[Economic Report of the President (2011)]
[Administration of Barack H. Obama]
[Online through the Government Printing Office, www.gpo.gov]

112th Congress, 1st Session..................................................H. Doc. 112-2
 
ECONOMIC

REPORT

OF THE

PRESIDENT


TRANSMITTED TO THE CONGRESS
FEBRUARY 2011


TOGETHER WITH
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS


UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 2011

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ISBN 978-0-16-087664-6


C O N T E N T S
Page

ECONOMIC REPORT OF THE PRESIDENT................................     1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS*                   9

CHAPTER 1. FROM CRISIS TO RECOVERY AND GROWTH...................    19

CHAPTER 2. THE YEAR IN REVIEW AND THE YEARS AHEAD...............    29

CHAPTER 3. THE FOUNDATIONS OF GROWTH............................    53

CHAPTER 4. THE WORLD ECONOMY....................................    81

CHAPTER 5. HEALTH CARE REFORM...................................   111

CHAPTER 6. TRANSITIONING TO A CLEAN ENERGY FUTURE...............   125

CHAPTER 7. SUPPORTING AMERICA'S SMALL BUSINESSES................   143

REFERENCES .....................................................   157

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 2010............   165

APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENt,
AND PRODUCTION......................................   179

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*For a detailed table of contents of the Council's Report, see page 13.



ECONOMIC REPORT
OF THE
PRESIDENT


ECONOMIC REPORT OF THE PRESIDENT

TO THE CONGRESS OF THE UNITED STATES:

As we begin a new year, the country is still emerging from the worst
recession in generations. Across the nation, millions lost their jobs,
their businesses, and their sense of security about the future. Many
have had to put off their plans for a better life: going to college,
buying a new home, or retiring after a long career.

At the same time, we've seen encouraging signs that the recovery is
beginning to take hold. An economy that had been shrinking for a year
is now growing again. After two years of job losses, our economy added
more than one million private sector jobs in 2010. Yet, as we all are
too well aware, the recovery is not happening fast enough. Millions of
Americans--our neighbors, friends, family members--are still looking
for jobs. this means that the most immediate task must be to get our
fellow Americans back to work by accelerating economic growth and job
creation by the private sector.

That's why, at the end of last year, I signed into law a measure to
prevent taxes from rising on middle-class families and to create new
incentives for businesses to create jobs. this bipartisan compromise
cut payroll taxes for 155 million workers, prevented a $3,000 tax
increase from going into effect on the typical working family, and
extended important tax credits to help families make ends meet and
send their kids to college. the law also extended unemployment
insurance, preventing 7 million Americans from losing their benefits
as they look for new work, and gave businesses two powerful
incentives to invest and create jobs. these were 100 percent expensing
of investment expenditures and an extension of the research and
experimentation tax credit.

I proposed an up-front investment in building new roads, rails, and
runways to upgrade our infrastructure and create new jobs. And last
month, I laid out a commonsense approach to regulation that is
pragmatic, based on evidence, and driven by data that will help lay
the groundwork for economic growth and job creation while continuing
to protect our health, safety, and environment. In addition, my
Administration has moved aggressively to open markets abroad and boost
exports of American goods and services.

These steps will help the economy this year. But it is also essential
that we take stock and look to the future--to what kind of America we
want to see emerge from this crisis and take shape for the generations
of Americans to come.

We know what it takes to compete for the jobs and industries of our
time. We know what we have to do to win the future. We need to
out-innovate, out-educate, and out-build the rest of the world. We
have to make America the best place on Earth to do business. We need
to rein in deficits after a decade of rising debt, and reform our
government. This is the way to robust and widely shared prosperity.

The first step in winning the future is encouraging American
innovation. That is ultimately driven by free enterprise. But public
support also plays an essential role in encouraging innovative
research and development. It holds incredible promise for our future.
That is why, throughout history our government has provided
cutting-edge scientists and inventors with the support that they need.
This is what planted the seeds for the Internet. This is what helped
make possible breakthroughs like computer chips and GPS.

Two years ago, I set a goal for America: that we needed to reach a
level of research and development we haven't seen since the height of
the Space Race. And this year, my budget helps us meet that goal.
We'll invest in biomedical research, information technology, and
especially clean energy technology--an investment that will strengthen
our security, protect our planet, and create countless new jobs for
our people.

We've begun to reinvent our energy policy. We're telling America's
scientists and engineers that if they assemble teams of the best minds
in their fields, and focus on the hardest problems in clean energy,
we'll fund the Apollo Projects of our time. We're doing this through
investments in innovation hubs across America. These are teams of
scientists focused on one difficult problem. We're also supporting
the Advanced Research Projects Agency for Energy, modeled on a
successful defense agency that has developed cutting-edge technologies
for decades.

In addition, clean energy breakthroughs will only translate into
clean energy jobs if businesses know there will be a market for what
they're selling. So in my State of the Union, I called on Congress to
join me in setting a new goal: by 2035, 80 percent of America's
electricity will come from clean energy sources.

The second part of our strategy is education. Over the next ten
years, nearly half of all new jobs will require education that goes
beyond a high school degree. And yet, as many as a quarter of our
students aren't even finishing high school. the quality of our math
and science education lags behind many other nations. And so the
question is whether all of us--as citizens, and as parents--are willing to do what's necessary to give every child a chance to succeed.

Of course, our schools share this responsibility. When a child walks
into a classroom, it should be a place of high expectations and high
performance. Yet too many schools in our country don't meet this
threshold test. that's why we launched a competition called Race to
the top. Race to the top is the most meaningful reform of our public
schools in a generation. For less than one percent of what we spend
on education each year, it has led over 40 states to raise their
standards for teaching and learning.

Next, because an increasing number of jobs require more than a high
school diploma, higher education must be within reach of every
American. So we've ended the taxpayer subsidies that went to banks to
act as a middleman in the student loan process, and used the savings
to make college affordable for millions of students. And this year,
we will work to make permanent our tuition tax credit--worth $10,000
for four years of college. We are also revitalizing America's
community colleges, which will help us reach the goal I set two years
ago: by the end of the decade, America will once again have the
highest proportion of college graduates in the world.

The third step in winning the future is rebuilding America. to
attract new businesses to our shores, we need the fastest, most
reliable ways to move people, goods, and information--from high-speed
rail to high-speed internet. that is why, over the last two years, we
have begun rebuilding for the 21st century, a project that has meant
thousands of good jobs for the hard-hit construction industry.

We will put more Americans to work repairing crumbling roads and
bridges. We will make sure this is fully paid for, attract private
investment, and pick projects based on what's best for the economy,
not politicians. Within 25 years, our goal is to give 80 percent of
Americans access to highspeed rail, which could allow you to go places
in half the time it takes to travel by car. Routes in California and
the Midwest are already underway. And within the next five years, we
will also make it possible for business to deploy the next generation
of high-speed wireless coverage to 98 percent of all Americans.

All these investments--in innovation, education, and
infrastructure--will make America a better place to do business and
create jobs. But to help our companies compete, we also have to knock
down barriers that stand in the way of their success.

To help businesses sell more products abroad, we set a goal of
doubling our exports by 2014. My Administration has worked to knock
down barriers our exporters face and advocated for U.S. exporters
abroad--resulting in signing important deals to sell more American
goods and services to China and India. And in December, we finalized
a trade agreement with South Korea that will support at least 70,000
American jobs. this agreement has unprecedented support from business
and labor, Democrats and Republicans, and I've asked Congress to pass
it as soon as possible. Finally, we are also pursuing agreements with
Panama and Colombia, and continuing our Asia Pacific and global trade
talks.

To reduce barriers to growth and investment, I've ordered a review
of government regulations. When we find rules that put an unnecessary
burden on businesses, we will fix them. But I will not hesitate to
create or enforce commonsense safeguards to protect the American
people. that's what we've done in this country for more than a century,
from child labor laws to protections for our air and water. It's why
last year, we put in place consumer protections against hidden fees
and penalties by credit card companies, and new rules to prevent
another financial crisis. And it's why we passed reform that finally
prevents the health insurance industry from exploiting patients.

The final step in winning the future is to make sure we aren't buried
under a mountain of debt. We are living with a legacy of
deficit-spending that began almost a decade ago. And in the wake of
the financial crisis, some of that was necessary to keep credit
flowing, save jobs, and put money in people's pockets.

That is why in my Budget, I've proposed that government live within
its means while investing in the future. I have promised to veto any
bill that contains earmarks. I've proposed freezing annual domestic
spending for the next five years. this would reduce the deficit by
more than $400 billion over the next decade, and will bring
discretionary spending to the lowest share of our economy since
Dwight Eisenhower was President.

Yet, at the same time, we cannot solve our fiscal problems on the
backs of our most vulnerable citizens. And it would also be a mistake
to cut the deficit by gutting our investments in innovation and
education, which are so critical for our future prosperity. the fact
is, priorities like education, innovation, and infrastructure have
traditionally commanded bipartisan support. there are no inherent
ideological differences that should prevent Democrats and Republicans
from improving our economy. We are all Americans, and we are all in
this race together--we can focus on what is necessary for America to
win the future.

For as difficult as the times may be, the good news is that we know
what the future could look like for the United States. We can see it
in the classrooms that are experimenting with groundbreaking reforms,
and giving children new math and science skills at an early age. We
can see it in the wind farms, solar plants, and advanced battery
plants that are opening across America. We can see it in the
laboratories and research facilities all over this country that are
churning out discoveries and turning them into new start-ups and new
jobs.

Our job is simply to harness the potential that exists all across
this country, and this economic report lays out the policies that will
help our nation succeed by doing exactly that. In the subsequent
chapters, we will look at the progress that has been made over the
past year. In addition, this report will lay out many of the policies
that will foster growth and make our economy more competitive. that
is our great challenge today. And I am absolutely confident it is one
we will meet.


THE WHITE HOUSE
FEBRUARY 2011



THE ANNUAL REPORT

OF THE

COUNCIL OF ECONOMIC ADVISERS


LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS
Washington, D.C., February 23, 2011
Mr. President:
The Council of economic Advisers herewith submits its 2011 Annual
Report in accordance with the provisions of the employment Act of
1946 as amended by the Full employment and Balanced Growth Act of
1978.

Sincerely,

Austan Goolsbee
Chairman


Cecilia Elena Rouse
Member