
what workers receive from the economy in wages. This seemingly
troubling phenomenon, according to the Report, lends itself to
interventionist solutions including increasing the Federal
minimum wage and pushing more workers (regardless of their
preferences) into unions.
The purported productivity-pay gap has faced significant and
compelling criticism.155 The methodology underlying Figure 3-5
has been discredited and research indicates the opposite is true.
Productivity growth remains closely related to wage growth.
123
Economist James Sherk finds that key methodological differences
between the productivity and compensation series in Figure 3-5
account for nearly 80 percent of the alleged gap.156 Chief among
these differences being that the productivity and compensation
series use different inflation adjustments.157 The Implicit Price
Deflator (IPD) is used for productivity series and the Consumer
Price Index (CPI) is used for the compensation series. Comparing
wages and productivity measures when each is adjusted using
different deflators will not lead to accurate conclusions.
In fact, rigorous research identifies a strong relationship between
increased productivity and higher wages. Productivity growth is
correlated with wage gains for workers in both high and low skill
industries. Edward Lazear found that between 1989 and 2017,
industries with significant concentrations of high skilled workers
saw productivity rise 40 percent and wages rise 29 percent. Over
the same time period, lower skilled industries saw a 22 percent
increase in productivity and a 27 percent increase in wages.158 Not
only do these and other studies show that productivity and wages
are still connected, but they show that differences in wage growth
are likely the result of different levels of productivity. Wage
inequality is not mainly a result of direct discrimination as the
Report claims.
Federal policymakers could consider fixing the myriad of
disincentives to work that exist across the large and complex
means-tested welfare system. Many welfare programs undermine
work by providing assistance without requiring employment or
work preparation for those who are working age and non-disabled.
These programs make non-work a viable alternative to work for
some Americans. Congress could pursue reforms to Temporary
Assistance for Needy Families, the Supplemental Nutrition
Assistance Program, Medicaid, rental housing assistance
programs, Social Security Disability Insurance, Supplemental
Security Income, and a number of other social safety net programs
to more effectively promote work.159
124
State and local occupational licensing reforms would also enable
individuals to more easily enter new professions or industries and
pivot within the labor market, a point the Report similarly
highlights.160 Currently, occupational licensing regulations require
workers to receive permission from State and local Governments
to legally receive pay for their services. These requirements force
animal breeders, auctioneers, dance instructors, hair braiders,
bartenders, florists, contractors, cosmetologists, landscapers, and
even fortune tellers to pay fees (which can be several thousands of
dollars) to do a requisite amount of training (which can take
anywhere between a few hours to over a year) before being able
to legally work.161
The frequently voiced justification behind occupational licensing
is that it protects consumers. Much like a doctor requires a degree
before he or she can practice medicine, many licensing
requirements are purportedly put in place to ensure that safety
standards are upheld. The reality, however, is that many of these
licensing processes have no obvious safety-related need and
instead act solely as barriers to entry that discourage labor
mobility. The Federal Reserve Bank of Minneapolis finds
interstate migration rates for workers in jobs requiring an
occupational license are 36 percent lower than for workers with
unlicensed jobs.162 The evidence shows that licensing
requirements likely play a role in restricting individuals’ interstate movement and consequently keep them from new
opportunities.
The heavy regulatory burdens of occupational licensing tend to
fall hardest on military spouses, who typically live in several
States throughout their working lives, and the formerly
incarcerated, who are typically ineligible to receive occupational
licenses to work.
Making it easier for Americans to access work without jumping
through unnecessary hoops would make the goal of full
employment more attainable. While reform is challenging given
125
that each State has its own regulations for different jobs and
industries, the potential gains for workers make occupational
licensing reform a worthwhile pursuit.
Conclusion
In the pre-pandemic economy, both employment and labor force
participation were on the rise. Americans came off the sidelines to
join the workforce, wages rose, and unemployment fell. Workers
with low wages and those from historically disadvantaged groups
experienced some of the largest gains, enjoying record high
incomes and record low poverty rates.
Following the initial pandemic shock in early 2020, employment
started to recover rapidly, but then began to slow as a result of
work disincentives like enhanced unemployment compensation,
an expanded CTC, cash transfers, and vaccine mandates. The ARP
continued or increased many of the policies that held back labor
supply. The policy-induced suppression of the labor supply
contributed to a 6.3 million worker shortfall relative to the prepandemic trend. While nominal wages rose in some industries,
high inflation reversed those gains.
The strong pre-pandemic economy demonstrated what works for
improving the labor market outcomes for American families,
especially those with low wages and from historically
disadvantaged groups—a labor market where workers and
employers alike are free from burdensome regulation and work is
rewarded more than non-work.
To achieve full employment, the root causes of the slow labor
market recovery must be addressed. Increasing labor supply by
refraining from additional Federal spending and by proactively
engaging in occupational licensing reform is the first step to
increasing productivity, raising wages, and boosting the living
standards of American families.
126
CHAPTER 4: PRODUCTION
The Employment Act identifies the promotion of maximum
production as one of three key goals of economic policymaking,
along with stable prices and maximum employment.163 Economic
growth, driven by American enterprise and ingenuity, has served
as a powerful force for improving living standards throughout our
nation’s history.
While the concept of economic growth and increased production
can seem abstract and removed from the daily lives of Americans,
the benefits of economic growth show up across various
dimensions of well-being. Americans at all income levels have
access to a greater quality and quantity of food than ever before,
have more leisure time, and work fewer hours for higher incomes
than at any other point in history.164 They live in higher quality
homes with modern appliances and less overcrowding. Advances
in medical technology have helped increase the average life
expectancy from 47 years in 1900 to 79 years today.165
These gains in well-being are why the trend of slowing growth
rates highlighted in the Report presents a pressing policy concern.
The Report argues that economic growth has slowed in recent
decades as a result of the Government retreating from its core
responsibility of intervening in markets to keep them from failing.
However, there is very little evidence that Government has
withdrawn or that market failures are the cause of slowing
economic growth.
This chapter will document the opposite—how the growth of
Government and the regulatory state is an important cause of
lower growth rates over the last half-century, and why pro-growth
policies that rely on the private sector remain the best way to
maximize long-run economic production and economic wellbeing for all Americans.
127
Is Economic Growth Slowing?
Economic growth has historically served as a powerful force for
improving the material well-being and living standards of
Americans. Yet, rates of economic growth in the United States and
other developed countries have slowed somewhat in recent
decades. Following the goals set out in the Employment Act, the
Report rightly focuses on the importance of maximizing economic
growth for improving the well-being of all Americans, and it
accurately notes that gross domestic product (GDP) growth rates
have slowed somewhat since the 1970s. However, the Report
ignores cause for future optimism.
The average annual real GDP growth rate between 1948 and 1978
in the United States was 3.8 percent. In the years following 1978
the average GDP growth rate slowed by 1.1 percentage points to
2.7 percent.
To more clearly show this trend, Figure 4-1 presents a 10-year
rolling average of annual growth rates. The figure shows three
distinct periods. Growth rates were initially high, averaging 3.9
percent up to 1975, fell to an average of 3.3 percent between 1975
and 2000, and fell again to 2.0 percent over the past two decades
(2000-2021). Some of this decline is due to slower population
growth and other demographic factors, but growth in GDP per
capita has similarly fallen from an average annual growth rate of
2.4 percent between 1948-1975, to an average annual growth rate
of 1.7 percent from 1975-2021.
128
Figure 4-1: Real Gross Domestic Product, Rolling 10 Year
Average Annual Growth Rate, 1958-2021
Source: JEC Calculations; U.S. Bureau of Economic Analysis, National Bureau of Economic
Research.
Notes: Grey bars indicate recessions as defined by the National Bureau of Economic Research.
Small changes in growth rates can have a large impact on the
future size of the economy and relatedly, the well-being of
Americans. If the United States had maintained its pre-1970s
average growth rate, the economy would have been more than
twice as large in real terms at the end of 2021. Ensuring strong
growth in economic output over the long-run is the most powerful
tool we have to ensure future generations will continue to be better
off than their parents.
A related measure of economic progress, productivity growth, tells
a more complicated story. Figure 4-2 presents a measure of total
factor productivity (TFP), which represents how efficiently an
economy uses its inputs.166 Economic growth depends on inputs
129
of labor, capital, and the effectiveness with which these inputs are
combined and utilized. The economy can grow by expanding the
number of workers, hours worked, new investments in tools and
infrastructure, or increasing TFP. Figure 4-2 displays 10-year
average productivity growth rates. The trend shows that TFP was
growing at historically low rates through the 1970s and early1980s, falling from a ten-year average annual growth rate of 1.3
percent in 1964 to -0.2 percent in 1982. TFP growth rates then
picked up following the information technology booms of the late
1980s and early-1990s, grew again with the advent of smartphones
in the early-2000s, and declined following the 2008-09 Great
Recession. Productivity growth has since slowly recovered and the
ten-year average was roughly at its historical average in 2019.167
130
Figure 4-2: Total Factor Productivity, Rolling 10 Year Average
Annual Growth Rate, 1964-2019
Source: JEC Calculations; Bureau of Labor Statistics.
Notes: Grey bars indicate recessions as defined by the National Bureau of Economic Research.
Although productivity is only one factor that influences future
growth, there is some cause for optimism if recent trends continue.
Major breakthroughs in medical technology, artificial intelligence,
and building materials, to name a few examples, have the potential
to support stronger future productivity growth.168 New
technologies can take years to penetrate industries, but they
frequently lead to rapid acceleration in productivity growth
following widespread adoption. The Report’s presentation of these
economic trends and subsequent proposals of Government
intervention as a necessary remedy are too pessimistic and likely
counterproductive. Pre-pandemic trends in productivity could
mark a departure from the slower economic growth of previous
decades, especially if productivity growth is accompanied by
growth in the labor force and capital stock.169
131
The Report blames slow economic growth on a “retreat of the U.S.
public sector” beginning in the 1970s. The next section will show
that instead of retreating, Government has steadily grown over
time.
Growth of the Public Sector
The Report misdiagnoses the primary cause of slower economic
growth, attributing it to a “depleted public sector” that has
retreated from its core responsibility of “partnering” with the
market. To the contrary, this section of the Response documents
how the size and scope of Government has grown steadily since
the 1930s, with no discernable retreat or shrinkage following the
1970s.
Figure 4-3 shows the steady increase in total Government
spending (Federal, State, and local) over the past four decades.
Adjusted for inflation, annual Government spending per person
amounted to $24,508 in January 2022, up from $11,928 in January
1970, a 105 percent real increase. Government spending as a share
of GDP has also increased, rising steadily through the 1970s and
1980s, before leveling off.
132
Figure 4-3: Annualized Government Spending Per Person, 2022
Dollars, Monthly, 1962-2022
Source: Bureau of Economic Analysis.
Note: Series includes total dollars of Federal, State, and local Government spending. Monthly
values shown are annualized and seasonally adjusted.
In addition to spending, Government intervention in the private
sector via regulatory activity has grown dramatically since the
1970s. The number of restrictions—defined here as words or
phrases in the Code of Federal Regulations that indicate an
obligation to comply, such as “must” or “shall,”—has nearly
tripled in the last 50 years. Figure 4-4 shows that regulatory
restrictions increased from just over 400,000 in 1970 to 1.1 million
in 2021.170 Between 1970 and 1980 the number of restrictions
increased by 57 percent, growing faster than in any other decade.
133
Figure 4-4: Code of Federal Regulations, Restriction Count,
1970-2021
Source: QuantGov.
Note: A restriction is defined as words or phrases in the Code of Federal Regulations that indicate
an obligation to comply.
Rather than representing a period of deregulation, the 1970s
represented an era of dramatic growth in the regulatory burden
imposed by the public sector. This period of expanding public
sector involvement in economic activity is reflected in books such
as The Population Bomb (1968) and Silent Spring (1962) that
sought to limit economic growth and impose population controls
as a means to protect the environment. Laws such as the National
Environmental Policy Act (NEPA) and the National Historic
Preservation Act (NHPA) made it harder to build new public or
private infrastructure. These laws, NEPA in particular, set up a
process that is intended to protect the natural and built
environment, but instead creates a system ripe for abuse by special
interest groups who use the process to block new infrastructure,
134
electricity generation, redevelopment projects, and other
economically significant investments.171 Similarly, a series of
court cases, including Citizens to Protect Overton Park v. Volpe,
further built the legal framework by which special interests can
engage in litigation to block new development.172 With expanding
control over economic activity, State and Federal regulatory
agencies can stand in the way of economic progress by simply
moving too slowly or not approving private sector proposals.
Even as overall regulation grew, some industries benefited from
modest deregulation in the 1970s. Deregulation of airlines,
trucking, and railroads allowed the industries to increase capacity
and reduce fares. As a result, airfare, trucking, and railroad
transportation costs fell by between 33 percent and 75 percent and
have remained lower in the following decades. Lower costs in
these three industries represent annual savings to consumers of
$67 billion annually in 2022 dollars.173 Likewise, while reforms in
the 1980s implemented cost benefit analyses in agency rulemaking
and the elimination of some price controls, regulatory
accumulation continued throughout the decade, slowing
temporarily before returning to the previous trend.174
Box 4-1. Private Versus Public Sector Research and
Development
One area where Government growth has not outpaced the private
sector is research and development (R&D). Total R&D spending
increased from 2.7 percent of GDP in 1970 to 3.5 percent of GDP
in Q1 2022, driven primarily by the private sector. Figure 4-5
shows that inflation adjusted private sector spending on R&D
increased 654 percent ($558 billion) between Q1 1970 and Q1
2022 while Government spending on R&D only increased 56
percent ($71 billion). Over this period, private sector spending on
R&D as a share of GDP increased from 1.1 percent to 2.6 percent
135
while Government spending on R&D as a share of GDP decreased
from 1.6 percent to 0.8 percent.
The fact that total R&D spending has increased in real terms and
as a share of GDP belies the Report’s claim that the past several
decades have seen “inadequate investment” in research. While it
is true that Government spending on R&D as a share of GDP has
fallen, there is limited evidence that additional Government
spending is needed or would mark a substantial improvement over
the heavy investment already present from the private sector.175
In fact, Government R&D spending has often been criticized as
less efficient than private spending. For example, a large portion
of the elevated Government R&D spending in the 1960s and 1980s
represented spending related to Cold War competition with the
Soviet Union. The research leaned heavily on military uses and
has been criticized in the academic literature, including by a
National Academy of Sciences roundtable, as feeding a
“redundant and perhaps wasteful” research industry that was
driven primarily by incentives to chase funding.176 While
Government spending on R&D as a share of GDP fell in the
decades following the Cold War, it has been more than offset by
growth in private sector spending.
136
Figure 4-5: Private versus Public Sector Spending on Research
and Development as Share of GDP, 1947–2022
Source: Bureau of Economic Analysis.
There is little evidence that any period in recent history has
represented a broad retreat of the public sector. Instead, the past
several decades have represented an acceleration in the growth of
Government by multiple different metrics. In the limited cases
where Government has relaxed some of its onerous rules, namely
deregulation of airlines, trucking, and railroads, consumers have
experienced broad-based benefits in the form of significant cost
savings and a greater variety of options.
137
Consequences of an Expanding Public Sector
Where the Report blames slower economic growth on a depleted
public sector, this Response argues that the opposite is more likely
to be true, that burdensome growth of the public sector has been a
major driver of the slowing growth trends in recent decades. This
section documents evidence that growth in Government since the
1970s—in terms of regulation, spending, and taxes—is a major
cause of muted economic growth in the United States.
Regulations can create excessive burdens for individuals and
businesses alike. These rules and mandates can disincentivize
firms from growing larger to take advantage of economies of scale,
entering new markets, bringing new products to consumers, or
investing in talent development. As these costs accumulate, the
burden weighs on overall economic growth and productivity.
The American Action Forum reports that since 2005 the
cumulative economic impact of Federal rulemaking as estimated
by Federal agencies amounts to $1.3 trillion.177 These economic
impact estimates are calculated by agencies over a limited time
frame (e.g. 10 years) and fail to account for all of the possible ways
that regulation can prove detrimental to economic growth,
including ways in which regulations may interact to worsen
growth. Additionally, the latest available OMB Information
Collection Budget (2018) found that the annual paperwork burden
imposed by Federal Government regulation since the passage of
the Paperwork Reduction Act (1980) amounted to 11.5 billion
hours annually.178 Without including the more than 480 million
additional annual paperwork hours imposed by agencies since the
release of the latest OMB report, at the average private sector wage
as of April 2022, this paperwork burden would amount to more
than $360 billion in wages spent on unproductive economic
activity, with the actual cost likely much higher as compliance
staff are typically lawyers and other highly paid professionals.179
138
Economists estimate that the true cumulative cost of regulations is
far larger than that reported by Federal agencies.180 Federal
economic impact estimates fail to account for a majority of
regulations and often miss many of the ways that the rules could
prove detrimental to economic growth. Bentley Coffey, Patrick
McLaughlin, and Pietro Petro find that the U.S. economy would
have been 25 percent larger in 2012 if regulation had been held
constant at 1980 levels, implying that regulatory growth since
1980 reduced 2012 GDP by $4 trillion.181 In 2012, this amounted
to approximately $13,000 per capita in lost output.
Using a different method and time period, John Dawson and John
Seater estimate an even larger impact of regulation on economic
growth. They find that regulation reduced economic growth
between 1949 and 2005 by 2 percent annually, implying the 2005
economy was 28 percent of the size it could have been had
regulation remained constant at 1949 levels.182 Dawson and Seater
also find that changes in regulation likely contributed to the
productivity slowdown in the 1970s.183 Dustin Chambers,
McLaughlin, and Oliver Sherouse find that regulatory growth
depresses new firm startups and job creation rates by between 4
percent and 20 percent annually across industries.184 German
Gutiérrez and Thomas Philippon find that, in comparison to other
possible explanations such as returns to scale or changes in
technology, regulation and taxation can effectively explain the
recently observed declined in new firm startup rates and
dynamism within industries.185
Government spending, and the taxation needed to finance it, also
imposes costs that depress economic growth. While some studies
find that Government spending on the protection of property rights
and certain types of physical infrastructure investments can
support growth, the benefits of Government spending decline as
the public sector expands relative to the private sector.186 Too
139
much Government spending on unproductive ends can inflate
prices in markets, crowd out private investments that face
competition with Government, encourage corruption and rentseeking for Government-granted privileges, and reduce economic
mobility by subsidizing non-work through income transfer
programs and other benefits.
Any benefit from Government spending is offset by the costs of
the taxes necessary to finance the expenditures. The negative
effects of taxation in suppressing economic growth are well
supported in a range of academic research. Taxes on labor income
reduce incentives to work and innovate and taxes on capital and
investment income discourage the private investment necessary
for sustained economic growth. Former Chair of the Council of
Economic Advisers for President Obama, Christina D. Romer, and
coauthor David H. Romer find that a one percent increase in
taxation as a share of GDP leads to a decrease of almost three
percent in real GDP.187 Valerie Ramey corroborates that tax
increases reduce GDP by between two and three times the revenue
raised.188 William McBride likewise concludes that “nearly every
empirical study of taxes and economic growth published in a peerreviewed academic journal finds that tax increases harm economic
growth.”189
The U.S. Government has not retreated since the 1970s, but
instead has expanded significantly as measured by regulations and
spending. These Government activities reduce rather than enhance
the goal of promoting economic production set forth in the
Employment Act.
140
Box 4-2. Costs of Industrial Policy
The Report argues that a lack of Government involvement in
industrial production and trade worsened economic turmoil in
2021. To remedy this, it recommends a more active Federally
directed industrial policy that restricts trade to promote domestic
industries and subsidizes politically popular domestic
manufacturers. The Report admits in Chapter 7 that industrial
policy has had a mixed track record in the United States and in
other countries. But it goes on to suggest that “many failed efforts
might have been avoided with better processes for strategically
targeting industrial policy opportunities.”190
Unfortunately, the Report stops there, making no mention of the
costs of industrial policy. Not only does Government intervention
in domestic manufacturing impose opportunity costs by
discouraging private investment, but the projects themselves often
cost more than initial projections and the benefits are almost
always overstated.191 It is also likely that any industrial policy
efforts would no longer offer the needed innovation by the time
they are completed, as Government projects often take ten years
or more to complete192 and as politicians are rarely suited to
predict future market needs.193 The relative inefficiency of
Government planning and the disconnect between Government
and market priorities are some of the unavoidable reasons why
past industrial policy efforts have failed and why “better
processes” are unlikely to make a difference.
The Report praises Japanese industrial policy in the 1980s,
claiming that Government intervention helped Japan to increase
its international competitiveness.194 Yet, Japanese industrial
policy missed the mark on strategic investment and resulted in
multiple planning failures, corruption, and an economic collapse
that launched Japan into its lost decade.195
141
Pursuing a Pro-Growth Agenda
To support growth and prosperity, policymakers should limit the
size and involvement of Government in the affairs and decisionmaking of the private sector. Government should seek to reduce
the regulatory, spending, and tax burdens it imposes on its citizens.
The pro-growth policies of deregulation and tax cuts implemented
in the pre-pandemic economy benefited low-income and
otherwise disadvantaged Americans the most through a strong
labor market and a healthy, growing economy. The President’s
agenda outlined in the Report and the Fiscal Year 2023 Budget
ignore these lessons by raising taxes, increasing spending, and
advancing an agenda of increasingly costly regulations.
For example, the Budget plans to raise about $954 billion in tax
revenue by increasing the corporate income tax rate by 7
percentage points from 21 percent to 28 percent.196 Such an action
would leave American businesses paying the highest combined
corporate tax rates in the developed world. President Biden’s other
tax proposals could raise total combined top marginal personal
income tax rates by 14.4 percentage points (from 42.9 percent to
57.3 percent) and capital gains tax rates by 19.7 percentage points
(from 29.2 percent to 48.9 percent).197 These tax increases would
put American personal and businesses tax rates well above the
international norm. The result would be less private investment,
slower economic growth, and weaker income gains for American
families.
The Biden Administration has also implemented an aggressive and
costly regulatory agenda, repealing the Trump Administration’s
two-for-one regulatory budget and beginning to rollback other
major regulatory reforms that took place between 2017 and 2020.
In 2021, major new regulations by the Biden Administration are
estimated by Federal agencies to impose at least $201 billion in
regulatory costs on the American economy.198 Looking forward,
142
the Biden Administration’s 2022 regulatory agenda, relative to the
prior administration, reflects a 35 percent increase in regulatory
actions and a 186 percent increase in economically significant
rulemakings—those that have an annual effect on the economy of
$100 million or more.199 These actions increase policy uncertainty,
actively discourage investment and production, and increase costs
for American families.
The Report’s proposals may lead to what appear to be small
decreases in economic growth rates, but even small changes can
have large long-term effects. Thus, policies that reduce levels of
inequality—a key focus of the Report—at the expense of overall
growth would ultimately do more harm than good to the long-term
living standards of the very individuals these policies are designed
to support. Given that taxation and spending are the primary
mechanisms by which the Government would address inequality,
the policies proposed in the Report are likely to be
counterproductive to their stated goals of raising long term growth
and improving the well-being of all Americans.
Congress and the President should instead cut regulations, reduce
Federal outlays, and keep taxes low to help return our economy to
one of low inflation, full employment, and sustainable long-term
growth. These types of pro-growth reforms that actually allow the
Government to retreat are the best path toward reversing the
worrying economic trends identified by the Report. Following
pro-growth reforms under the Trump Administration, GDP growth
in 2017, 2018, and 2019 surpassed forecasters’ expectations and
resulted in gains for American families.200 In 2019, unemployment
fell to 3.5 percent, its lowest level since 1969, and real median
household income grew by a record 6.8 percent to an all-time high
of $68,700.201 These income gains and historic levels of job
growth—particularly for women and minorities—caused poverty
to fall to a record low for every race and ethnic group, with Black
143
and Hispanic poverty falling the most. The four years before the
pandemic also marked the reversal of a 20-year decline in primeage labor force participation, rising in January 2020 to 83.1
percent, a level not seen since 2008.202 Private nonresidential fixed
investment rose to more than 9 percent above trend, increasing
long run potential output by as much as 3 percent.203
To reduce the burdens of regulation, Congress and the President
could reinstate a regulatory budget, implement standard sunset
requirements for new regulations, require Congress to authorize
economically significant regulations and set up regular ex-post
reviews of rulemaking. These reforms would help increase
accountability of Federal agencies and reinsert Congress in the
process of ensuring regulations meet the statutory intent of the
authorizing legislation. Additionally, given the worsening of the
national housing affordability crisis, policies that Constitutionally
address the effect of local land use restrictions on housing supply
can have a large positive effect on economic growth by expanding
access to economic opportunity and more productive labor
markets.204
Box 4-3. Regulatory Budgeting and Review
In 1979, the first Response endorsed by both the Majority and
Minority members unanimously recommended a regulatory
budget, stating that “the current regulatory process fails to
recognize the goals of regulatory programs must be balanced with
other national objectives.”205 The report called for Congress to
amend the Congressional Budget and Impoundment Control Act
of 1974 to establish a regulatory budget that would limit the costs
of compliance imposed by each agency, stating that such a budget
would better quantify the economic burden that the Federal
Government imposes on the economy.
144
While this proposal was not ultimately implemented, examples of
effective regulatory budgeting and review systems can be found in
Canada as well as in other Organisation for Economic Cooperation and Development (OECD) countries including
Australia, the United Kingdom, and Portugal. Canada has
implemented both targeted regulatory reviews and a regulatory
budget.206 This approach is modeled after the red-tape reduction
success of British Columbia, encouraging agencies to reduce redtape and review and modernize regulations with support and
involvement from the private sector.207 Within three years of
implementing its regulatory reforms, British Columbia reduced its
regulatory burden by 37 percent. Following the reforms, GDP
growth in British Columbia accelerated from an average annual
growth rate 0.7 percent below the Canadian average in the decade
prior to implementing regulatory reform, to outpacing broader
economic growth in Canada annually by nearly a full percentage
point through 2020.208 Similarly, Portugal implemented a one-forone regulatory budget and the United Kingdom has established
requirements for agencies to identify simplification measures and
offsets for all major proposals.209
To reduce spending and the commensurate tax burden the
Government imposes on its citizens,210 Congress will need to act
in the immediate future to keep taxes from increasing
automatically following the expiration of the Tax Cuts and Jobs
Act after 2025. Beyond keeping taxes from rising, Congress and
the President should pursue additional reforms that bring spending
in line with tax revenues and continue to lower the tax burden for
all Americans.
Economic growth is critical for supporting the long-term
prosperity, fiscal stability, and material wellbeing of all
Americans. As a central goal of the Employment Act, promoting
maximum production should continue to be a key goal of the
145
Government. The Report does well to focus on this important goal,
but misdiagnoses key economic events and provides policy
proposals that will undermine, rather than promote economic
growth and production. Reducing Federal outlays to keep taxes
low, cutting unnecessary regulations, and removing disincentives
to work would go a long way towards returning our economy to
one of low inflation, full employment, and long-term growth.
146
CHAPTER 5: SOCIAL CAPITAL
This final chapter of the Response covers social capital, which
refers to the relationships within families, workplaces and
communities that enable a healthy society and are a crucial
ingredient for economic growth. The three main goals of the
Employment Act of 1946 are addressed in Chapter 2 through
Chapter 4. Here, we supplement our chapters on employment and
production by investigating trends that have been particularly
battered during the pandemic and represent foundational
structures on which employment and production are ultimately
based.
The Response highlights trends in social capital for two reasons.
First, social capital is a central but often overlooked factor
underlying economic growth and general well-being, key goals of
the Employment Act which directs public policy to “foster and
promote…the general welfare” and maximize employment and
production.211 Second, declines in social capital in recent decades,
accentuated by Government policies during the COVID-19
pandemic, make social capital an especially important topic today
as policymakers seek to advance economic prosperity through
increased employment and growth.
In recognition of the importance of social capital in fostering a
strong society and economy, Ranking Member Mike Lee
introduced the Social Capital Project in 2017 to document trends
in social capital and develop a policy agenda to strengthen the
social fabric of the nation. The Project focuses on five areas:
increasing family stability, making it more affordable to raise a
family, reconnecting Americans to work, improving investment in
youth, and rebuilding civil society.
This chapter discusses the current state of several trends related to
social capital, many of which were affected by economic and
147
social restrictions during the COVID-19 pandemic. These include
drug overdose deaths, homicides and violent crime, learning loss
among children, poor teen mental health, and declining family
formation. Each of these trends are in part the product of social
isolation and disconnection from community, key components of
social capital.
The Report largely neglects these topics, despite their large
economic costs and implications for achieving the Employment
Act’s economic goals. For example, we estimate that the 170,000
drug overdose deaths over the 20-month period since the
pandemic began carried an economic cost of almost $2.0 trillion.
The Report fails to discuss this surging epidemic, mentioning the
words “opioid” or “drug” only a total of three times in the context
of drug abuse. In contrast, the Report uses the word “equity”
nearly 40 times. The Report also fails to address costs of
skyrocketing homicides or the policy mistake of shutting down
schools. The Response highlights these issues as a means of
informing policymakers on some of the most pressing threats to
societal and economic strength today.
Drug Overdose Deaths
The U.S. has been facing an epidemic of drug abuse for decades
that became much worse during the COVID-19 pandemic.212 After
rising steadily since the early 2000s, drug overdose deaths began
to level off in January 2017 at just over 6,000 deaths per month,
picking up to about 6,400 deaths by February 2020 just before the
pandemic emerged (see Figure 5-1). Drug overdose deaths then
spiked to 7,268 in March 2020 and jumped even higher to 9,463
in May 2020. During the 12-month period ending in October 2021,
overdose deaths reached almost 104,000—nearly the highest 12month total ever recorded.213
148
Figure 5-1: Drug Overdose Deaths by Month, January 2015October 2021
Source: Centers for Disease Control and Prevention. National Center for Health Statistics.
National Vital Statistics System. Mortality 1999-2020 on CDC WONDER Online Database,
released in 2021.214
Notes: JEC calculations with linear trendline fitted based on data from January 2015 through
February 2020.
The pandemic, and policies implemented in response to the
pandemic, likely caused the major growth in drug overdose deaths
since early 2020. Of the nearly 170,000 drug overdose deaths
between March 2020 and October 2021, approximately 37,000
were in excess of the number of deaths that would have been
expected if deaths evolved along their pre-pandemic trend (a death
toll approximately 28 percent higher than expected). Consistent
with these results, Casey Mulligan estimates the pandemic and
related recession were associated with a 10 percent to 60 percent
increase in “deaths of despair” more broadly (deaths from drug
overdose, suicide, and alcohol) in 2020.215
149
The cost of the loss of life due to overdose deaths in 2020 and 2021
is staggering. We estimate the economic cost of drug overdose
deaths by applying a value of statistical life (VSL) to each life lost.
The VSL is used by Federal agencies to evaluate the costs and
benefits of policies that involve mortality risks. A VSL of $11.8
million is the preferred estimate used by the Department of
Transportation as of 2021. Applying the VSL to drug overdose
deaths, the economic cost of the 37,000 excess deaths during the
pandemic (between March 2020 and October 2021) was
approximately $437 billion.216 This is 22 percent of the nearly $2.0
trillion cost of all overdose deaths during this period.217
Nonfatal effects of drug abuse have major costs as well. Jeremy
Greenwood, Nezih Guner, and Karen Kopecky estimate that
increased substance use explains between 9 percent and 26 percent
of the reduction in labor force participation among prime-age
adults (aged 25 to 54) during the first 17 months of the
pandemic.218 Prime-age adults disproportionately suffer from
substance abuse, reflected by the fact that almost 70 percent of
overdose deaths between March 2020 and December 2020 were
people of prime working age.219
The rise in drug abuse and its attendant costs were likely fueled by
a combination of pandemic-related policies that began in 2020 and
continued into 2021, including Federal policies that boosted
incomes while discouraging work, making it easier to afford drugs
and reducing the opportunity cost of abusing them. Casey
Mulligan finds that elevated overdose deaths during the early
months of the pandemic only began to fall when supplemental
Unemployment Insurance payments were reduced.220 Jon E.
Sprague et al., using data from the Ohio Department of Health,
find that economic impact payments during the pandemic were
associated with higher rates of opioid overdoses.221
150
Social distancing and restrictions on gatherings likely also
contributed to increased drug overdose deaths during the
pandemic. Social isolation can contribute to worsened mental
health and subsequent increased drug use among users.222 The
pandemic and social distancing policies also reduced the
availability of drug treatment services and likely dampened
people’s desire to seek out treatment. A survey by the National
Association of Addiction Treatment Providers administered in
August 2020 and September 2020 found that 43 percent of
treatment providers decreased their patient capacity due to
COVID-19.223 In another study using data from California’s
Outcomes Measurement System, Tami L. Mark et al. find that
initiation of drug treatment services decreased by 28 percent
between March 2020 and October 2020, compared to pre-COVID19 levels.224
Less policing of drug offenses during the pandemic may have also
increased accessibility of illegal drugs. Even as drug overdoses
climbed, the rate of people convicted for drug offenses
(manufacturing, selling, or possession of illicit drugs) declined for
most of 2020 and at least through the first quarter of 2021.225
Unfortunately, the Biden Administration has failed to fully
recognize the severity of the drug epidemic, the role of its policies
in fueling the problem, and the most productive ways of
addressing it. In April 2022, the Biden Administration released a
drug control strategy that heavily focuses on harm reduction.226
Harm reduction attempts to make drug use safer by providing
clean needles and supervised sites for drug use, among other
provisions. However, a harm reduction approach not only fails to
promote recovery from addiction, it fails to prevent people from
becoming addicted in the first place.227
151
Countering the drug epidemic requires addressing the factors that
cause and exacerbate it. Government policies that subsidize nonwork should not be reintroduced. Shutdowns that unnecessarily
limit Americans’ ability to receive treatment, work, or socialize
should be avoided. The Federal Government could also block the
influx of illicit drugs into the country through ports of entry at the
southern border and through the mail from factories in China. But
as a first step, the Biden Administration should recognize the
record scale of the surging drug epidemic. The fact that the Report
dedicates almost no attention to the problem—mentioning the
words “drug” or “opioid” a total of three times in the context of
drug abuse—demonstrates the Administration is falling short even
on this first step.
Homicide and Violent Crime
After the U.S. homicide rate fell by almost half from 1991 to 2019,
it spiked by 27 percent in 2020, rising from a rate of 5.1 to 6.5
victims per 100,000 people (see Figure 5-2). Rising violent crime
imposes high social and economic costs on affected communities;
in addition to direct costs to victims, it threatens the ability to work
and consume safely, reducing economic activity and the wellbeing of citizens.
According to the Centers for Disease Control and Prevention,
there were 24,576 homicide deaths in 2020. 228 These homicides
represent an economic cost of almost $290 billion, assuming a
VSL of $11.8 million. These costs were borne in large part by
majority Black and Hispanic neighborhoods that saw the largest
annual increases in homicides in 2020.229 Provisional data from
the CDC show homicides remained elevated in the first two
quarters of 2021. Relative to its Q1 2020 rate, the homicide rate
was 20 percent higher in the Q1 2021 and 36 percent higher in Q2
2021.230
152
Figure 5-2: Homicides Per 100,000 Population by Year, 19852020
Source: Federal Bureau of Investigation. Crime Data Explorer. https://crime-dataexplorer.app.cloud.gov/pages/explorer/crime/crime-trend.
Richard Rosenfeld of the University of Missouri suggests the
increased homicide rate could be attributed to a variety of factors:
economic challenges associated with the pandemic, social unrest
surrounding the killing of George Floyd, reduced policing as a
result of the pandemic, political pressure against policing, law
enforcement staffing shortages, increased drug use, and greater
access to guns.231 Julia P. Schleimer et al. find that unemployment
in the early months of the pandemic was associated with higher
rates of gun violence and homicide, although not with acquisitive
crime (e.g., theft, burglary, robbery) or aggravated assault.232
In spite of the alarming increase in homicides and the substantial
costs it imposes on families and communities, the Report
overlooks the problem. Given the link between violent crime and
153
unemployment, addressing the spike in homicides can begin with
not reintroducing policies that discourage work. In addition, local
Governments should support law enforcement in protecting
communities against violent crime.
Learning Loss and Mental Health among Children and Youth
In 2021, the majority of children in the United States continued to
experience disruptions in their schooling due to persisting school
closures that began in 2020 at the onset of the pandemic. In the
spring of 2021, only 18 percent of schools were operating fully in
person, 24 percent remained fully remote, and 51 percent were
operating under a hybrid model.233 One year later, in the spring of
2022, schools have mostly returned to in-person learning, with 92
percent fully in person and only 0.5 percent fully remote.234
School closures not only pushed children into less productive
virtual learning environments, they also led some children to stay
out of school altogether. Total public school enrollment for all
grade levels decreased three percent between the 2019-2020 and
2020-2021 school years, with pre-kindergarten and kindergarten
enrollment down by 13 percent.235 Declining public school
enrollment, particularly among young children, may reflect some
families shifting to non-public schooling options, such as private
or home schooling, but it likely also includes some children not
enrolling in any type of formal education.
Disruptions in schooling that persisted into the first half of 2021
imposed significant learning loss on children. According to the
Penn Wharton Budget Model, school disruption led to learning
loss equivalent to 0.42 fewer years of reading and 0.43 fewer years
of math during the 2020-2021 school year.236 In another study
examining school testing data among students in the first through
eighth grades, researchers found that fewer students were prepared
for grade-level reading or math in the spring of 2021 compared to
154
previous years.237 Younger students were particularly ill-prepared
for grade level reading or math.238
Learning loss was greater among disadvantaged students, as
children in disadvantaged communities typically experienced
fewer days of in-person schooling during the pandemic.239 These
students are less likely to have a high-quality learning
environment at home free of distractions, less likely to have access
to their own devices dedicated to remote instruction, and less
likely to engage in online school with the same consistency as
students from higher-income families.240
Learning loss from prolonged school closures will have longlasting economic consequences. A McKinsey & Company report
by Emma Dorn et al., estimates that learning loss from the
pandemic could cost the average K-12 student in the United States
$61,000 to $82,000 (in constant 2020 dollars) in lifetime
earnings.241 The Penn Wharton Budget Model estimates learning
loss during the 2020-2021 school year will lead to a drop in labor
productivity of 0.45 percent in the year 2031 and an even further
decline of 1.12 percent in 2051 as the age cohorts affected by the
pandemic come to make up a larger share of the labor force and
enter their peak earning years.242 Declining labor force
productivity due to pandemic learning loss is projected to decrease
GDP by 1.4 percent in 2051.243
Given the Report’s focus on equity, learning loss due to school
closures should be an area of major concern to the Administration.
While the Report discusses pandemic learning loss and the
particular impacts of school disruptions for disadvantaged
students, it should also have pointed out that the months-long
Government shutdowns of largely Government-run schools that
caused the learning loss were mostly unnecessary.
155
By the end of the fall 2020 semester, several studies had been
conducted on school transmission of COVID-19, with most
finding K-12 schools generally did not contribute significantly to
community spread of the virus.244 In early February 2021, Dr.
Rochelle Walensky, Director of the Centers for Disease Control
and Prevention, said schools were safe to reopen even if teachers
had not yet been vaccinated.245 While the Biden Administration
issued an executive order in January 2021 to support the reopening
of schools, the Administration allowed teachers unions to
influence CDC policy for school reopening.246 The
Administration’s heed to the political interests of teachers unions
over social and educational interests of children likely kept many
schools shuttered or in hybrid mode longer than necessary,
exacerbating learning loss.247
The lack of educational options for families during the pandemic
has underscored the importance of educational choice for families.
Instead of families being limited to their neighborhood public
schools, policies that provide parents with the ability to choose
from a variety of education options can help families better meet
their children’s educational needs. Educational choice could have
provided more options for families where public schools were
closed unnecessarily. Educational choice policies also could have
helped reduce contentious public debates surrounding school
closures and reopening by allowing families to decide what type
of school environment works best for them.
Teen Mental Health
In addition to learning loss, some measures of mental health
among youth worsened in 2021, continuing an already troubling
trend of deteriorating mental health among American teens.248
Teen mental health in the United States has worsened steadily
during roughly the past decade, with increases in the rates of
156
depression, suicidal thoughts, and suicide among teens.249 In the
spring of 2021, 44 percent of U.S. teenagers reported feeling
persistently sad or hopeless during the past year, up from 37
percent in 2019 (see Figure 5-3). The share of high school students
seriously considering suicide increased slightly from 19 percent to
20 percent between 2019 and 2021 (see Figure 5-3).
Figure 5-3. Share of High School Students Reporting Mental
Health Conditions, 1991–2021
Source: Centers for Disease Control and Prevention. Youth Risk Behavior Survey.
https://www.cdc.gov/healthyyouth/data/yrbs/data.htm, data documentation various years; Trends
in the Prevalence of Suicide-Related Behaviors National YRBS: 1991-2019.
https://www.cdc.gov/healthyyouth/data/yrbs/factsheets/2019_suicide_trend_yrbs.htm; and
Morbidity and Mortality Weekly Report (MMWR), Table 2.
https://www.cdc.gov/mmwr/volumes/71/su/su7103a3.htm.
Whether school closures or other challenges related to the
pandemic negatively affected teens’ mental health is unclear,
given that teen mental health was already worsening prior to the
pandemic. In addition, actual suicide rates among high school-age
157
students stayed relatively flat between 2019 and 2020, after rising
steadily between 2008 and 2017 and declining somewhat in 2018
(see Figure 5-4).250 Increased parental supervision during the
pandemic, due to teens being at home more, may have helped keep
teen suicide rates from increasing. Parents may have been able to
recognize signs of suicide risks earlier and intervene, including
taking their children to the hospital. Data on teen suicide are not
yet available for 2021, so time will tell whether the leveling off of
suicide among teens continued, or whether re-opening of schools
in combination with further erosion of underlying mental health
will drive a renewed increase in teen suicides.251
Figure 5-4: Number of Suicides Among Youth Ages 14 to 17 per
100,000 Population, 2001-2020
Source: Centers for Disease Control and Prevention. https://wisqars.cdc.gov/data/exploredata/home.
Addressing declining teen mental health is challenging,
particularly since the causes are not fully understood. Still, civic
158
institutions like schools, churches, and other community
organizations could help inform families about trends in teen
mental health, familiarize parents with the symptoms of
depression and suicidal behavior, and connect families with
mental health services. Because researchers have identified
connections between increased social media use and declining
teen mental health, Federal policymakers could redirect some
current funding to research the effects of social media on youth
mental health.252
Declining Family Formation
Another concerning long-term trend that has worsened in recent
years is family formation, specifically falling marriage and birth
rates. The most intimate and central form of social capital is the
family—an institution with primary responsibility for nurturing
and transmitting societal values to the next generation of children.
Strong families enable investment in the human capital of children
that increases their skills and productivity as adults, leading to
increased long-run economic growth.
Declining Marriage Rate
While the marriage rate in the U.S. has declined for years, it
dropped by 16 percent between 2019 and 2020 (see Figure 5-5).253
The steep drop was expected, given many weddings were
postponed due to the COVID-19 restrictions on social gatherings.
Marriages picked up again in 2021, according to provisional data
in some States, as postponed weddings from 2020 took place.254
Still, severe limits on socializing during the pandemic have
decreased opportunities for people to meet and date, potentially
leading to fewer marriages in coming years than otherwise would
have occurred, possibly exacerbating the downward trend in
marriage rates.
159
Figure 5-5: Marriages Per 1,000 Population, 2000-2020
Source: Centers for Disease Control and Prevention. National Center for Health Statistics.
https://www.cdc.gov/nchs/data/dvs/national-marriage-divorce-rates-00-20.pdf.
The decline in marriage has negative consequences for children,
as more children are born outside of marriage. Children in
married-parent homes are substantially less likely to experience
poverty, have higher educational achievement, and have better
physical and emotional health.255 Stable two-parent families also
impart benefits beyond the immediate family; children raised in
communities with a greater share of fathers present achieve greater
social mobility, according to research by Harvard economist Raj
Chetty.256 As the Joint Economic Committee has written
previously: “As sources of valuable social capital, few
relationships are as important as the family ties between parents
and children.”257
While most college-educated adults marry and raise their children
in married-parent homes, the majority of children born to non-
160
college-educated mothers are born outside of marriage.258 The
racial divide in unwed childbearing is also stark. In 2020, more
than two-thirds of Black children, more than half of Hispanic
children, and more than a quarter of White children were born to
unwed mothers.259 The share of births to unmarried women in the
U.S. increased slightly in 2020 after decreasing for several years,
with increases among all racial groups, but the biggest increase
was among Hispanic women (see Figure 5-6).260
Figure 5-6: Share of Births to Unwed Mothers, by Race and
Ethnicity, 1970–2020
Source: U.S. Department of Health and Human Services. Centers for Disease Control and
Prevention. National Center for Health Statistics, various reports.261
161
Declining Fertility Rate
Declining marriage rates are linked with declining fertility. 262 As
seen in Figure 5-7, in most years since the early 1970s, the total
fertility rate in the United States (the number of children a woman
is projected to have in her lifetime) has been below the
replacement level of 2.1 (the number of children born per woman
needed to replace the current population).263 After remaining fairly
stable for several decades, the fertility rate began to decline
starting with the 2008 recession, and in 2020 reached an all-time
low of 1.6.264 Provisional data for 2021 show the total fertility rate
ticked up slightly to 1.7, the first increase in years, yet total fertility
is still well below replacement level.265
Figure 5-7: Total Fertility Rate, United States, 1960-2020
Source: Federal Reserve Bank of St. Louis. Federal Reserve Economic Data. Fertility Rate, Total
for the United States. https://fred.stlouisfed.org/series/SPDYNTFRTINUSA
Note: Total fertility rate is defined as the number of children a woman is projected to have in her
lifetime
162
Declining fertility has detrimental economic effects by shrinking
the workforce, reducing innovation due to fewer people coming
up with new ideas, and weakening overall economic growth.
Fewer working-age adults also means a smaller share of people
contributing to Government social programs upon which a large
number of older adults rely. Fewer siblings means fewer people
with whom to share the responsibility of caring for aging parents,
making it more challenging for prime-age adults to balance work
and family responsibility.
Marriage can be strengthened by local and community efforts to
promote the benefits of healthy marriages. States can provide
marriage education to help couples form and maintain stable
relationships. And Federal policymakers can reduce marriage
penalties in means-tested social programs and the tax code.266
Fertility can be bolstered by strengthening the families, religious
organizations, and communities that support families.
Conclusion
Over the past year, several problems related to social capital have
worsened, many of which were affected by Government policies
and social restrictions during the COVID-19 pandemic. Rising
drug overdose deaths, rising homicides, learning loss among
children, poor teen mental health, and declining family formation
all pose a threat to the social and economic well-being of the
United States. Some of these problems are a continuation of a
decades-long trend and were made worse during the pandemic.
For years, Americans have experienced weakening family
stability, declining connection to the labor force, decreasing
participation in community organizations, and greater fissures in
our civic life.
During the last five years, the Joint Economic Committee’s Social
Capital Project has proposed a variety of policy options designed
163
to help strengthen individuals, families, and communities.267
These policies include those that would help couples build and
maintain healthy marriages, give families greater educational
opportunity, remove barriers to work, and encourage philanthropic
giving. Policies that strengthen social capital will help rebuild civil
society and in so doing, bolster economic prosperity.
164
ENDNOTES
U.S. Congress, Senate, “The Wealth of Relations Expanding Opportunity by
Strengthening Families, Communities, and Civil Society,” Social Capital
Project, Joint Economic Committee, Report No. 3-19, April 2019,
https://www.jec.senate.gov/public/_cache/files/3b9f335e-06dc-47eb-9edbc718ed337cfa/jec-report-wealth-of-relations-final.pdf.
2
An Act to Declare a National Policy on Employment, Production, and
Purchasing Power, and For Other Purposes, Public Law 79-304,
https://budgetcounsel.files.wordpress.com/2016/10/employment-act-of-1946as-enacted.pdf.
3
The Employment Act refers to JEC as the “Joint Committee on the
Economic Report.”
4
The Humphrey-Hawkins Act also provided more specific directives to CEA,
including the submission of an “Annual Report of the Council of Economic
Advisers” alongside the Economic Report, and more specific directives on
forecasts and numerical goals to achieve in terms of unemployment and
economic growth.
5
George Hall, Jonathan Payne, Thomas J. Sargent, and Bálint Szőke, “Costs
of Financing US Federal Debt: 1791-1933,” Working Paper, Princeton
University, September 10, 2021, https://bcf.princeton.edu/workingpapers/costs-of-financing-us-federal-debt-1791-1933/.
6
Paul Winfree, A History (and Future) of the Budget Process in the United
States. Palgrave Macmillan, 2019.
7
Sandra Kollen Ghizoni, “Creation of the Bretton Woods System,” Federal
Reserve Bank of St. Louis, November 22, 2013,
https://www.federalreservehistory.org/essays/bretton-woods-created.
8
John Maynard Keynes, The General Theory of Employment, Interest and
Money, 1936.
9
Paul Winfree, A History (and Future) of the Budget Process in the United
States, 120.
10
J. Bradford De Long, “Keynesianism, Pennsylvania Avenue Style: Some
Economic Consequences of the Employment Act of 1946,” The Journal of
Economic Perspectives, Vol. 10, No. 3, Summer, 1996, 41-53, http://wwwpersonal.umich.edu/~kathrynd/JEP.DeLong.pdf; U.S. Congress, Senate, The
2016 Joint Economic Report: Chapter 7, 114 th Congress, 2nd Session, Report
114-218, 2016, https://www.jec.senate.gov/public/_cache/files/4efd4d9844db-495c-9a15-ca612bdfe7d2/crpt-114srpt218.pdf.
11
Public Law 79-304.
12
The 2016 Response notes that the final legislation “reflected a number of
compromises between those in Congress who were interventionist and those
who were concerned about fiscal responsibility and maintaining the primary
role of the private sector in maximizing employment.” The Humphrey1
165
Hawkins Act expanded some of the goals for economic management but
remained primarily focused on the Employment Act’s three positive,
measurable goals. U.S. Congress, Senate, The 2016 Joint Economic Report:
Chapter 7, 114th Congress, 2nd Session, Report 114-218, 2016.
13
Bruce Bartlett, “The Joint Economic Committee in the Early 1980s:
Keynesians versus Supply-Siders,” Journal of Policy History 27, no. 1, 2015:
184–95, https://www.cambridge.org/core/journals/journal-of-policyhistory/article/abs/joint-economic-committee-in-the-early-1980s-keynesiansversus-supplysiders/8AFBC6126043E7D5B8EED88FF53F23A8.
14
Bruce Bartlett, “The Joint Economic Committee in the Early 1980s:
Keynesians versus Supply-Siders.”
15
James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The
Political Legacy of Lord Keynes, Indianapolis: Liberty Fund, 1977,
https://www.econlib.org/library/Buchanan/buchCv8.html.
16
Paul Winfree, A History (and Future) of the Budget Process in the United
States, 187.
17
Council of Economic Advisers, Economic Report of the President, April
2022, Washington, DC, GPO, 43, https://www.whitehouse.gov/wpcontent/uploads/2022/04/ERP-2022.pdf.
18
Report, 189.
19
William McBride concludes that “nearly every empirical study of taxes and
economic growth published in a peer-reviewed academic journal finds that tax
increases harm economic growth.” Valerie Ramey also finds that tax increases
reduce GDP by two to three times the increase in revenue.
William McBride, “What Is the Evidence on Taxes and Growth?” Tax
Foundation Special Report No. 207, December 18, 2012,
https://taxfoundation.org/what-evidence-taxes-and-growth/; William McBride,
“Empirical Evidence on Taxes and Growth: A Response to CBPP,” Tax
Foundation, February 21, 2014, https://taxfoundation.org/empirical-evidencetaxes-and-growth-response-cbpp/; Valerie A. Ramey, “Ten Years After the
Financial Crisis: What Have We Learned from the Renaissance in Fiscal
Research?” Journal of Economic Perspectives, Vol. 33, No. 2, Spring 2019,
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.2.89.
20
31 U.S.C. §1105(a)
21
Congressional Research Service, “Introduction to the Federal Budget
Process,” R46240, February 26, 2020,
https://crsreports.congress.gov/product/pdf/R/R46240.
22
Paul Winfree, A History (and Future) of the Budget Process in the United
States, 211.
23
Council of Economic Advisers, Economic Report of the President, January
1962, Washington, DC, GPO, 3, https://fraser.stlouisfed.org/title/economicreport-president-45/1962-8133.
166
24
U.S. Joint Economic Committee, Report of the Joint Committee on the
Economic Report on the January 1948 Economic Report of the President, 80th
Congress, 2nd Session, May 18, 1948,
https://www.jec.senate.gov/reports/80th%20Congress/Joint%20Economic%20
Report%20on%20the%20January%201948%20Economic%20Report%20of%
20the%20President%20(10).pdf.
25
U.S. Congress, Employment Act of 1946, S 380, 79th Congress, 2nd Session,
https://fraser.stlouisfed.org/title/employment-act-1946-1099; U.S. Congress,
Full Employment and Balanced Growth Act of 1978, 95th Congress,
introduced in House January 1, 1977,
https://fraser.stlouisfed.org/files/docs/historical/congressional/fullemployment-balanced-growth-1978.pdf.
26
JEC Calculations; U.S. Bureau of Labor Statistics, Databases, Tables &
Calculators by Subject, Prices – Consumer, All Urban Consumers (Current
Series), https://www.bls.gov/data/home.htm.
27
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
28
U.S. Bureau of Labor Statistics, Databases, Tables & Calculators by
Subject, Prices – Consumer, All Urban Consumers (Current Series),
https://www.bls.gov/data/home.htm.
29
JEC Calculations; U.S. Bureau of Labor Statistics, Databases, Tables &
Calculators by Subject, Prices – Consumer, All Urban Consumers (Current
Series), https://www.bls.gov/data/home.htm.
Expansion dates are taken from: National Bureau of Economic Research, US
Business Cycle Expansions and Contractions,
https://www.nber.org/research/data/us-business-cycle-expansions-andcontractions.
30
JEC Calculations; U.S. Bureau of Economic Analysis, Personal
Consumption Expenditures: Chain-type Price Index. Retrieved from the
Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/PCEPI.
31
U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban
Consumers: All Items Less Food and Energy in U.S. City Average. Retrieved
from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/CPILFENS; U.S. Bureau of Economic
Analysis, Personal Consumption Expenditures Excluding Food and Energy
(Chain-type Price Index). Retrieved from the Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/PCEPILFE.
32
Report, 69-71.
33
Federal Reserve Bank of Philadelphia, “Second Quarter 2022 Survey of
Professional Forecasters,” May 13, 2022,
167
https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/spfq2-2022.
34
Federal Reserve Bank of St. Louis, 5-Year Breakeven Inflation Rate,
https://fred.stlouisfed.org/series/T5YIE.
35
Federal Reserve Bank of St. Louis, 5-Year Breakeven Inflation Rate,
https://fred.stlouisfed.org/series/T5YIE.
36
Federal Reserve Bank of St. Louis, 10-Year Breakeven Inflation Rate,
https://fred.stlouisfed.org/series/T10YIE.
37
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/index.cfm/republicans/state-inflationtracker.
38
U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban
Consumers: All Items in U.S. City Average. Retrieved from the Federal
Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CPIAUCNS.
39
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
40
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
41
JEC Calculations; U.S. Bureau of Labor Statistics, Databases, Tables &
Calculators by Subject, Prices – Consumer, All Urban Consumers (Current
Series), https://www.bls.gov/data/home.htm.
42
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
43
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
44
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
45
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
168
Jackie Benson, Kevin Corinth, and Kole Nichols, “State Inflation Tracker:
April 2022,” U.S. Joint Economic Committee Republicans, May 11, 2022,
https://www.jec.senate.gov/public/_cache/files/56b3a79b-eaa3-4a65-84289faa23a863c3/state-inflation-tracker-april-2022.pdf.
47
Efriam Berkovich, Zheli He, and Xiaoyue Sun, “Impact of Inflation by
Household Income,” Penn Wharton Budget Model, December 15, 2021,
https://budgetmodel.wharton.upenn.edu/issues/2021/12/15/consumptionunder-inflation-costs.
48
David Altig, “An Ebbing Tide Lowers All Boats: Monetary Policy,
Inflation, and Social Justice,” Federal Reserve Bank of St. Louis, 1992
Quarter 2,
https://fraser.stlouisfed.org/files/docs/publications/frbclevreview/pages/19901994/68581_1990-1994.pdf.
49
Bart Hobijn and David Lagakos, “Inflation Inequality in the United States,”
Federal Reserve Bank of New York, October 2003,
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr173.
pdf.
50
JEC Calculations; U.S. Bureau of Economic Analysis, Real Personal
Consumption Expenditures: Goods. Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/DGDSRX1.
51
JEC Calculations; U.S. Bureau of Economic Analysis, Real Personal
Consumption Expenditures: Goods. Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/DGDSRX1.
52
JEC Calculations; U.S. Bureau of Economic Analysis, Real Personal
Consumption Expenditures: Goods. Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/DGDSRX1; U.S. Bureau of
Economic Analysis, Real Personal Consumption Expenditures: Services.
Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PCESC96.
53
Report, 66.
54
Jackie Benson, “How to Fix Broken Supply Chains and Lower Inflation,”
U.S. Joint Economic Committee Republicans, December 16, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/2021/12/how-to-fixbroken-supply-chains-and-lower-inflation.
55
Greg Miller, “As transport socks sink, Los Angeles port volumes soar,”
American Shipper, April 12, 2022, https://www.freightwaves.com/news/astransport-stocks-sink-los-angeles-port-volumes-soar.
56
U.S. Bureau of Labor Statistics, Producer Price Index by Commodity:
Transportation Services: Truck Transportation of Freight. Retrieved from the
Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/WPU3012.
46
169
57
Cass Transportation Index Report, Inferred Freight Rates Historical Data,
Cass Information Systems, Inc., https://www.cassinfo.com/freight-auditpayment/cass-transportation-indexes/march-2022.
58
Jackie Benson, “How to Fix Broken Supply Chains and Lower Inflation,”
U.S. Joint Economic Committee Republicans, December 16, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/2021/12/how-to-fixbroken-supply-chains-and-lower-inflation.
59
“Volkswagen Expects Chip Shortage to Ease Later in 2022,” Reuters,
February 16, 2022, https://money.usnews.com/investing/news/articles/202202-16/volkswagen-expects-chip-shortage-to-ease-later-in-2022; Bogdan Popa,
“General Motors Has Chip Shortage Updates, Pretty Bad News,”
autoevolution, May 4, 2022, https://www.autoevolution.com/news/generalmotors-has-chip-shortage-updates-pretty-bad-news-188153.html.
60
Jackie Benson, “How to Fix Broken Supply Chains and Lower Inflation,”
U.S. Joint Economic Committee Republicans, December 16, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/2021/12/how-to-fixbroken-supply-chains-and-lower-inflation.
61
U.S. Bureau of Labor Statistics, Average Hourly Earnings of All
Employees, Transportation and Warehousing. Retrieved from the Federal
Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CES4300000003.
62
Report, 102.
63
U.S. Bureau of Economic Analysis, Personal Consumption Expenditures
(PCE). Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PCE; Committee for a Responsible Federal
Budget, “How Much Would the American Rescue Plan Overshoot the Output
Gap?” February 2021, https://www.crfb.org/blogs/how-much-wouldamerican-rescue-plan-overshoot-output-gap.
64
JEC calculations; Ceyhun Elgin, and Abdullah Yalaman, “COVID-19
Economic Stimulus Packages Database,” Centre for Economic Policy
Research, May 2021, http://web.boun.edu.tr/elgin/COVID.htm.
65
JEC calculations; U.S. Department of Education Federal Student Aid,
Service Portfolio by Loan Status, https://studentaid.gov/datacenter/student/portfolio.
66
U.S. Bureau of Economic Analysis, Personal Saving, Retrieved from the
Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/PMSAVE.
67
For example, see: Mitchell Barnes, Wendy Edelberg, Sara Estep, and
Moriah Macklin, “Bolstered balance sheets: Assessing household finances
since 2019,” Brookings, March 22, 2022,
https://www.brookings.edu/research/bolstered-balance-sheets-assessinghousehold-finances-since-2019/; “Quick shot: Consumers’ cup runneth over,”
J.P. Morgan Wealth Management, October 7, 2021,
https://www.chase.com/personal/investments/learning-andinsights/article/tmt-october-seven-twenty-one-daily; Joseph Politano,
170
“Understanding Americans’ Excess Savings,” Apricitas Economics, January
15, 2022, https://apricitas.substack.com/p/understanding-americans-excesssavings?s=r.
68
Figure 2-11 of the Report on page 58 mistakenly suggests an accumulation
of $1.7 trillion in excess savings by the end of 2021. Page 60 presents the
accurate figure, estimated by CEA to be $2.7 trillion.
JEC’s value of excess savings is estimated by first finding the differences
between actual personal savings and a linear forecast of personal savings each
month from March 2020 to December 2021. Those differences are then
divided by 12 to convert annualized excess savings into monthly excess
savings, and added together to find the cumulative value of excess savings
over the time period. The linear forecast was created based on monthly
personal savings data from January 2015 to February 2020, which show a
relatively flat trend.
69
JEC Calculations; U.S. Bureau of Economic Analysis, Personal
Consumption Expenditures (PCE), Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/PCE.
70
JEC calculations; U.S. Bureau of Economic Analysis, Personal
Consumption Expenditures (PCE), Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/PCE.
71
Francois de Soyres, Ana Maria Santacreu, and Henry Young, “Demandsupply imbalance during the COVID-19 pandemic: the role of fiscal policy,”
Centre for Economic Policy Research, March 1, 2022,
https://voxeu.org/article/demand-supply-imbalance-during-covid-19pandemic; Òscar Jordà, Celeste Liu, Fernanda Nechio, and Fabián RiveraReyes, “Why is U.S. Inflation Higher than in Other Countries?” Federal
Reserve Bank of San Francisco, March 28, 2022,
https://www.frbsf.org/economic-research/publications/economicletter/2022/march/why-is-us-inflation-higher-than-in-other-countries/;
Michael R. Strain, “Yes, the Biden Stimulus Made Inflation Worse,” National
Review, February 10, 2022, https://www.nationalreview.com/corner/yes-thebiden-stimulus-made-inflation-worse/.
72
Francois de Soyres, Ana Maria Santacreu, and Henry Young, “Demandsupply imbalance during the COVID-19 pandemic: the role of fiscal policy,”
Centre for Economic Policy Research, March 1, 2022,
https://voxeu.org/article/demand-supply-imbalance-during-covid-19pandemic.
73
Eric Milstein and David Wessel, “What did the Fed do in response to the
COVID-19 crisis?” Brookings, December 17, 2021,
https://www.brookings.edu/research/fed-response-to-covid19/.
74
Board of Governors of the Federal Reserve System, “Credit and Liquidity
Programs and the Balance Sheet,” May 2022,
https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm.
171
Board of Governors of the Federal Reserve System, “Federal Reserve issues
FOMC statement,” July 28, 2021,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20210728a
.htm.
76
U.S. Bureau of Economic Analysis, Personal Consumption Expenditures
Excluding Food and Energy (Chain-type Price Index), Retrieved from the
Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PCEPILFE.
77
Board of Governors of the Federal Reserve System, “Federal Reserve issues
FOMC statement,” December 15, 2021,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20211215a
.htm.
78
U.S. Bureau of Economic Analysis, Personal Consumption Expenditures
Excluding Food and Energy (Chain-type Price Index), Retrieved from the
Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PCEPILFE.
79
Board of Governors of the Federal Reserve System, “Federal Reserve issues
FOMC statement,” March 16, 2022,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220316a
.htm.
80
Board of Governors of the Federal Reserve System, “Federal Reserve issues
FOMC statement,” May 5, 2022,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504a
.htm.
81
Board of Governors of the Federal Reserve System, “Plan for Reducing the
Size of the Federal Reserve’s Balance Sheet,” May 4, 2022,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504
b.htm.
82
JEC Calculations. See endnote 68.
83
Federal Reserve Bank of Atlanta, “Taylor Rule Utility,”
https://www.atlantafed.org/cqer/research/taylor-rule.
84
Report, 191, 204.
85
Scott C. Bradford, Paul L. E. Grieco, and Garry Clyde Hufbauer, “The
Payoff to America from Global Integration,” The United States and the World
Economy, (Peterson Institute for International Economics Jan 2005), 65-109;
Jacqueline Varas, “The Impact of U.S. Imports on Manufacturing
Employment,” American Action Forum, May 11, 2020,
https://www.americanactionforum.org/research/the-impact-of-u-s-importsmanufacturing-employment/.
86
The World Bank, “Asian Ports Dominate Global Container Port
Performance Index,” May 5, 2021, https://www.worldbank.org/en/news/pressrelease/2021/05/05/asian-ports-dominate-global-container-port-performanceindex.
75
172
Jackie Benson, “How to Fix Broken Supply Chains and Lower Inflation,”
U.S. Joint Economic Committee Republicans, December 16, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/analysis?id=362E7D
C9-BA5D-408E-900E-EB6DB5E9A6D7.
88
Jackie Benson, “How to Fix Broken Supply Chains and Lower Inflation,”
U.S. Joint Economic Committee Republicans, December 16, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/analysis?id=362E7D
C9-BA5D-408E-900E-EB6DB5E9A6D7.
89
Eric Boehm, “Restrictive Zoning Laws Worsened the Supply Chain Crisis,”
Reason, October 25, 2021, https://reason.com/2021/10/25/how-restrictivezoning-laws-worsened-the-supply-chain-crisis/.
90
Report, 218.
91
For example, see: Scott Lincicome and Huan Zhu, “Questioning Industrial
Policy: Why Government Manufacturing Plans are Ineffective and
Unnecessary,” June 16, 2021, https://www.cato.org/sites/cato.org/files/202106/working-paper-63-updated-2.pdf; Tori Smith, “Buy American” Laws: A
Costly Policy Mistake That Hurts Americans,” The Heritage Foundation, May
18, 2017, https://www.heritage.org/trade/report/buy-american-laws-costlypolicy-mistake-hurts-americans; Davide Furceri, Swarnali A. Hannan,
Jonathan David Ostry, and Andrew K. Rose, “Macroeconomic Consequences
of Tariffs,” International Monetary Fund, January 5, 2019,
https://www.imf.org/en/Publications/WP/Issues/2019/01/15/MacroeconomicConsequences-of-Tariffs-46469.
92
Tom Lee and Jacqueline Varas, “The Total Cost of U.S. Tariffs,” American
Action Forum, May 10, 2022,
https://www.americanactionforum.org/research/the-total-cost-of-tariffs/.
93
Jacqueline Varas and Jonathan DeDomenico, “The Impact of the
President’s Tariffs on Consumer Goods,” American Action Forum, July 29,
2019, https://www.americanactionforum.org/research/the-impact-of-thepresidents-tariffs-on-consumer-goods/.
94
Dr. Joseph Francois and Laura M. Baughman, “Round 2: Trading Partners
Respond, The Estimated Impacts of Tariffs on Steel and Aluminum,” Trade
Partnership LLC/The Trade Partnership, March 13, 2018,
https://tradepartnership.com/wpcontent/uploads/2018/03/232RetaliationPolicyBrief.pdf.
95
For example, see: Mary Amiti, Stephen J. Redding, and David Weinstein,
“The Impact of the 2018 Trade War on U.S. Prices and Welfare,” National
Bureau of Economic Research, March 2019,
https://www.nber.org/papers/w25672; Mary Amiti, Stephen J. Redding, and
David E. Weinstein, “Who’s Paying for the US Tariffs? A Longer-Term
Perspective,” National Bureau of Economic Research, January 2020,
https://www.nber.org/papers/w26610; Pablo D. Fajgelbaum, Pinelopi K.
Goldber, Patrick J. Kennedy, and Amit K. Khandelwal, “The Return to
87
173
Protectionism,” National Bureau of Economic Research, October 2019,
https://www.nber.org/papers/w25638.
96
Aaron Flaaen and Justin Pierce, “Disentangling the Effects of the 20182019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” Federal
Reserve Board, December 23,
2019, https://www.federalreserve.gov/econres/feds/files/2019086pap.pdf;
Alessandro Barattieri and Matteo Cacciatore, “Self-Harming Trade Policy?
Protectionism and Production Networks,” National Bureau of Economic
Research, July 2020, https://www.nber.org/papers/w27630.
97
Gary Clyde Hufbauer, Megan Hogan, and Yilin Wang, “For inflation relief,
the United States should look to trade liberalization,” Peterson Institute for
International Economics, March 2022,
https://www.piie.com/publications/policy-briefs/inflation-relief-united-statesshould-look-trade-liberalization.
98
John Frittelli, “Harbor Dredging: Issues and Historical Funding,”
Congressional Research Service, IN11133, November 6, 2019,
https://crsreports.congress.gov/product/pdf/IN/IN11133.
99
Colin Grabow, Inu Manak, and Daniel J. Ikenson, “The Jones Act: A
Burden America Can No Longer Bear,” Cato Institute,
https://www.cato.org/publications/policy-analysis/jones-act-burden-americacan-no-longer-bear.
100
Ari Ashe, “US chassis orders may not be fulfilled until late 2022,” The
Journal of Commerce Online, November 4, 2021,
https://www.joc.com/trucking-logistics/trucking-equipment/us-chassis-ordersmay-not-be-fulfilled-until-late-2022_20211104.html.
101
”The Global Chip Shortage: A Timeline of Unfortunate Events,” Fusion
Worldwide, October 11, 2021, https://info.fusionww.com/blog/the-globalchip-shortage-a-timeline-of-unfortunate-events.
102
JEC Calculations; Board of Governors of the Federal Reserve System,
Industrial Production: Total Index, Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/INDPRO.
103
JEC Calculations; U.S. Bureau of Economic Analysis, Real Personal
Consumption Expenditures: Goods, Retrieved from the Federal Reserve Bank
of St. Louis, https://fred.stlouisfed.org/series/DGDSRX1.
104
Inflation adjusted goods imports increased 19.7 percent from Q4 2019 to
Q1 2022. U.S. Bureau of Economic Analysis, Real imports of goods,
Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/A255RX1Q020SBEA.
105
JEC calculations using a linear trendline fitted from the trough of the 2008
recession through February 2020; U.S. Bureau of Economic Analysis, All
Employees, Total Nonfarm (PAYEMS), Retrieved from the Federal Reserve
Bank of St. Louis, https://fred.stlouisfed.org/series/PAYEMS.
174
Peter Ganong, Pascal Noel, and Joseph S. Vavra, “US Unemployment
Insurance Replacement Rates during the Pandemic,” Becker Friedman
Institute for Economics at the University of Chicago, August 2020,
https://bfi.uchicago.edu/working-paper/2020-62/.
107
Isabel Soto, “Ending Federal Pandemic Unemployment Compensation and
its Effect on Unemployment Claims,” American Action Forum, September 7,
2021, https://www.americanactionforum.org/research/ending-federalpandemic-unemployment-compensation-and-its-effect-on-unemploymentclaims/.
108
Harry Holzer, R. Glenn Hubbard, and Michael R. Strain, “Did Pandemic
Unemployment Benefits Reduce Employment? Evidence from Early StateLevel Expirations in June 2021,” National Bureau of Economic Research,
December 2021, https://www.nber.org/papers/w29575.
109
Kevin Corinth, Bruce D. Meyer, Matthew Stadnicki, and Derek Wu, “The
Anti-Poverty, Targeting, and Labor Supply Effects of the Proposed Child Tax
Credit Expansion,” National Bureau of Economic Research, March 2022,
https://www.nber.org/papers/w29366.
110
Jon Huntley, Maddison Erbabian, and John Ricco, “H.R. 5376, Build Back
Better Act: Budget and Macroeconomic Effects,” Penn Wharton, University
of Pennsylvania, November 2021,
https://budgetmodel.wharton.upenn.edu/issues/2021/11/15/hr-5376-buildback-better-budget-macro; Alex Durante, Cody Kallen, Huaqun Li, and
William McBride, “Details and Analysis of President Biden’s American Jobs
Plan,” Tax Foundation, June 2021, https://taxfoundation.org/american-jobsplan/; Gordon Gray and Douglas Holtz-Eakin, “Assessing the Biden Promises:
Infrastructure, Taxes, and Growth,” American Action Forum, April 2021,
https://www.americanactionforum.org/insight/assessing-the-biden-promisesinfrastructure-taxes-and-growth/; John W. Diamond, “Macroeconomic Effects
of H.R. 5376: The Build Back Better Act,” American Action Forum, May 6,
2022, https://www.americanactionforum.org/wp-content/uploads/2022/05/1.5Diamond-Macro-Effects-of-HR-5367-05-09-2022-CLEAN28.pdf.
111
White House Briefing Room, “Remarks by President Biden on Lowering
Energy Costs for Working Families,” delivered at Menlo, Iowa, April 12,
2022, https://www.whitehouse.gov/briefing-room/speechesremarks/2022/04/12/remarks-by-president-biden-on-lowering-energy-costsfor-working-families/; Jeff Stein and Cat Zakrzewski, “White House takes aim
at oil industry as gas prices create economic and politics rifts,” Washington
Post, November 17, 2021,
https://www.washingtonpost.com/business/2021/11/17/biden-ftc-gas-prices/.
112
Budget of the U.S. Government, Fiscal Year 2023, Analytical Perspectives,
23, https://www.whitehouse.gov/wpcontent/uploads/2022/03/ap_2_assumptions_fy2023.pdf.
106
175
Board of Governors of the Federal Reserve System, “Federal Reserve
issues FOMC statement,” March 16, 2022,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220316a
.htm.
114
Russia invaded Ukraine on February 24, however, oil prices (measured by
the price of WTI crude) did not spike until the beginning of March. It is
unlikely that the Russian invasion had any significant impact on U.S. CPI in
February. Oilprice.com, WTI crude, https://oilprice.com/oil-pricecharts/#WTI-Crude.
115
JEC estimates; Consumer Price Index - March 2022, Table 6. Consumer
Price Index for All Urban Consumers (CPI-U): U.S. city average, by
expenditure category, March 2022, 1-month analysis table, Bureau of Labor
Statistics, April 12, 2022,
https://www.bls.gov/news.release/archives/cpi_04122022.pdf.
The counterfactual annual CPI growth rate, which assumes 3.5 percent growth
in energy prices from February to March, is calculated using the following
three step formula:
1. Counterfactual Seasonally Adjusted Effect of Energy on All Items in
March 2022 = [Counterfactual Monthly Growth Rate in Energy Prices /
Actual Monthly Growth Rate in Energy Prices] x Seasonally Adjusted
Effect of Energy on All Items in March 2022
2. Counterfactual Monthly CPI Growth Rate, February 2022 to March
2022 = Actual March 2022 CPI + [Counterfactual Seasonally Adjusted
Effect of Energy on All Items in March 2022 - Seasonally Adjusted
Effect of Energy on All Items in March 2022]
3. Counterfactual CPI Level, March 2022 = February CPI x [1 +
(Counterfactual Monthly CPI Growth Rate/100)]
4. Counterfactual Annual CPI Growth Rate, March 2021 to March 2022 =
Counterfactual March 2022 CPI/Actual March 2021 CPI – 1
116
Jeff Stein and Cat Zakrzewski, “White House takes aim at oil industry as
gas prices create economic and politics rifts,” Washington Post, November 17,
2021, https://www.washingtonpost.com/business/2021/11/17/biden-ftc-gasprices/.
117
U.S. Congress, House, Consumer Fuel Price Gouging Prevention Act, HR
7688, 117th Congress, 2nd Session, introduced in House May 6, 2022,
https://www.congress.gov/117/bills/hr7688/BILLS-117hr7688ih.pdf.
118
For example, see: Sam Peltzman, “Prices Rise Faster Than They Fall,”
Journal of Political Economy 83, no. 3, August 2001: 466-502; Barry K.
Goodwin and Matthew T. Holt, “Price Transmission and Asymmetric
Adjustment in the U.S. Beef Sector,” American Journal of Agricultural
Economics 81, no. 3, August 1999: 630-637; and Douglas J. Miller and
Marvin L. Hayenga, “Price Cycles and Asymmetric Price Transmission in the
113
176
U.S. Pork Market,” American Journal of Agricultural Economics 83, no. 3.
August 2001: 551-562.
119
Kartick Gupta, “Oil price shocks, competition, and oil & gas stock returns
– Global evidence,” Energy Economics 57, (June 2016): 140-153,
https://www.sciencedirect.com/science/article/pii/S0140988316300998.
120
Valerie A. Ramey, “Ten Years After the Financial Crisis: What Have We
Learned from the Renaissance in Fiscal Research?,” Journal of Economic
Perspectives 33, no. 2, Spring 2019: 89-114,
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.2.89.
121
JEC calculations; Inflation is measured as the annual percent change in the
GDP Price Deflator, defined as Nominal GDP/Real GDP x 100. Nominal and
real GDP projections are retrieved from CBO’s 10-Year Economic Projections
published in July 2021. The added inflation from the Budget and BBB in 2022
and 2023 is the difference between two inflation estimates: one real-world
estimate for each year based on GDP deflators derived from actual CBO
projections, and a counterfactual rate for each year based a nominal GDP
estimate that adds together CBO’s nominal GDP projection, proposed
increases in outlays in the budget, and CBO’s estimate of total estimated
outlays triggered by BBB. Because there is no output gap (consistent with
CBO’s 10-Year Economic Projections) we assume 100 percent of the increase
in nominal GDP will translate into price increases via a larger GDP Price
Deflator. Our assumption relies on the additional spending not increasing real
GDP because the economy is already at its short-run productive capacity.
Bureau of Economic Analysis, National Income and Product Accounts, Table
1.1.4 Price Indexes for Gross Domestic Product,
https://apps.bea.gov/iTable/index_nipa.cfm; Congressional Budget Office,
“10-Year Economic Projections,” July 2021,
https://www.cbo.gov/data/budget-economic-data; Congressional Budget
Office, “Summary of Cost Estimate for H.R. 5378, the Build Back Better
Act,” November 18, 2021, https://www.cbo.gov/publication/57627.
122
Alan Cole, “Stable Monetary Policy to Connect More Americans to
Work,” U.S. Joint Economic Committee Republicans, September 14, 2020,
https://www.jec.senate.gov/public/index.cfm/republicans/2020/9/stablemonetary-policy-to-connect-more-americans-to-work.
123
David Beckworth, “Facts, Fears, and Functionality of NGDP Level
Targeting: A Guide to a Popular Framework for Monetary Policy,” Mercatus
Center at George Mason University, September 2019,
https://www.mercatus.org/system/files/beckworth-ngdp-targeting-mercatusspecial-study-v2.pdf.
124
Aaron Steelman, “Employment Act of 1946 | Federal Reserve History,”
https://www.federalreservehistory.org/essays/employment-act-of-1946.
177
125
U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm
[PAYEMS]. Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PAYEMS.
126
U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm
[PAYEMS]. Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PAYEMS;
“Estimated Budgetary Effects of H.R. 1319, American Rescue Plan Act of
2021,” March 10, 2021, https://www.cbo.gov/system/files/202103/Estimated_Budgetary_Effects_of_HR_1319_as_passed_0.pdf.
127
U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 25-54
Yrs. [LNS11300060], Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/LNS11300060.
128
U.S. Congress, Senate, “Inactive, Disconnected, and Ailing: A Portrait of
Prime-Age Men out of the Labor Force,” Social Capital Project, Joint
Economic Committee, Report No. 3-18, September 2018,
www.jec.senate.gov/public/index.cfm/republicans/analysis?ID=D72FFEABDE2D-4F2C-9BCD-670B9B1BE9C3.
129
U.S. Bureau of Labor Statistics, Employment-Population Ratio - Black or
African American, Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/LNS12300006;
U.S. Bureau of Labor Statistics, Employment Population Ratio – Asian,
Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/LNU02332183;
U.S. Bureau of Labor Statistics, Employment-Population Ratio – White,
Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/LNS12300003;
U.S. Bureau of Labor Statistics, Employment-Population Ratio - Hispanic or
Latino, Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/LNS12300009.
130
U.S. Bureau of Labor Statistics, Median usual weekly earnings - in
constant (1982-84) dollars, [LES1252881600];
Richard V. Burkhauser, Kevin C. Corinth, and Douglas Hotlz-Eakin. “Policies
to Help the Working Class in the Aftermath of COVID-19: Lessons from the
Great Recession,” The Annals of the American Academy of Political and
Social Science, 695(1), 2021,
https://journals.sagepub.com/doi/abs/10.1177/00027162211031772.
131
Figure 3-2 Non-farm employment numbers include the month of March
because the majority of days in the reference week for March 2021 data (week
ending March 12, 2021) occurred before the passage of the ARP.
U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm [PAYEMS],
Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/PAYEMS.
178
132
U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE],
Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/UNRATE.
133
Abhinav Chugh, “What Is the ‘Great Resignation?’ an Expert Explains,”
World Economic Forum, November 29, 2021,
http://www.weforum.org/agenda/2021/11/what-is-the-great-resignation-andwhat-can-we-learn-from-it/.
134
U.S. Census Bureau, Income and Poverty in the United States: 2020,
October 8, 2021, https://www.census.gov/data/tables/2021/demo/incomepoverty/p60-273.html.
135
U.S. Congress, Senate, “Ranking Member Mike Lee: Views and Estimates
of the President’s FY2023 Budget,” Joint Economic Committee, May 13,
2022,
https://www.jec.senate.gov/public/index.cfm/republicans/2022/5/rankingmember-mike-lee-views-and-estimates-of-the-president-s-fy2023-budget.
136
U.S. Bureau of Labor Statistics, Table A-2, Current and Real (Constant
1982-1984 Dollars) Earnings for production and nonsupervisory employees
on Private Nonfarm Payrolls, Seasonally Adjusted,
https://www.bls.gov/news.release/realer.t01.htm;
U.S. Bureau of Labor Statistics, Real Earnings Summary, May 11, 2022,
https://www.bls.gov/news.release/realer.nr0.htm.
137
U.S. Bureau of Labor Statistics, Table A-1. Current and Real (Constant
1982-1984 Dollars) Earnings for All Employees on Private Nonfarm Payrolls,
Seasonally Adjusted, https://www.bls.gov/news.release/realer.t01.htm;
U.S. Bureau of Labor Statistics, Real Earnings Summary, May 11, 2022,
https://www.bls.gov/news.release/realer.nr0.htm.
138
U.S. Congress, Senate, “Ranking Member Mike Lee: Views and Estimates
of the President’s FY2023 Budget,” Joint Economic Committee, May 13,
2022,
https://www.jec.senate.gov/public/index.cfm/republicans/2022/5/rankingmember-mike-lee-views-and-estimates-of-the-president-s-fy2023-budget.
139
Peter Ganong, Pascal Noel, and Joseph Vavra, “US Unemployment
Insurance Replacement Rates during the Pandemic,” Journal of Public
Economics, 191, 2020,
https://www.sciencedirect.com/science/article/pii/S0047272720301377.
140
Isabel Soto, “Revisiting Federal Pandemic Unemployment Compensation
under the Biden Administration,” American Action Forum, February 8, 2021,
http://www.americanactionforum.org/research/revisiting-federal-pandemicunemployment-compensation-under-the-biden-administration/.
141
Isabel Soto, “Ending Federal Pandemic Unemployment Compensation and
Its Effect on Unemployment Claims,” American Action Forum, September 7
2021, www.americanactionforum.org/research/ending-federal-pandemicunemployment-compensation-and-its-effect-on-unemployment-claims/.
179
Harry J. Holzer, R. Glenn Hubbard, and Michael R. Strain, “Did Pandemic
Unemployment Benefits Reduce Employment? Evidence from Early StateLevel Expirations in June 2021,” National Bureau of Economic Research,
December 1, 2021, https://www.nber.org/papers/w29575.
143
Scott Winship, “New Evidence on the Benefits and Costs of an Expanded
Child Tax Credit,” American Enterprise Institute, October 7, 2021,
https://www.aei.org/poverty-studies/new-evidence-on-the-benefits-and-costsof-an-expanded-child-tax-credit/.
144
Kevin Corinth, Bruce D. Meyer, Matthew Stadnicki, and Derek Wu, “The
Anti-Poverty, Targeting, and Labor Supply Effects of the Proposed Child Tax
Credit Expansion,” National Bureau of Economic Research, March 2022,
https://www.nber.org/papers/w29366.
145
Kevin Corinth, Bruce D. Meyer, Matthew Stadnicki, and Derek Wu, “The
Anti-Poverty, Targeting, and Labor Supply Effects of the Proposed Child Tax
Credit Expansion,” National Bureau of Economic Research, March 2022,
https://www.nber.org/papers/w29366.
146
U.S. Department of the Treasury, “Economic Impact Payments,”
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-americanfamilies-and-workers/economic-impact-payments.
147
Tom Lee, “Potential Consequences of Continued Student Loan
Forbearance, and Blanket Loan Forgiveness,” American Action Forum, March
29, 2022, https://www.americanactionforum.org/insight/potentialconsequences-of-continued-student-loan-forbearance-and-blanket-loanforgiveness/.
148
“Without Immediate Relief, More than Half of Licensed Child Care Will
Close in the next Week,” NAEYC, http://www.naeyc.org/aboutus/news/press-releases/without-immediate-relief;
Emma K. Lee, and Zachary Parolin, “The Care Burden during COVID-19: A
National Database of Child Care Closures in the United States,” Socius:
Sociological Research for a Dynamic World 7, January 2021:
237802312110320, https://doi.org/10.1177/23780231211032028.
149
Debbie Truong, “Child Care Providers Say D.C. Should Lift Caps on Class
Sizes to Match Public Schools,” NPR.org, May 10, 2021,
https://www.npr.org/local/305/2021/05/10/995422004/child-care-providerssay-d-c-should-lift-caps-on-class-sizes-to-match-public-schools.
150
JEC Calculations; U.S. Bureau of Labor Statistics, “State Employment and
Unemployment – December 2021,”
https://www.bls.gov/news.release/archives/laus_01252022.pdf.
The share of workers who are not fully vaccinated in each state is calculated
by dividing the number of 18-64 year-old individuals who are not fully
vaccinated by the state’s 18-64 year-old population. To calculate the number
of unvaccinated workers, the share of the working age population that is not
fully vaccinated is multiplied by the total number of employees in each state
142
180
as of December 2021, under the assumption that vaccination rates among the
employed population in each state and the overall state working age
population are the same.
151
To gauge how many more adults might be separated from work under a
future universal mandate, it is necessary to first adjust the proportion of
unvaccinated Americans who have reported leaving their jobs by the
proportion of workers who are already covered by mandates. As of November
2021, 4 percent of unvaccinated Americans had left their jobs due to a vaccine
mandate but only 29 percent of all workers were under a mandate. Therefore,
it stands to reason that 13.8 percent of unvaccinated Americans might leave
their jobs under a future, universal mandate (4 percent divided by 29 percent).
Applying 13.8 percent to the total unvaccinated population (70 million) gives
an estimate of 9.6 million unvaccinated Americans that are at risk of job
separation. The upper bound estimate of future potential job loss, 6.8 million,
is found by subtracting the number of unvaccinated adults that have already
left their jobs due to a mandate, 2.8 million, from the total number of
unvaccinated adults that would leave their jobs under a universal mandate, 9.6
million.
The JEC estimate of 70 million unvaccinated adults was found using
the November KFF survey, and is roughly the same as what current CDC data
suggest. As of February 1, 2022, CDC reports that 191.5 million adults are
fully vaccinated. With a total U.S. adult population of 258.3 million in 2021,
this in turn suggests that 66.8 million adults are unvaccinated.
Liz Hamel, Lunna Lopes, Grace Sparks, Ashley Kirzinger, Audrey Kearney,
Mellisha Stokes, and Mollyann Brodie, “KFF COVID-19 Vaccine
Monitor: November 2021,” KFF Polling. Kaiser Family
Foundation, December 2, 2021, https://www.kff.org/coronavirus-covid19/poll-finding/kff-covid-19-vaccine-monitor-november-2021/;
Centers for Disease Control and Prevention, “Rates of Covid-19 Cases or
Deaths by Age Group and Vaccination Status,” October 19,
2021, https://data.cdc.gov/Public-Health-Surveillance/Rates-of-COVID-19Cases-or-Deaths-by-Age-Group-and/3rge-nu2a/data.
152
“The Littler Annual Employer Survey 2022,” Littler Mendelson P.C. April
26, 2022, https://www.littler.com/publication-press/publication/littleremployer-survey-report-2022.
153
Liz Hamel, Lunna Lopes, Grace Sparks, Ashley Kirzinger, Audrey
Kearney, Mellisha Stokes, and Mollyann Brodie, “KFF COVID-19 Vaccine
Monitor: October 2021,” KFF Polling. Kaiser Family Foundation, October 28,
2021, https://www.kff.org/coronavirus-covid-19/poll-finding/kff-covid-19vaccine-monitor-october-2021/.
154
Report, 159.
181
Edward P Lazear, “Performance Pay and Productivity,” American
Economic Review, vol. 90, no. 5, 2000, pp. 1346–1361,
http://www.jstor.org/stable/2677854?seq=1;
Edward Lazear, “Productivity and Wages: Common Factors and
Idiosyncrasies across Countries and Industries.” National Bureau of Economic
Research, November 2019, http://www.nber.org/papers/w26428;
James Pethokoukis, “The Productivity-Pay ‘Gap’: A Pernicious Economic
Myth,” American Enterprise Institute, February 10, 2022,
http://www.aei.org/articles/the-productivity-pay-gap-a-pernicious-economicmyth/;
Anna, Stansbury and Lawrence H. Summers, “Productivity and Pay: Is the
Link Broken?” SSRN Electronic Journal, 2018, 10.2139/ssrn.3192609.
156
James Sherk, “Productivity and Compensation: Growing Together,” The
Heritage Foundation, July 13, 2013, www.heritage.org/jobs-andlabor/report/productivity-and-compensation-growing-together.
157
James Sherk, “Productivity and Compensation: Growing Together,” The
Heritage Foundation, July 13, 2013, www.heritage.org/jobs-andlabor/report/productivity-and-compensation-growing-together.
158
Edward Lazear, “Productivity and Wages: Common Factors and
Idiosyncrasies across Countries and Industries,” National Bureau of Economic
Research, November 2019, http://www.nber.org/papers/w26428.
Lazear’s findings were presented as change in log points. JEC calculations
converted log point differences to percent change using the formula found in:
Christopher Palmer, “Interpretation of β in Log-Linear Models,” 2011,
https://faculty.haas.berkeley.edu/palmer/beta_in_log-linear_regression.pdf.
159
Christina King, Scott Winship, and Adam Michel, “Reconnecting
Americans to the Benefits of Work,” U.S. Joint Economic Committee
Republicans, October 27, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/2021/10/reconnectin
g-americans-to-the-benefits-of-work.
160
Report, 152.
161
Adam Michel and Christina King, “Occupational Licensing Stands in the
Way of Recovery,” U.S. Joint Economic Committee Republicans, July 28,
2021,
www.jec.senate.gov/public/index.cfm/republicans/analysis?ID=57751C4503AE-439F-8CA7-4433368AA7E1;
Dick M. Carpenter, Lisa Knepper, Kyle Sweetland, and Jennifer McDonald,
“License to Work,” Institute for Justice, November 13, 2017,
https://ij.org/report/license-to-work-2/.
162
Janna E. Johnson and Morris M. Kleiner, “Is Occupational Licensing a
Barrier to Interstate Migration?” American Economic Journal: Economic
Policy, 12 (3): 347-73, 2020,
https://www.aeaweb.org/articles?id=10.1257/pol.20170704.
155
182
163
U.S. Congress, Employment Act of 1946, S 380, 79th Congress, 2nd Session,
https://fraser.stlouisfed.org/title/employment-act-1946-1099.
164
Robert Fogel, The Escape from Hunger and Premature Death, 1700–2100:
Europe, America, and the Third World, Cambridge Studies in Population,
Economy and Society in Past Time, Cambridge: Cambridge University Press,
2004, doi:10.1017/CBO9780511817649; Charlie Giattino and Esteban OrtizOspina, “Are We Working More than Ever?” Our World in Data, December
16, 2020, https://ourworldindata.org/working-more-than-ever.
165
Elizabeth Arias and Jiaquan Xu, “United States Life Tables, 2019,”
National Vital Statistics Reports, Volume 20, Number 19, National Center for
Health Statistics, National Vital Statistics Program, 2022.
166
Elizabeth Arias and Jiaquan Xu, “United States Life Tables, 2019,”
National Vital Statistics Reports, Volume 20, Number 19, National Center for
Health Statistics, National Vital Statistics Program, 2022.
166
Bureau of Labor Statistics, Total Factor Productivity - 2021,
https://www.bls.gov/news.release/pdf/prod3.pdf.
167
“Technology Timeline,” Weber State University, Accessed May 26, 2022,
https://www.weber.edu/digitalhistory/timeline.html.
168
James Pethokoukis, “Is the Great Stagnation over?” American Enterprise
Institute, Accessed May 23, 2022, https://www.aei.org/articles/is-the-greatstagnation-over/; Anne Trafton, “New Lightweight Material Is Stronger than
Steel,” MIT News | Massachusetts Institute of Technology, Accessed May 23,
2022, https://news.mit.edu/2022/polymer-lightweight-material-2d-0202.
169
Reka Juhász, Mara P. Squicciarini, and Nico Voigtländer, “Technology
Adoption and Productivity Growth: Evidence from Industrialization in
France,” National Bureau of Economic Research, 2020,
https://doi.org/10.3386/w27503.
170
Patrick McLaughlin, Jonathan Nelson, Thurston Powers, Walter Stover,
and Stephen Strosko, RegData US 4.0 Annual (dataset), QuantGov, Mercatus
Center at George Mason University, 2021.
171
Lettie McSpadden Wenner, “The Misuse and Abuse of NEPA.”
Environmental Review: vol. 7, no. 3, 1983: 229–54,
https://doi.org/10.2307/3984482.
172
Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402; Alan Cole, “A
conversation with Jim Pethokoukis on anti-growth politics,” Full Stack
Economics, April 20, 2022, https://fullstackeconomics.com/a-conversationwith-jim-pethokoukis-on-anti-growth-politics/.
173
Adjusted to 2022 dollars by applying CPI-U All US Cities to annual cost
savings figure in Robert W. Crandall, “Extending Deregulation: Make the
U.S. Economy More Efficient,” Brookings, July 28, 2007,
https://www.brookings.edu/wpcontent/uploads/2016/06/pb_deregulation_crandall.pdf.
183
“Executive Order 12291--Federal Regulation,” National Archives and
Records Administration, Accessed May 24, 2022,
https://www.archives.gov/federal-register/codification/executiveorder/12291.html; Hershey, Robert D., “President Abolishes Last Price
Controls on U.S.-Produced Oil,” The New York Times, January 29, 1981,
https://www.nytimes.com/1981/01/29/us/president-abolishes-last-pricecontrols-on-us-produced-oil.html.
175
Tea Petrin, “A literature review on the impact and effectiveness of
government support for R&D and innovation,” 2018.
176
John A. Douglas, “The Cold War, Technology and the American
University,” 1999, UC Berkeley: Center for Studies in Higher Education,
Retrieved from https://escholarship.org/uc/item/9db970dq; Committee on
Assessing the Value of Research in Advancing National Goals, Division of
Behavioral and Social Sciences and Education, National Research Council,
Richard F. Celeste, Ann Griswold, and Miron Straf, editors, Furthering
America's Research Enterprise, Washington, DC: National Academies Press,
Oct 28 2014, https://www.ncbi.nlm.nih.gov/books/NBK253889/.
177
“Regulation Rodeo by the American Action Forum,” American Action
Forum Regulation Rodeo, Accessed May 31, 2022, regrodeo.com.
178
“Information Collection Budget - Whitehouse.gov,” Accessed May 24,
2022, https://www.whitehouse.gov/wp-content/uploads/2020/12/2018-ICBReport-Final.pdf.
179
U.S. Bureau of Labor Statistics, Table B-3. Average Hourly and Weekly
Earnings of All Employees on Private Nonfarm Payrolls by Industry Sector,
Seasonally Adjusted - 2022 M04 Results. May 6, 2022,
https://www.bls.gov/news.release/empsit.t19.htm; U.S. Bureau of Labor
Statistics, “13-1041 Compliance Officers,” March 31, 2022,
https://www.bls.gov/oes/current/oes131041.htm; “Regulation Rodeo by the
American Action Forum,” Data reported for 2018-2022, American Action
Forum Regulation Rodeo, Accessed May 31, 2022, regrodeo.com.
180
James Broughel and Robert Hahn, “The Impact of Economic Regulation on
Growth: Survey and Synthesis,” Accessed May 11, 2022,
https://onlinelibrary.wiley.com/doi/abs/10.1111/rego.12376.
181
Bentley Coffey, Patrick A. McLaughlin, and Pietro Peretto, “The
cumulative cost of regulations,” Review of Economic Dynamics, Volume 38,
2020, pp. 1-21, https://doi.org/10.1016/j.red.2020.03.004.
182
John W. Dawson and John J. Seater, “Federal regulation and aggregate
economic growth,” Journal of Economic Growth 18, 137–177, 2013,
https://doi.org/10.1007/s10887-013-9088-y.
183
John W. Dawson and John J. Seater, “Federal regulation and aggregate
economic growth,” Journal of Economic Growth 18, 137–177, 2013,
https://doi.org/10.1007/s10887-013-9088-y.
174
184
184
Dustin Chambers, Patrick A. McLaughlin, and Oliver Sherouse,
“Regulation, Entrepreneurship, and Dynamism,” Mercatus Working Paper,
Mercatus Center at George Mason University, October 2020.
185
Germán Gutiérrez and Thomas Philippon, “The Failure of Free Entry,”
National Bureau of Economic Research, June 2019,
https:\www.nber.org\papers\w26001.
186
Robert J. Barro, 1990, “Government spending in a simple model of
endogeneous growth,” Journal of Political Economy 98(S5): 103-125; Di
Matteo Livio, “Measuring Government in the 21st Century - Fraser Institute,”
Accessed May 12, 2022,
https://www.fraserinstitute.org/sites/default/files/measuring-government-inthe-21st-century.pdf.
187
Christina D. Romer and David H. Romer, 2010, “The Macroeconomic
Effects of Tax Changes: Estimates Based on a New Measure of Fiscal
Shocks,” American Economic Review, 100 (3): 763-801.
188
Valerie A. Ramey, “Ten Years After the Financial Crisis: What Have We
Learned from the Renaissance in Fiscal Research?” Journal of Economic
Perspectives, Vol. 33, No. 2, Spring 2019,
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.2.89.
189
William McBride, “What Is the Evidence on Taxes and Growth?” and
William McBride, “Empirical Evidence on Taxes and Growth: A Response to
CBPP,” Tax Foundation, February 21, 2014,
https://taxfoundation.org/empirical-evidence-taxes-and-growth-responsecbpp/.
190
Report, 238-239.
191
Scott Lincicome and Huan Zhu, “Questioning Industrial Policy: Why
Government Manufacturing Plans are Ineffective and Unnecessary,” June 16,
2021, https://www.cato.org/sites/cato.org/files/2021-06/working-paper-63updated-2.pdf.
192
For example, the Congressional Budget Office estimates that it would take
10 years for Congress to spend the funds authorized by the U.S. Innovation
and Competition Act (USICA) and the America Creating Opportunities for
Manufacturing Pre-Eminence in Technology and Economic Strength
(America COMPETES):
Congressional Budget Office, “Estimated Budgetary Effects of H.R. 4521, the
America COMPETES Act of 2022, as Passed by the House of Representatives
on February 4, 2022,” March 2022, https://www.cbo.gov/system/files/202203/hr4521.pdf; Congressional Budget Office, “At a Glance: S. 1260, Endless
Frontier Act, with an Amendment in the Nature of a Substitute, the United
States Innovation and Competition Act of 2021,” May 2021,
https://www.cbo.gov/system/files/2021-10/s1260.pdf.
193
Scott Lincicome and Huan Zhu, “Questioning Industrial Policy: Why
Government Manufacturing Plans are Ineffective and Unnecessary,” June 16,
185
2021, https://www.cato.org/sites/cato.org/files/2021-06/working-paper-63updated-2.pdf; Juan Londoño, “The Return of Industrial Policy Means Bad
News for Emerging Technology Sectors,” American Action Forum, July 15,
2021, https://www.americanactionforum.org/insight/the-return-of-industrialpolicy-means-bad-news-for-emerging-technology-sectors/.
194
Report, 239.
195
Adam Thierer, “’Japan Inc’ and Other Tales of Industrial Policy
Apocalypse,” Discourse Magazine, June 28, 2021,
https://www.discoursemagazine.com/culture-and-society/2021/06/28/japaninc-and-other-tales-of-industrial-policy-apocalypse/.
196
William McBride and Alex Durante, “Biden Budget Would Raise Income
Tax Rates to Highest in Developed World.” Tax Foundation, May 23, 2022,
https://taxfoundation.org/biden-budget-tax/.
197
William McBride and Alex Durante, “Biden Budget Would Raise Income
Tax Rates to Highest in Developed World,” Tax Foundation, March 2022,
https://taxfoundation.org/biden-budget-tax/.
198
“Regulation Rodeo by the American Action Forum.” Data reported for
2018-2022 American Action Forum Regulation Rodeo, Accessed May 31,
2022, regrodeo.com.
199
Diane Katz, “The Biden Administration's Radical Regulatory Agenda.”
The Heritage Foundation, Accessed May 31, 2022,
https://www.heritage.org/government-regulation/report/the-bidenadministrations-radical-regulatory-agenda.
200
Council of Economic Advisers, “Chapter 1: The Great Expansion,” in 2020
Economic Report of the President, February 2020,
https://www.govinfo.gov/content/pkg/ERP-2020/pdf/ERP-2020.pdf.
201
Council of Economic Advisers, “Incomes Hit a Record High and Poverty
Reached a Record Low in 2019 – the White House,” Trump White House
Archives, September 2020, Accessed April 15, 2022,
https://trumpwhitehouse.archives.gov/articles/incomes-hit-record-highpoverty-reached-record-low-2019/.
202
U.S. Bureau of Labor Statistics, “Labor Force Participation Rate - 25-54
Yrs.,” Retrieved from the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/LNS11300060.
203
“Testimony of Dr. Tyler Goodspeed before the U.S. Congress Joint
Economic Committee,” Joint Economic Committee, Accessed May 13, 2022,
https://www.jec.senate.gov/public/_cache/files/9cda6fc1-6933-48c0-b2768995b6fff437/goodspeed-final-jec-testimony-4.27.2022.pdf.
204
“Sen. Lee Introduces Bill to Increase Utah Housing Supply,” Mike Lee US
Senator for Utah, April 8, 2022, https://www.lee.senate.gov/2022/4/sen-leeintroduces-bill-to-increase-utah-housingsupply#:~:text=Senator%20Mike%20Lee%20(R%2DUT,of%20the%20land%
20in%20Utah.
186
205
U.S. Joint Economic Committee, 1979 Annual Joint Economic Committee
Report, 96th Congress, 2nd Session, September 4, 1980,
https://www.jec.senate.gov/reports/96th%20Congress/The%20Global%20200
0%20Report%20(998).pdf.
206
Secretariat, Treasury Board of Canada, “Targeted Regulatory Review,”
Canada.ca, Gouvernement du Canada, January 25, 2021,
https://www.canada.ca/en/government/system/laws/developing-improvingfederal-regulations/modernizing-regulations/targeted-regulatory-reviews.html;
Secretariat, Treasury Board of Canada. “One-For-One Rule.” Canada.ca,
Gouvernement du Canada, July 8, 2016,
https://www.canada.ca/en/government/system/laws/developing-improvingfederal-regulations/requirements-developing-managing-reviewingregulations/one-for-one-rule.html.
207
Laura Jones, “Cutting Red Tape in Canada: A Regulatory Reform Model
for the United States?” Mercatus Center, September 15, 2019,
https://www.mercatus.org/publications/regulation/cutting-red-tape-canadaregulatory-reform-model-united-states.
208
“B.C. Economic Accounts & Gross Domestic Product,” Province of British
Columbia, Province of British Columbia, November 17, 2021,
https://www2.gov.bc.ca/gov/content/data/statistics/economy/bc-economicaccounts-gdp.
209
Nick Malyshev, “A Primer on Regulatory Budgets,” OECD, Accessed May
24, 2022, https://www.oecd.org/gov/budgeting/.
210
Ergete Ferede and Bev Dahlby, “The Impact of Tax Cuts on Economic
Growth: Evidence from the Canadian Provinces,” National Tax Journal 65,
no. 3, 2012: 563–594.
211
U.S. Congress, Employment Act of 1946, S 380, 79th Congress, 2nd Session,
https://fraser.stlouisfed.org/title/employment-act-1946-1099.
212
U.S. Congress, Senate, “Long Term Trends in Deaths of Despair,” Social
Capital Project, Joint Economic Committee, Report No. 4-19, September
2019, https://www.jec.senate.gov/public/index.cfm/republicans/2019/9/longterm-trends-in-deaths-of-despair.
213
Centers for Disease Control and Prevention, National Center for Health
Statistics, Vital Statistics Rapid Release. “Provisional Drug Overdose Death
Counts,” Accessed April 26, 2022, https://www.cdc.gov/nchs/nvss/vsrr/drugoverdose-data.htm.
214
Data are from the Multiple Cause of Death Files, 1999-2020, as compiled
from data provided by the 57 vital statistics jurisdictions through the Vital
Statistics Cooperative Program. Accessed May 10, 2022,
http://wonder.cdc.gov/ucd-icd10.html; Centers for Disease Control and
Prevention, National Center for Health Statistics, Monthly Provisional Counts
of Deaths by Select Causes, 2020-2022, Accessed May 11, 2022,
https://data.cdc.gov/d/9dzk-mvmi.
187
Casey Mulligan, “Deaths of Despair and the Incidence of Excess Mortality
in 2020,” National Bureau of Economic Research, December 2020,
http://www.nber.org/papers/w28303.pdf.
216
U.S. Department of Transportation, “Departmental Guidance on Valuation
of a Statistical Life in Economic Analysis,” March 23, 2021,
https://www.transportation.gov/office-policy/transportation-policy/reviseddepartmental-guidance-on-valuation-of-a-statistical-life-in-economic-analysis.
217
The Value of a Statistical Life ($11.8 million) multiplied by the 168,996
total number of overdose deaths since March 2020.
218
Jeremy Greenwood, Nezih Guner, and Karen Kopecky, “Substance Abuse
during the Pandemic: Implications for Labor-Force Participation,” National
Bureau of Economic Research, April 2022,
http://www.nber.org/papers/w29932.pdf.
219
Centers for Disease Control and Prevention, National Center for Health
Statistics, National Vital Statistics System, Mortality 1999-2020 on CDC
WONDER Online Database, released in 2021. Data are from the Multiple
Cause of Death Files, 1999-2020, as compiled from data provided by the 57
vital statistics jurisdictions through the Vital Statistics Cooperative Program.
Accessed May 10, 2022, http://wonder.cdc.gov/ucd-icd10.html.
220
Casey B. Mulligan, “Lethal Unemployment Bonuses? Substitution and
Income Effects on Substance Abuse, 2020-21,” National Bureau of Economic
Research, February 2022,
https://www.nber.org/system/files/working_papers/w29719/w29719.pdf.
221
Jon E. Sprague, Arthur B. Yeh, Qizhen Lan, Jamie Vieson, and Maggie
McCorkle, “COVID-19 economic impact payments and opioid overdose
deaths,” International Journal of Drug Policy 102, April 2022: Article
103608, Accessed April 27, 2022,
https://europepmc.org/article/med/35131687.
222
See Janna Ataiants, Alexis M. Roth, Silvana Mazzella, and Stephen E.
Lankenau, “Circumstances of overdose among street-involved, opioidinjecting women: Drug, set, and setting,” International Journal of Drug Policy
78, April 2020, https://pubmed.ncbi.nlm.nih.gov/32086154/.
223
National Association of Addiction Treatment Providers, “Treatment
Provider COVID-19 Impact Survey,” Accessed May 12, 2022,
https://www.naatp.org/sites/naatp.org/files/COVID19%20Impact%20Survey%20Results.pdf.
224
Tami L. Mark, Brent Gibbons, and Alan Barnosky, “Changes in
Admissions to Specialty Addiction Treatment Facilities in California During
the COVID-19 Pandemic,” JAMA Network Open 4, no. 7, July 14, 2021,
https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2781940.
225
Richard Rosenfeld and Ernesto Lopez, “Pandemic, Social Unrest, and
Crime in U.S. Cities: March 2021 Update,” National Commission on COVID19 and Criminal Justice. May 2022, https://counciloncj.org/wp215
188
content/uploads/2021/11/Pandemic_Social_Unrest_and_Crime_in_US_Cities
_-_March_2021_Update.pdf.
226
The White House, “FACT SHEET: White House Releases 2022 National
Drug Control Strategy that Outlines Comprehensive Path Forward to Address
Addiction and the Overdose Epidemic,” April 21, 2022,
https://www.whitehouse.gov/briefing-room/statementsreleases/2022/04/21/fact-sheet-white-house-releases-2022-national-drugcontrol-strategy-that-outlines-comprehensive-path-forward-to-addressaddiction-and-the-overdose-epidemic/.
227
See Christopher F. Rufo, “The Harm in ‘Harm Reduction’,” City Journal,
Spring 2020, https://www.city-journal.org/vancouver-harm-reduction.
228
Centers for Disease Control and Prevention, National Center for Health
Statistics, National Vital Statistics System, Homicide 2020, Underlying
Causes of Death, 1999-2020, Deaths Occurring through 2020, Accessed June
3, 2022. Note: CDC homicide numbers differ from FBI calculations, which
estimate total homicides at 21,570 in 2020. See
https://www.pewresearch.org/fact-tank/2021/10/27/what-we-know-about-theincrease-in-u-s-murders-in-2020/.
229
Weihua Li and Beth Schwartzapfel, “Murder Rose Last Year. Black and
Hispanic Neighborhoods Were Hit the Hardest,” The Marshall Project, April
8, 2021, https://www.themarshallproject.org/2021/04/08/murders-rose-lastyear-black-and-hispanic-neighborhoods-were-hit-hardest; Scott R. Kegler,
Thomas R. Simon, Marissa L. Zwald, May S. Chen, James A. Mercy,
Christopher M. Jones, Melissa C. Merado-Crespo, Janet M. Blair, Deborah M.
Stone, Phyllis G, Ottley, and Jennifer Dills, “Vital Signs: Changes in Firearm
Homicide and Suicide Rates—United States, 2019-2020,”
https://www.cdc.gov/mmwr/volumes/71/wr/mm7119e1.htm
230
Centers for Disease Control and Prevention, National Center for Health
Statistics, Vital Statistics Rapid Release, Mortality Dashboard, Accessed May
31, 2022, https://www.cdc.gov/nchs/nvss/vsrr/mortality-dashboard.htm.
231
Marisa Lagos, “Violent Crime Soared During the Pandemic. But Does the
Political Debate Reflect the Data?” KQED. March 2, 2022, Accessed April 29,
2022, https://www.kqed.org/news/11906253/violent-crime-soared-during-thepandemic-but-does-the-political-debate-reflect-the-data.
232
Julia P. Schleimer, Veronica A. Pear, Christopher D. McCort, Aaron B.
Shev, Alaina De Biasi, Elizabeth Tomsich, Shani Buggs, Hannah S. Laqueur,
and Garen J. Wintemute, “Unemployment and Crime in U.S. Cities During the
Coronavirus Pandemic,” Journal of Urban Health 99, January 2022: 82-91,
https://link.springer.com/article/10.1007/s11524-021-00605-3.
233
Jacqueline Varas, Vijay Menon, and Robert Bellafiore, “What’s Next for
Schools: Balancing the Costs of School Closures Against COVID-19 Health
Risks,” Joint Economic Committee Republicans, February 2, 2021,
189
https://www.jec.senate.gov/public/index.cfm/republicans/analysis?id=33BC87
AF-9E6A-4EAD-BAD0-F15B83990663#_edn1.
234
MCH Strategic Data, “COVID-19 IMPACT: School District Operational
Status Updates for Spring 2022,” Accessed April 29, 2022,
https://www.mchdata.com/covid19/schoolclosings.
235
Institute of Education Sciences, “New Data Reveal Public School
Enrollment Decreased 3 Percent in 2020-21 School Year,” NCES Blog, July
26, 2021, Accessed May 10, 2022, https://nces.ed.gov/blogs/nces/post/newdata-reveal-public-school-enrollment-decreased-3-percent-in-2020-21-schoolyear.
236
Penn Wharton, University of Pennsylvania, “COVID-19 Learning Loss:
Long-run Macroeconomic Effects Update,” October 27, 2021, Accessed April
28, 2022, https://budgetmodel.wharton.upenn.edu/issues/2021/10/27/covid19-learning-loss-long-run-macro-effects.
237
i-Ready, “Academic Achievement at the End of the 2020-2021 School
Year.” June 2021, https://www.curriculumassociates.com//media/mainsite/files/i-ready/iready-understanding-student-needs-paperspring-results-2021.pdf.
238
Ibid.
239
Dan Goldhaber, Thomas J. Kane, Andrew McEachin, Emily Morton, Tyler
Patterson, and Douglas O. Staiger, “The Consequences of Remote and Hybrid
Instruction During the Pandemic,” Harvard University Center for Education
Policy Research, 10. May 2022, https://cepr.harvard.edu/files/cepr/files/54.pdf?m=1651690491.
240
Emma Dorn, Bryan Hancock, Jimmy Sarakatsannis, and Ellen Viruleg,
“COVID-19 and student learning in the United States: The hurt could last a
lifetime,” McKinsey & Company, June 1, 2020,
https://www.mckinsey.com/industries/education/our-insights/covid-19-andstudent-learning-in-the-united-states-the-hurt-could-last-a-lifetime.
241
Emma Dorn, Bryan Hancock, Jimmy Sarakatsannis, and Ellen Viruleg,
“COVID-19 and student learning in the United States: The hurt could last a
lifetime,” McKinsey & Company, June 1, 2020,
https://www.mckinsey.com/industries/education/our-insights/covid-19-andstudent-learning-in-the-united-states-the-hurt-could-last-a-lifetime.
242
Penn Wharton, University of Pennsylvania, “COVID-19 Learning Loss:
Long-run Macroeconomic Effects Update.”
243
Ibid.
244
Margaret A. Honein, Lisa C. Barrios, and John T. Brooks, “Data and
Policy to Guide Opening Schools Safely to Limit the Spread of SARS-CoV-2
Infection,” JAMA 325, no. 9, January 26, 2021: 823-824,
https://jamanetwork.com/journals/jama/fullarticle/2775875.
245
Berkeley Lovelace Jr., “CDC director says schools can safely reopen
without vaccinating teachers,” CNBC, February 3, 2021,
190
https://www.cnbc.com/2021/02/03/cdc-director-says-schools-can-safelyreopen-without-vaccinating-teachers.html.
246
The White House, “Executive Order on Supporting the Reopening and
Continuing Operation of Schools and Early Childhood Education Providers,”
January 21, 2021, https://www.whitehouse.gov/briefing-room/presidentialactions/2021/01/21/executive-order-supporting-the-reopening-and-continuingoperation-of-schools-and-early-childhood-education-providers/; U.S. House of
Representatives, Select Subcommittee on the Coronavirus Crisis, “Interim
Findings: Union Officials Wrote Key Portions of the Biden Administration’s
School Reopening Guidance,” March 30, 2022; Katelyn Caralle, “Republicans
released damning report claiming teachers union WROTE part of the Biden
Administration’s guidance on reopening schools, received millions in
donations and had ‘uncommon’ links to CDC,” Daily Mail, March 30, 2022,
Accessed May 16, 2022, https://www.dailymail.co.uk/news/article10667987/Republicans-expose-cozy-relationship-CDC-teachers-union-schoolreopenings.html.
247
Ibid.
248
Marie Elizabeth Loades, Eleanor Chatburn, Nina Higson-Sweeney, Shirley
Reynolds, Roz Shafran, Amberly Brigden, Catherine Linney, Megan Niamh
McManus, Catherine Borwick, and Esther Crawley, “Rapid Systematic
Review: The Impact of Social Isolation and Loneliness on the Mental Health
of Children and Adolescents in the Context of COVID-19,” Journal of the
American Academy of Child and Adolescent Psychiatry 59 no. 11, November
2020: 1218-1239, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7267797/;
Jean Twenge, “How Much Is Social Media to Blame for Teens’ Declining
Mental Health?” Institute for Family Studies, April 11, 2022,
https://ifstudies.org/blog/how-much-is-social-media-to-blame-for-teensdeclining-mental-health.
249
Centers for Disease Control and Prevention, “Youth Risk Behavior Survey
Data Summary & Trends Report 2009-2019,”
https://www.cdc.gov/healthyyouth/data/yrbs/pdf/YRBSDataSummaryTrendsR
eport2019-508.pdf; Jean Twenge, “How Much Is Social Media to Blame for
Teens’ Declining Mental Health?” April 11, 2022,
https://ifstudies.org/blog/how-much-is-social-media-to-blame-for-teensdeclining-mental-health.
250
Centers for Disease Control and Prevention, WISQARS, Explore Fatal
Injury Data Visualization Tool, Select “Suicide,” “Age Range 14-17,”
Accessed May 12, 2022, https://wisqars.cdc.gov/data/explore-data/home.
251
Jean Twenge, “How Much Is Social Media to Blame for Teens’ Declining
Mental Health?” April 11, 2022, https://ifstudies.org/blog/how-much-issocial-media-to-blame-for-teens-declining-mental-health.
252
Rachel Sheffield and Catherine Francois, “Is Instagram Causing Poorer
Mental Health Among Teen Girls?” U.S. Joint Economic Committee
191
Republicans, December 1, 2021,
https://www.jec.senate.gov/public/index.cfm/republicans/analysis?id=3CA023
1D-4C1F-45DD-8CC7-40320817C55B.
253
See Centers for Disease Control and Prevention, National Vital Statistics
System, “Provisional number of marriages and marriage rate: United States,
2000-2020.” Accessed April 29, 2022,
https://www.cdc.gov/nchs/data/dvs/national-marriage-divorce-rates-00-20.pdf.
254
See Florida Department of Health Bureau of Vital Statistics, Table 9:
Marriages Performed by Month, by County of Issuance, various years,
Accessed April 29, 2022,
http://www.flpublichealth.com/VSprov/rdPage.aspx?rdReport=ProvReports&r
adReport=T10&drpYear=2020; Iowa Department of Public Health, Accessed
April 29, 2022, https://idph.iowa.gov/health-statistics/data/preliminarydata#birth.
255
Rachel Sheffield and Scott Winship, “The Demise of the Happy TwoParent Home,” Joint Economic Committee Republicans, July 23, 2020,
https://www.jec.senate.gov/public/index.cfm/republicans/2020/7/the-demiseof-the-happy-two-parent-home.
256
Ibid.
257
Rachel Sheffield and Scott Winship, “The Demise of the Happy TwoParent Home,” Joint Economic Committee Republicans. July 23, 2020.
258
Ibid.
259
Michelle J.K. Osterman, Brady E. Hamilton, Joyce A. Martin, Anne K.
Driscoll, and Claudia Valenzuela, “Births: Final Data for 2020,” U.S.
Department of Health and Human Services, Centers for Disease Control and
Prevention, National Center for Health Statistics, National Vital Statistics
System, February 7, 2022, https://www.cdc.gov/nchs/data/nvsr/nvsr70/nvsr7017.pdf.
260
See Rachel Sheffield and Scott Winship, “The Demise of the Happy TwoParent Home,” Table 11; Joyce A. Martin, Brady E. Hamilton, Michelle J. K.
Osterman, and Anne K. Driscoll, “Births: Final Data for 2019,” U.S.
Department of Health and Human Services, Centers for Disease Control and
Prevention, National Center for Health Statistics, National Vital Statistics
System, Table 10, March 23, 2021, Accessed May 10, 2022,
https://www.cdc.gov/nchs/data/nvsr/nvsr70/nvsr70-02-508.pdf; Michelle J.K.
Osterman, Brady E. Hamilton, Joyce A. Martin, Anne K. Driscoll, and
Claudia P. Valenzuela, “Births: Final Data for 2020,” U.S. Department of
Health and Human Services, Centers for Disease Control and Prevention,
National Center for Health Statistics, National Vital Statistics System,
February 7, 2022, Accessed May 10, 2022,
https://www.cdc.gov/nchs/data/nvsr/nvsr70/nvsr70-17.pdf.
261
Data for 1970 – 1995: Stephanie J. Ventura and Christine A. Bacharach,
“Nonmarital Childbearing in the United States, 1940-99,” U.S. Department of
192
Health and Human Services, Centers for Disease Control and Prevention.
National Center for Health Statistics, October 18, 2000, Table 4, Accessed
May 12, 2022, https://www.cdc.gov/nchs/data/nvsr/nvsr48/nvs48_16.pdf;
Estimates for 1995-2020 are available from various National Vital Statistics
Reports. Note: Data for Hispanics are not reported until 1990, and only for
Hispanic and non-Hispanic white. Data for non-Hispanic black are reported
beginning in 1995.
262
Lyman Stone, “Declining Fertility in America,” American Enterprise
Institute, December 2018, Accessed May 13, 2022, https://www.aei.org/wpcontent/uploads/2018/12/Declining-Fertility-in-America.pdf.
263
The total fertility rate is projected based on “the prevailing age-specific
fertility rates” and “is calculated by totaling the age-specific fertility rate as
defined over five-year intervals.” See OECD Data, Fertility rates, Accessed
May 13, 2022, https://data.oecd.org/pop/fertility-rates.htm; Brady E.
Hamilton, Joyce A. Martin, and Michelle J. K. Osterman, “Births: Provisional
Data for 2021,” U.S. Department of Health and Human Services, Centers for
Disease Control and Prevention, National Center for Health Statistics,
National Vital Statistics System, May 2022, Accessed June 2, 2022,
https://www.cdc.gov/nchs/data/vsrr/vsrr020.pdf.
264
World Bank, “Fertility Rate, Total for the United States,” Retrieved from
the Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/SPDYNTFRTINUSA; Michelle J.K.
Osterman, Brady E. Hamilton, Joyce A. Martin, Anne K. Driscoll, and
Claudia P. Valenzuela, “Births: Final Data for 2020.”
265
Brady E. Hamilton, Joyce A. Martin, and Michelle J. K. Osterman, “Births:
Provisional Data for 2021,” U.S. Department of Health and Human Services,
Centers for Disease Control and Prevention, National Center for Health
Statistics, National Vital Statistics System, May 2022, Accessed June 2, 2022,
https://www.cdc.gov/nchs/data/vsrr/vsrr020.pdf.
266
Rachel Sheffield and Scott Winship, “The Demise of the Happy TwoParent Home.”
267
Joint Economic Committee Republicans. Social Capital Project.
193
194
@FedFRASER