Building a Strong Economy

7/27/2019 Building a Strong Economy

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When the President took oce, the economywas losing over 700,000 private sector jobs amonth, and experiencing the worst two quarterso growth since the end o World War II. Due toswit action taken by the President shortly a-ter taking oce, the Nation avoided what couldhave been a second Great Depressionand has

now experienced 22 consecutive months o pri-vate sector job growth, with 3.2 million jobs cre-ated. In just the rst ew months o 2009, thePresidents strong leadership produced a Recov-ery Act to bolster American amilies against theworst o the crisis, as well as a rescue o the autoindustry and the stabilization o our nancialsystem which, together, prevented our economyrom spiraling into a deep depression.

At the beginning o 2011, our economy wasgaining traction ater enduring an historic reces-

sion and coming back rom the brink o a depres-sion. During the previous six quarters, real grossdomestic product (GDP) had grown at an aver-age annual rate o 3 percent and, over the pre-

vious 12 months, the private sector had created1.3 million new jobs. The nancial system was nolonger in crisis. The credit and capital marketswere unctioning, and the cost o stabilizing thenancial and automobile sectors was amountingto a raction o initial estimates. We subsequentlylearned that the recession was deeper than manyexperts rst thought: revised estimates showed

that the economy contracted at an 8.9 percentannualized rate in the last quarter o 2008, roman original projection o 3.8 percent, the largestquarterly downward revision in history. A trioo world events then created strong headwinds

that challenged the economic expansion: up-risings in the Middle East that sent oil priceshigher; an earthquake in Japan that prevented

American auto and manuacturing companiesrom getting the supplies they needed to keepour actories producing; and widespread sover-eign debt concerns in Europe that roiled markets

across the globe. In addition, the willingness oRepublicans in Congress to risk the rst deaultin our Nations history over the statutory debtceiling and the subsequent downgrade by Stan-dard & Poors o the long-term sovereign ratingo U.S. Treasuries and other debt tied to the U.S.credit rating kept nancial markets on edge andappeared to rattle consumer condence.

In the ace o these headwinds, the policiesenacted by the President played a key role inkeeping the economy moving orward. Because

o the policies that the President ought or, thetypical working amily received a $1,000 payrolltax cut in 2011, and millions o Americans pound-ing the pavement looking or jobs could continueto receive unemployment insurance (UI). Thisprovided crucial insurance against headwindsbueting our economy.

While concerns lingered over the nancial de-velopments in Europe and the risk they posed tothe U.S. economy, the pace o real GDP growthincreased in the second hal o the year. Early in

2011, job growth picked up and the unemploy-ment rate ell, but progress slowed in the springand summer beore picking up again in the all.Overall, the unemployment rate ell over thecourse o the year, rom 9.4 percent in December

BUILDING A STRONG ECONOMY


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10 BUILDING A STRONG ECONOMY

2010 to 8.5 percent in December 2011, and theeconomy added 1.9 million private sector jobs in2011. Over the last two months o 2011, consumercondence jumped, nearing its high prior to theJapanese earthquake; housing starts were higher

in November than they were in May; and aterdeclining in August, the manuacturing Purchas-ing Managers Index (PMI) has now increased to53.9, indicating an economic expansion.

Despite these encouraging signs, economicgrowth was not strong enough to create a su-cient number o good jobs or all o the Americanswho wanted to work or robust enough to restoreor the middle class the security and opportuni-ty they deserved. At the same time, our countrystill aced the consequences o years o scal ir-

responsibility. When the President took oce, heinherited an annual decit o $1.3 trillion andprojected decits o trillions more in the yearsthereater. Driving these decits were decisionsmade over the previous eight years not to pay ortwo tax cuts and a Medicare prescription drugbenet. The decits were then exacerbated by therecession: the sharp decline in receipts, steep in-crease in automatic outlays to help those in need,and eorts needed to jumpstart economic growth.

Recognizing the challenges still acing the eco-

nomic recovery, the Administration believes thatshort-term eorts to boost economic growth andjob creation plus comprehensive, balanced eortsto put the United States on the path toward scalstability were both needed. These are complemen-tary policies: a growing economy is necessary orlong-term decit reduction, and likewise, long-term decit reduction and scal sustainability isnecessary to maintain and strengthen economicgrowth or years to come.

That is why the President pursued signicant,

balanced decit reduction throughout calendaryear 2011: rst, in his 2012 Budget; then, in theFramework or Shared Prosperity and SharedFiscal Responsibility released in April that builton the Budget to identiy $4 trillion in decit re-duction; next, in a similarly sized plan presentedto congressional Republicans during negotiations

over extending the debt ceiling during the sum-mer; and nally in the Presidents Plan or Eco-nomic Growth and Decit Reduction that waspresented to the Joint Select Committee on De-cit Reduction in September. It also is why the

President proposed the American Jobs Act (AJA)last September, a plan to put more people backto work, put more money in the pockets o work-ing Americans, and do so without adding a dimeto the decit. This combination o tax cuts, in-rastructure investments, and aid to those seek-ing work would give the economy a needed boostthrough this dicult time.

Unortunately, at each step, partisan dividesand unwillingness by Republicans in Congressto ask the wealthiest among us to pay their air

share through any revenue increases preventeda comprehensive decit reduction agreement ormeasures in the AJA to boost demand rom beingenacted. Indeed, this lack o real progress on boththe AJA and decit reduction actually became adrag in and o itsel on an economy already strug-gling to recover rom a severe recession and bat-tling signicant headwinds rom events aroundthe globe.

As we look orward, the challenges o this pastyear persist: to build an economy that will grow

robustly and create good jobs that pay well oryears to come, and to put the country on a sustain-able scal path through decit reduction that isbalanced and asks all Americans to pay their airshare. This Budget lays out the Presidents visionto accomplish both. It will take tough choicescutting waste as well as some valuable programsthat we would not cut i not or the scal situ-ation. It will entail undertaking actions now tosupport and strengthen economic growth. And itwill take reallocating resources to allow targetedinvestments so that we have an economy based

not on speculation and bubbles, but one that isbuilt on the solid oundation o an educated work-orce, cutting-edge innovation, and world-classinrastructure.


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THE BUDGET FOR FISCAL YEAR 2013 11

ManagingandWinding doWn

Urgent recoveryefforts

When the President took oce the economywas in ree-all. Real GDP was dropping at an

annual rate o 6.7 percent in the rst quarter o2009, ater alling at an annual rate o 8.9 percentthe previous quarter. A seizure o credit marketsin late 2008 caused companies to lay o workersand cut costs at an unprecedented rate. A steepdecline in the stock market combined with all-ing home prices led to an enormous loss o house-hold wealth. Between the third quarter o 2007and the rst quarter o 2009, the real net wortho American households declined by 27 percentthe equivalent o more than one years GDP.

Americans reacted to this massive loss o wealth

by saving more instead o spending. The personalsavings rate spiked at 6.2 percent in the secondquarter o 2009, ater averaging only 2 percentthrough the end o 2007. This had the eect oreducing consumer demand, a key driver o eco-nomic growth. The economy was in the worstdownturn since the Great Depression, with sig-nicant risk that conditions could worsen. Thatis why the Administration took swit action to

jumpstart economic growth and avoid a secondGreat Depression.

We now know that these eorts were evenmore critical to the recovery than it appeared atthe time, as the decline we were in was deeperthan anyone, at the time, knew. Now, as we workto build an economy that remains strong, sta-ble and creating good jobs, the Administrationis managing, and in some cases, winding downthese critical recovery eorts.

The Recovery Act

Faced with the collapse o the economy, the Ad-ministration took decisive action to bolster mac-roeconomic demand and jumpstart economic ac-tivity, thus breaking the back o a recession thatwas spiraling out o control. The President movedrapidly, working with the Congress, and just 28days ater taking oce, signed into law the Recov-ery Act to create and save jobs, as well as trans-

orm the economy to compete in the 21st Century.Approximately one-third o the Acts unds weretargeted to tax cuts or small businesses and 95percent o working amilies. Another third wasused or emergency relie or those who bore the

brunt o the recession. For example, more than17 million Americans beneted rom extended orincreased unemployment benets, and health in-surance was made 65 percent less expensive orlaid-o workers and their amilies who relied onCOBRA. The nal third was invested in projectsto create jobs, spur economic activity, and laythe oundation or uture sustained growth. Aidto State and local governments helped to closebudget shortalls, supporting the jobs o morethan 650,000 teachers, reghters, and police o-cers. By the end o 2011, almost 95 percent o

Recovery Act spending was obligated and 100percent o the tax relie had been provided. Near-ing the third anniversary o the Recovery Act, itis clearand conrmed by independent analystsranging rom the Congressional Budget Oce(CBO) to private-sector orecastersthat theseswit and signicant actions in the Recovery Actbolstered economic growth and created or pre-served millions o jobs.

Progress has continued with sustained eortsby the Administration to ensure that Recovery

Act unds continue to be spent expeditiously andin ways that create jobs and grow our economy,both now and in the uture. In September 2011,the Administration directed Federal agencies toaccelerate spending on the remaining Recovery

Act unds or purposes that would create jobsright away, and is working closely with States,Tribes, local governments, and others on these e-orts. Since this eort began, agencies have spentapproximately $17 billion in additional discre-tionary unds, bringing the total amount o un-spent discretionary unds down to less than $60

billion. In addition, 2011 saw investment andwork begin in earnest on a number o long-terminitiatives that were unded through the Recov-ery Act and are critical to creating a 21st Centuryeconomy and inrastructure. In particular, signa-ture pieces o the Recovery Act dealing with highspeed rail, broadband, clean energy, and health


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inormation technology began to ramp up, pavingthe way or long-term economic prosperity.

Reviewing the overall impact o the RecoveryAct, the White House Council o Economic Advis-

ers (CEA) estimates that the Recovery Act raisedthe level o GDP by the end o 2011, relative towhat it would have been absent intervention, bybetween 2 and 2.9 percentage points. These es-timates closely parallel those o a wide range ooutside analysts, including CBO. The CEA alsoestimates that the Recovery Act raised employ-ment relative to what it otherwise would havebeen by between 2.2 and 4.2 million jobs in thesame time rame.

The Troubled Asset Relief Program

A central part o the response to the nancialcrisis was the implementation o the Troubled

Asset Relie Program (TARP), which was estab-lished in the all o 2008 under the EmergencyEconomic Stabilization Act o 2008. TARP suc-ceeded in helping to stop widespread nancialpanic and helped prevent what could have beena devastating collapse o our nancial system.The Governments authority to make new in-

vestments through the program expired on Oc-

tober 3, 2010, and TARP is now winding down.The U.S. Department o the Treasury (Treasury)has already recovered more than three-ourths oall the unds it disbursed, and the Governmentis now estimating the recovery o more unds orthe taxpayers and at a aster rate than predictedat the inception o the program.

As o November 30, 2011, Treasury has received$318 billion in TARP repayments, interest, ees,and other income o the $413 billion disbursed.When it started, independent observers such

as CBO estimated that TARP would cost $350billion or more; CBOs December 2011 estimateis $34 billion, which assumes that $13 billionwill be spent through the housing programs. The

Administration now estimates the cost o theprogram will be $68 billion, assuming that theentire $45.6 billion set aside or housing initiativesis utilized. In short, the price o stabilizing our

nancial system to prevent deep panic in everysector o our economy is now projected to be onlyone-th o the initially estimated cost.

The tasks ahead or TARP are to recover the

remaining investments in the nancial sectorand auto industry in a manner that continues topromote nancial stability while also maximiz-ing the return or taxpayers. In addition, the Ad-ministration will continue to use TARP unds toassist homeowners seeking to avoid oreclosure.

The Automobile Industry

As a result o the Presidents aggressive andeective intervention, we are seeing a notable

turnaround in the automobile industry at a lowercost than originally estimated. In late 2008, thecombination o an historic recession and nan-cial crisis pushed the American auto industryto the brink o collapse. Access to credit or carloans dried up and motor vehicle sales plunged 40percent. Auto manuacturers and suppliers dra-matically curtailed production. In the year beorePresident Obama took oce, the industry shedover 250,000 jobs. By late 2008, General Motors(GM) and Chrysler were on the brink o liquida-tion, which would have inficted immediate and

lasting damage to the countrys manuacturingand industrial base. It also would have produceda signicant rise in both regional and nationalunemployment, and would have urther damagedthe nancial system since automobile nancingis a signicant portion o overall nancial activ-ity. Moreover, i these companies had gone out obusiness, the economy would have been orceddeeper into recession and might have allen intoa depression. The President made a dicult deci-sion to provide support to GM and Chrysler onthe condition that they, and all o their stakehold-

ers, make the sacrices necessary to undamen-tally restructure their businesses and commit totough-minded plans to return to viability.

The Presidents decision to save GM and Chrys-ler was about more than those two companies. Itwas about standing behind the countless work-ers, amilies, communities, and businesseslarge


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and smallthat depend on the automotive indus-try. The success o this policy has been dramatic.Both companies restructured and emerged rombankruptcy, and since then, the auto industry hascreated more than 100,000 new jobs, and Ameri-

can automakers are in the midst o their stron-gest period o job growth in more than a decade.

American workers are back at the assembly linemanuacturing high-quality, uel-ecient, Ameri-can-made cars, capable o competing with manu-acturers rom around the world. In act, GeneralMotors is now once again the worlds number oneautomaker. The impact o this resurgence goesbeyond directly making cars and car parts, andaects the entire supply chain o goods and ser-

vices that contribute to the worlds largest man-uacturing activity. Companies that make steel,

tires, glass, aluminum products, machinery, andater-market products all rely on the continuedsuccess o the U.S. auto industry. Indeed, the re-surgence o the American auto industry has beenat the heart o a quiet improvement in the overallmanuacturing sectora key component o con-structing an economy that is built to last and cancreate good jobs or years to come. Since Decem-ber 2009, the United States has added 334,000manuacturing jobs, the rst time the manuac-turing sector has had sustained job growth since1998.

For taxpayers this means that the assistanceextended to these companies is paying o. In May2011, Chrysler repaid its outstanding loans to theU.S. Treasurya ull six years beore their sched-uled maturity. Chrysler was able to achieve thismilestone by accessing the debt markets and rais-ing capital on more avorable terms than the U.S.Government loansanother sign o its emergingstrength as a private company. With that repay-ment, Chrysler had returned $11.1 billion to theU.S. Government, which represents nearly 90

percent o the Federal support committed to thecompany.

sUpportingand protecting

Middle-class faMilies

The promise o America is that with hard work,Americans can provide a solid, middle-class lie

or their amilies: nd a good job, aord a home,send their children to good schools, receive high-quality and aordable health care, and enjoy asecure retirement in their later years. Americansdrive and ingenuity lie at the heart o this promise

and a growing economy makes it possible to real-ize these aspirations. Also critical are rules o theroad laid down to make our markets and ree soci-ety work, and remove barriers so that no one hasan unair advantage and everyone can have a airshot to go as ar as their dreams and talents cantake them. To that end, we have a responsibilityto one another as neighbors and as Americans tomake sure that the basic protections are in placeto enable amilies and businesses to thrive. Theseinclude keeping our air and water healthy or ourchildren, providing airness in the workplace and

supporting those looking or work, ensuring thatproducts are sae and are represented honestly,and protecting Social Security and Medicare toprovide or citizens in lies later years.

To add to this list, the Administration has un-dertaken two historic initiativeshealth insur-ance and Wall Street reormthat will hold someo the largest companies in the country account-able and help give all Americans the security theyneed to ensure that an illness or ill-conceivednancial decision made by a rm hundreds o

miles away will not bankrupt them or preventthem rom providing or their amily. Over thepast year, the Administration has worked dili-gently to implement these new reorms, and toprotect them rom eorts to undermine and de-und them. In the appropriations negotiationsboth at the beginning and end o 2011, the Ad-ministration insisted on having the necessaryunding to continue to implement health insur-ance and Wall Street reorm, and stopped eortsto use policy riders to undermine both o theseimportant initiatives, and their crucial protec-

tions or American consumers and amilies.

Health Insurance Reform

The President signed into law the PatientProtection and Aordable Care Act (ACA) onMarch 23, 2010, enacting comprehensive health


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insurance reorms that will hold insurance com-panies more accountable, lower health care costs,guarantee more health care choices, and enhancethe quality o health care or all Americans. The

ACA gives Americans the stability and security

they need by ending many discriminatory andabusive insurance industry practices; expand-ing coverage to more than 30 million Americanswho lack insurance; cutting waste and reorminghealth care delivery so that patients receive high-er quality care; and doing it all without adding adime to the decit. In act, the ACA will reducethe decit by more than $1 trillion over the nexttwo decades. Considering that rising health carecosts are a major contributor to the decit andhinder the Nations overall competitiveness, the

ACA puts in place much-needed decit reduction.

Americans already are enjoying many o theprotections put in place by the ACA. For instance,in the past, i a person became ill, insurancecompanies could rescind coverage and deny pay-ments or health services by retroactively ndingan error or other technical mistake on their pre-

viously accepted application; this is now illegal.Insurance companies are now prohibited romimposing lietime dollar limits on benets, suchas hospital stays. Young adults under age 26 cannow stay on their parents policies. And because

o the ACA, insurance companies can no longerdeny coverage to children under the age o 19 dueto a pre-existing condition. And all new private-market health insurance plans now must covercritical preventive care services such as mam-mograms and colonoscopies without charging adeductible, copay, or coinsurance.

Also, two important additions to coverage romthe ACA or seniors went into eect. First, eligi-ble Medicare beneciaries are paying less or pre-scription drugs that are purchased in the Part D

coverage gap starting with a 50 percent discounton covered brand-name prescription drugs in2011; coverage will increase each year until thecoverage gap is closed in 2020. Second, Medicarebeneciaries are now eligible or certain ree pre-

ventive services, such as annual wellness visitsand recommended cancer screenings.

More reorms also are taking eect. To ensurethat dollars are going to patient care, the ACArequires insurance companies to spend at least80 or 85 percent, depending on their market, opremium dollars on medical care and quality

improvements, instead o administrative costsand prots. I they ail to meet these standards,insurance companies are required to provide arebate to their customers. The rst rebates willbe paid out later this year. Additionally, the ACAbrings an unprecedented level o scrutiny andtransparency to health insurance rate increases.Large premium increases proposed by health in-surance companies in the individual and smallgroup markets will now be evaluated by expertsto make sure they are based on reasonable costassumptions and solid evidence, and insurance

companies have to publicly justiy unreasonablerate increases.

Beyond curbing the most egregious practiceso the insurance industry, Americans have real-ized other benets. Since ACAs passage, smallbusinesses have been claiming tax credits to helpthem provide insurance benets to their workers.Through 2013, this provision provides a creditworth up to 35 percent o employers contribu-tions to employees health insurance; it rises to50 percent or coverage purchased through A-

ordable Insurance Exchanges starting in 2014.For those individuals who have been uninsuredor at least six months because o a pre-existingcondition, there is now a Pre-Existing ConditionInsurance Plan to provide them with aordable,comprehensive coverage options. This programserves as a bridge to 2014, when all discrimina-tion against pre-existing conditions will be pro-hibited. Similarly, the Early Retiree ReinsuranceProgram provides temporary assistance to em-ployers who had been struggling to maintain cov-erage or older workers who retired, but are not

yet eligible or Medicare.

In addition, numerous ACA reorms aimed atimproving quality, eciency, and coordinationo care will take eect over the next year. Hos-pital Value-Based Purchasing and the HospitalReadmissions Reduction Programs will both tieMedicare payments to hospitals to achievement


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o indicators o high-quality care. The Medi-care Shared Savings Program will be launchednationwide, creating new opportunities or pa-tient-centered, integrated care or Medicare bene-ciaries. Further, the Administration is launching

several initiatives to improve care or individualseligible or both Medicare and Medicaid, includ-ing developing and testing new models designedto incentivize States to create eciencies throughintegration o care and improved care coordina-tion. And the ACA provided signicant new toolsand resources to crack down on waste and raudin health care.

Finally, the Administration is committed toimplementing the ACA switly, eciently, and e-ectively, and will continue to work with the Con-

gress to ensure that the resources are available todo just that. The need or resources is especiallycritical or establishing Aordable Insurance Ex-changes, which will help ensure that every Amer-ican can access high-quality, aordable healthinsurance coverage beginning in 2014. Thesecompetitive marketplaces will provide millionso Americans and small businesses with one-stop shopping or aordable coverage in everyState. Since passage o the ACA, the Departmento Health and Human Services (HHS) has pro-

vided grants to nearly all States to plan or and

establish these State Exchanges.

Wall Street Reform

Curbing the abuses in the health insurance in-dustry and beginning to bring down rising healthcare costs were long overdue steps toward ad-dressing critical problems that aect Americansevery day. The nancial and economic crisis o2008 also made it clear that the rules governingour nancial system needed revision to provide

a more stable oundation or the economy and toprotect consumers, businesses, and amilies.

The American ree market system is the mostpowerul engine o economic growth and job cre-ation the world has known, and when it works, ithelps ensure that the American middle class isstrong and secure. But the ree market was never

meant to give the nancial system ree licenseto take irresponsible and reckless risks o sucha size that they can harm our economy and leavetaxpayers with the bill.

The recent recession was not just the result oa turn in the business cycle. Rather, it was theresult o a perect storm o excessive risk-taking,inadequate disclosure, non-existent or myopicoversight, individuals and rms who chose to le-

verage themselves beyond their means, and insome cases outright deceptive lending practicesthat led too many Americans to take on debt theycould not aord. In sum, it was an abdication oresponsibility rom across many actors in thenancial system.

To prevent this rom happening again, theAdministration set out to crat a nancial reormpackage that lled the gaps in oversight, trans-parency, and restraint; put a check on predatoryand abusive lending; and restored accountabil-ity to the systemespecially or those who hadoperated outside the regulatory ramework. The

Administrations goal was to restore our nancialsystem to its core mission: providing a sae andproductive venue or private saving, helping en-trepreneurs and businesses with the best ideasto create value and jobs, and enabling amilies to

buy homes, nance college or their children, andsecure a dignied retirement.

On July 21, 2010, ater a long and dicultght on Capitol Hill, the President signed intolaw the most ar-reaching Wall Street reormssince the Great Depressionthe Dodd-FrankWall Street Reorm and Consumer Protection Act(Wall Street Reorm). This law takes the neces-sary steps to create a more stable and responsiblenancial system. The Act requires banks to holdmore capital so that when they make a bad bet

they pay or it, not taxpayers. It also preventsnancial companies, like AIG, rom posing sucha risk to our economy that we have no choicebut or taxpayers to bail them out. The Act doesthis by creating an orderly liquidation processor large nancial rms that ail, and by requir-ing the largest and most systemically importantnancial rms to write living wills that detail


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how, i they ail, they will be wound down in amanner that does not leave taxpayers vulnerable.The Act also brings transparency to the $600 tril-lion derivatives market and prohibits banks rommaking risky bets with their customers deposits.

Finally, the Act holds CEOs accountable by tak-ing back bonuses and compensation rom ailingCEOs, giving shareholders a voice on CEO pay,and protecting whistleblowers who speak outabout wrong-doing on Wall Street.

In addition, Wall Street Reorm puts in placesweeping reorms to protect American consum-ers. The Act created the Consumer FinancialProtection Bureau (CFPB), an agency exclusivelydevoted to protecting consumers, in part by giv-ing them the tools to make their own choices and

nd the most suitable nancial products, evenwhen a provider may have incentives to hidetrue costs. The CFPB is empowered to set highand uniorm standards across the market; ocuson improving nancial literacy or all Americans;and help to end prots based on misleading salespitches and hidden traps, orcing banks and non-bank nancial institutions to compete vigorouslyor consumers on the basis o price and quality.It will help crack down on abusive practices inthe mortgage industry, make nancial contractssimpler, and end many o the hidden ees so that

amilies know what they are signing when theybuy a home. It also ensures that students whotake out college loans will be provided clear andconcise inormation about their obligations. It re-inorces the Credit Card Accountability, Respon-sibility, and Disclosure Act passed in 2009 thatbans unair rate hikes, and ensures that bankscannot charge unwitting consumers overdratees when they sign up or a checking account.In total, these reorms put in place the strongestconsumer nancial protections in history.

Over the course o the last year, the Admin-istration and independent regulators have beenworking to implement Wall Street Reorm toachieve these goals. Regulators issued proposedregulations to implement the Volcker Rule tomake sure that banks benetting rom Govern-ment protectionssuch as Federal Deposit Insur-ance Corporation (FDIC) insurance on customer

depositsare prohibited rom making risky trad-ing bets or their own accounts and ace restric-tions in investing in or sponsoring hedge undsor private equity unds. Regulators have also pro-posed new rules or higher capital standards to

buer against risk in the nancial system. TheFDIC has nalized new rules to resolve a ailingnancial rm without threatening the nancialsystem or costing taxpayers.

To ensure that agencies and departmentshave the resources they need to implement WallStreet Reorm, the Administration ought or andsecured adequate unding levels or 2012, andcontinues this commitment in the 2013 Budget.

And to ensure that consumers are protected, thePresident appointed Richard Cordray to head the

CFPB. Without a Director, the CFPB could notully supervise non-bank nancial institutionssuch as independent payday lenders, non-bankmortgage lenders, non-bank mortgage servicers,debt collectors, credit reporting agencies, andprivate student lenders. This meant that tens omillions o Americans were let unprotected romalling prey to many o the harmul practices thatcontributed to the worst nancial crisis since theGreat Depression.

JUMpstarting econoMic

groWthand Job creation

By almost any measure, the economy this pastyear was stronger than it was in 2009 at thestart o the Administration. However, too many

Americans are still out o work, and our economyis not yet operating at its ull potential. Part othis is due to the destructive nature o the reces-sion that we went through, and part is due to aconfuence o external world events that shookglobal markets as described earlier in this Chap-ter. The eect o these events on economic per-

ormance in the latter part o calendar year 2011and, in turn, on the lives o millions o Americansin search o a good job and economic security ledthe Administration to propose the American Jobs

Act in September 2011.


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American Jobs Act

The purpose o the American Jobs Act (AJA)was simple: put more people back to work and putmore money in the pockets o working Americans.

Independent economists estimated that the Actwould have added up to nearly 2 million jobsin 2012. The AJA included: tax cuts to help

Americas small businesses hire and grow; taxcredits to spur hiring; investments in inrastruc-ture improvements; new pathways back to workor Americans looking or jobs, including the mostsignicant reorms to the Nations unemploy-ment system in 40 years to help those without

jobs transition to the workplace; and tax cuts toput more money in the pockets o every Americanworker and amily. Moreover, the AJA would not

have added to the decit. It included specic o-sets that would, in combination, more than ullypay or its cost.

While the AJA was comprised o the kinds oideas that had been embraced by Democrats andRepublicans in the past, congressional intran-sigence prevented the AJA rom becoming law.Nevertheless, the President kept ghting ormeasures to jumpstart economic growth and jobcreation. In November, the President won enact-ment o one plank o the AJA: a new tax credit or

Americas veterans, which provides up to $5,600or hiring a veteran who is long-term unemployedand $9,600 or businesses that hire a veteranwith a service-related disability.

And, in the waning days o the year, thePresident signed into law a short-term extensiono the decrease in the payroll tax, an increase inUI benets, and the prevention o a 27 percentcut to Medicare payments to physicians that wasset to take eect at the end o the calendar year.To be clear, the President preerred a year-long

extension o these critical growth measures, andexpects the Congress to continue the short-termpayroll tax and UI extension they approved inDecember or the rest o 2012, and avert the im-pending reduction in physician payments. Theull-year extension o the payroll tax cut or 2012would help 160 million American workers, pro-

viding a typical worker with an additional $40 ineach paycheck. The ull-year extension o UI ben-ets or Americans pounding the pavement look-ing or work would save 5 million individuals romexhausting benets this year, and would help to

create nearly 500,000 jobs as these benets arespent quickly in the economy. Finally, prevent-ing a deep cut in Medicare physician payments iscritical to seniors access to care.

We need to nish the job because there are stilltoo many Americans who want to work, but can-not nd jobs. That is why the President is stillcalling or eorts to spur near-term economicgrowth and job creation. This includes many othe planks in the AJA that were not enacted, aswell as measures not included in that legislation.

Some o these job-creating proposals include:

An upront investment o $50 billion romthe surace transportation reauthorizationbill or roads, rails, and runways to createthousands o quality jobs in the short term.

Aid to States and localities to retain and hireteachers and rst responders.

Extending UI benets and undertakingmajor reorms to help the long-term unem-

ployed nd work and spur the creation ojob opportunities or hundreds o thousandso the most-vulnerable Americanslow-in-come youth and adults. This includes reormsthat require those receiving emergency Fed-eral benets to participate in Reemploymentand Eligibility Assessments and be providedReemployment Services, which have beenproven to help put people back to work; thatbuild on and improve innovative State pro-grams where those who have been displacedtake temporary, voluntary work or pursue

on-the-job training; and that expand pro-grams to allow those receiving UI to starttheir own businesses.

The Better Buildings Initiative that seeks tomake non-residential buildings 20 percentmore energy ecient over the next decade


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by catalyzing private-sector investmentthrough a series o incentives to upgradeoces, stores, universities, hospitals, andcommercial buildings.

Funds to modernize at least 35,000 schoolsto create jobs now and high-quality schoolsor the uture.

Reauthorization o Clean Energy Manuac-turing Tax Credits to spur the creation omanuacturing jobs in the advanced energytechnology sector.

A new HomeStar program, which would en-courage Americans to invest in energy andcost-saving home improvements, reducing

amilies energy bills over time and creat-ing jobs or those who undertake and makethese renovations.

Continuing to allow businesses to write-othe ull amount o new investments nextyear.

Project Rebuild, a series o policies to helpconnect Americans looking or work in dis-tressed communities with the work neededto repurpose residential and commercial

properties.

We Cant Wait: Executive Actions toBoost the Economy

Recognizing the need or action in the ace ocongressional gridlock, the President believedthat the American people could not wait or theCongress to act to spur economic growth and jobcreation. That is why, throughout the all o 2011,the President waged a We Cant Wait campaign,

a series o executive actions that he and his Cabi-net took to help amilies hurt by the sluggish eco-nomic growth, boost economic activity, and spur

job creation:

Housing Refnancing. On October 24, thePresident announced steps to help respon-

sible borrowers with little or no equity intheir homes take advantage o todays lowmortgage rates.

Expanding Jobs or Veterans. On October

25, HHS announced an initiative to chal-lenge Community Health Centers to hire8,000 veteransapproximately one veteranper health center siteover the next threeyears. The Administration also announcedthat it would work with health practitionertraining programs to expand opportunitiesor returning service members with medicaltraining to become physician assistants.

Creating New Opportunities or ImprovingCollege Aordability. On October 26, the

President announced Pay as you Earn toenable student loan borrowers to cap theirstudent loan repayments at 10 percent odiscretionary income beginning in all 2012.

Helping Small Businesses Create Jobs. OnOctober 28, the White House issued twoPresidential Memoranda to help small busi-nesses create jobs. One memorandum di-rected agencies to take steps to speed up thetranser o Federal research rom the labora-tory to the marketplace. The other directed

the creation o BusinessUSA, an online plat-orm where businesses can access inorma-tion about Federal programs that supportsmall businesses and exports.

Preventing Drug Shortages. On October 31,the President signed an Executive Order di-recting the Food and Drug Administrationand the Department o Justice to take actionto help urther reduce and prevent shortag-es o critical drugs, protect consumers, andprevent price gouging.

Accelerating Transportation Projects. OnNovember 2, the President announced stepsthe Administration is taking to improve andexpedite the process o reviewing and ap-proving transportation projects. On Decem-ber 15, as part o this eort, the Department


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o Transportation awarded $511 million intransportation grants as part o the Depart-ments popular Transportation InvestmentGenerating Economic Recovery (TIGER)program, months ahead o schedule.

Supporting Jobs or Veterans. On November7, the Administration announced three exec-utive actions that will provide new resourcesor veterans to translate military experienceto the private job market, give veterans ad-ditional career development support, andbetter identiy rms looking to hire veterans.

Reorming Head Start. On November 8, thePresident announced important steps to im-prove the quality o services and accountabil-

ity at Head Start centers across the country.

Cutting Waste. On November 9, the Presidentsigned an Executive Order that will cut wasteand promote more ecient spending acrossthe Federal Government. Overall spendingin the areas covered by the Executive Orderwill be reduced by 20 percent, saving billions.

Creating Health Care Jobs. On November 14,HHS announced a $1 billion Health Care In-novation Challenge, which will award grants

to applicants who will implement the mostcompelling new ideas to deliver better careand lower costs to people enrolled in Medi-care, Medicaid, and the Childrens HealthInsurance Program. This competition pri-oritizes projects that deploy the health careworkorce in innovative ways.

Reducing Improper Payments. On November15, OMB and the Vice President announcedthat the Administration cut improper pay-ments by nearly $18 billion in 2011, and that

we are on track to meet the Presidents goalo cutting improper payments by $50 billionby the end o 2012. We also announced newactions to help urther reduce Medicare andMedicaid waste, raud, and abuse as well asa directive to agencies to step up their over-sight o contractors and grant recipients.

Raising Fuel Economy Standards. On No-vember 16, the Department o Transpor-tation and the Environmental Protection

Agency ormally unveiled their joint proposalto set stronger uel economy and greenhouse

gas pollution standards or Model Year 2017-2025 passenger cars and light duty trucks.This initiative will have net benets o be-tween $310 billion and $420 billion in uelsavings, slash oil consumption by 4 billionbarrels, and reduce greenhouse gas emis-sions by 2 billion metric tons over the lie-times o the vehicles sold those years. Whencombined with other steps we have taken toset standards or vehicles, this proposal willsave Americans approximately $1.7 trillionat the pump, reduce Americas dependence

on oil by an estimated 12 billion barrels, andreduce greenhouse gas emissions by 6 billionmetric tons over the lie o the programs.

Modernizing Government Records. On No-vember 28, the Administration issued aPresidential Memorandum that directedagencies to move to a digital-based recordskeeping system. This action will save tax-payer dollars, promote accountability, andincrease government transparency. This isone o the policy actions that open govern-

ment advocates have sought or years.

Expanding Health Inormation Technology(IT). On November 30, HHS announced atan event in Ohio that the number o physi-cians adopting electronic medical recordshas doubled since 2009, and set orth stepsthe agency is taking to make it easier ordoctors and other health proessionals to re-ceive incentive payments or adopting andmeaningully using health IT.

Improving Energy Efciency Through theBetter Building Initiative. On December2, with President Clinton, the President an-nounced nearly $4 billion in combined Fed-eral and private sector energy-eciency up-grades to buildings over the next two years.


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Expanding Advanced Biouels. In Decem-ber, the Deense Logistics Agency signed acontract to purchase 450,000 gallons o ad-

vanced drop-in biouel, the single largestpurchase o biouel in Government history.

Launching Small Business Innovation Fund.On December 8, in conjunction with the rstboard meeting o the Startup America Part-nership, the Small Business Administrationannounced that it is moving orward withlaunching a $1 billion Early Stage Innova-tion Fund that will provide matching capi-tal to small business investment companies.The Administration also announced com-mitments rom more than 50 private-sectorpartners to deliver over $1 billion in value to

100,000 startups over the next three years.

Extending Minimum Wage and OvertimeProtections. On December 15, the Presidentannounced new proposed rules to provideFederal minimum wage and overtime pro-tections or nearly two million workers whoprovide in-home care services or the elderlyand inrm.

I the Congress continues to block eorts topass legislation that can spur economic growth

and job creation, the President will undertakewhatever executive actions he can to make surethat our economy continues its recovery.

Rejuvenating the Housing Market

As the nancial crisis and recession was deep-ening in 2009, the Administration took immedi-ate steps to help thousands o responsible home-owners who were acing oreclosure or were atrisk o losing their homes. This began with the

Administrations eort to establish a broad seto programs designed to stabilize the housingmarket and keep millions o Americans in theirhomes. The initiative included Treasurys mort-gage-backed securities purchase program, whichalong with mortgage-backed securities purchasesby the Federal Reserve, has helped to keep mort-gage interest rates at historic lows and allowed

over 12 million homeowners to renance sinceApril 2009; the homebuyer tax credit, whichhelped millions o Americans to purchase homes,bolstering macroeconomic demand; the low-income housing tax credit and housing nance

agency programs to support aordable housing;and the Home Aordable Modication Program(HAMP), which provides eligible homeowners theopportunity to signicantly reduce their monthlymortgage payments, remain in their homes, andavoid oreclosures.

Although initially held back by implementa-tion challenges and poor perormance on thepart o mortgage servicers, HAMP has provided910,000 borrowers with a permanent modica-tion and, equally importantly, established a tem-

plate or the private market to provide more e-ective modications or struggling homeowners.In total, since the Administrations housing pro-grams took eect in 2009, there have been morethan twice as many public and private mortgagemodication oers made than oreclosures com-pleted. The Administration has worked to expandand enhance the programincluding introducingrelated programs or second lien modicationsand short sales, and has increased servicer over-sight and public reporting on servicer-specicperormance.

While there are signs that the broader hous-ing market is beginning to stabilize, too many

Americans are still paying mortgage interestrates ar above current market rates becausehome price declines made them ineligible or re-nancing. To address this issue, the Presidentannounced last September that his economicteam would work with Federal housing agen-cies and the Government-Sponsored Enterprises(GSEs) Fannie Mae and Freddie Mac to expandthe Home Aordable Renance Program (HARP),

and in October specic changes were announcedthat will remove many o the barriers preventingGSE borrowers who have remained current ontheir mortgages rom taking advantage o todayshistorically low mortgage rates.

While this is an important step, the Admin-istration believes that more relie is needed.


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Thereore, the Administration is calling on theCongress to take additional steps so virtuallyevery amily that has a standard mortgage andhas been paying its bills on time will have the op-portunity to renance their mortgage at todays

historically low rates. Specically, this would bedone by ully streamlining HARP to increase ac-cess and lower cost or borrowers and, more sig-nicantly, to provide those responsible Americanswho happen not to have a loan guaranteed by theGSEs with access to a comparable streamlinedrenance program through the Federal Hous-ing Administration. Helping amilies renancewill help homeowners get into more sustainableloans, save each amily on average $3,000, enablemany people to stay in their homes, and give a

jolt to local economies.

Opening Global Markets

The emergence o a global marketplace thatincludes the growing economies o China, India,Brazil, and other developing countries creates anopportunity or America to export our goods andservices to new customers. With 95 percent o theworlds customers as well as the globes astest-growing markets beyond our borders, we mustcompete aggressively to spur economic growth

and job creation. That is why the Presidentlaunched his National Export Initiative to mar-shal the ull resources o the Federal Governmentbehind Americas businesses, especially small-and medium-sized enterprises, to best help themsell their goods, services, and ideas to the resto the world and to reach the Presidents goal odoubling U.S. exports in ve years time (by theend o 2014).

The Administration is currently on pace tomeet this target: through October 2011, exports

o goods and services over the preceding 12months totaled over $2 trillion, 32 percent above2009 levels. Current GDP orecasts suggest thatthe ratio o exports to GDP will hit 14 percent in2011, which would also be an historical record.To support international trade and the jobs thataccompany it, the Administration has:

Signed Into Law Free Trade Agreements withColombia, Panama, and Korea. To help meetthe Presidents export goal, the Administra-tion completed negotiations or ree tradeagreements (FTAs) with Colombia, Panama,

and Korea. The three trade agreements werepassed in quick succession in the all o 2011and signed into law by the President, mark-ing the biggest step orward in Americantrade liberalization in nearly two decades.These agreements are air and were passedtogether with a renewed and strengthenedtrade adjustment assistance program orworkers displaced by international trade.In particular, the Korea-United States FTAis expected to boost annual U.S. goods ex-ports to Korea by as much as $11 billion and

support more than 70,000 American jobs.

Promoted Business Investment in the U.S.,Including Foreign Direct Investment (FDI).The Obama Administration has taken un-precedented steps to acilitate and promotebusiness investment in the United States.This includes establishing SelectUSA, aone-stop shop based in the Department oCommerce that acilitates investment in theUnited States rom both oreign and domes-tic investors. This eort represents the rst

systematic Federal Government initiative topromote and acilitate business investment,a role that had historically been let to theStates. In addition to increasing the level oFDI, SelectUSA also seeks to diversiy ourFDI beyond those countries that have his-torically been our largest trading partners.Within the United States, SelectUSA worksacross the Federal Government and partnerswith State and local economic developmentorganizations to enable a coordinated ap-proach to compete or business investment,

an eort which the President is proposing tosignicantly expand in the 2013 Budget.

This year, the Administration will continue tovigorously enorce international and domestictrade laws and look or opportunities to level theplaying eld or American workers, businesses,


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ranchers, and armers; pursue increased accessto several oreign markets through the ground-breaking Trans-Pacic Partnership; implementthe three FTAs passed in 2011; work with theCongress to pass legislation allowing the United

States to benet rom Russias accession to theWorld Trade Organization; and promote tourismand travel to the United States rom the worldsastest growing economies by expanding visaprocessing in countries such as Brazil and China.

Pursuing Sensible Regulation

Administration is rmly committed to a regu-latory strategy that promotes continued economicgrowth and job creation, while protecting the

saety and health o all Americans. Smart, cost-eective regulations, crated with input romstakeholders inside and outside o Government,can save lives and prevent harm while promotinggrowth and innovation. As the economy continuesto recover and create new jobs, it is particularlycritical or the Nations regulatory strategy toenable American businesses to grow and innovate.

That is why the Administration careullyweighs the costs and benets o rulesnot byreducing dicult questions to problems o arith-

metic, but by careully weighing economic eectsand also by taking into account qualitative ac-tors, including airness and human dignity. The

Administration uses objective data to assess theimpact o rules and to assess alternatives. More-over, the Administration looks or areas whereit can promote transparency and disclosure as

a low-cost, high-impact regulatory tool. Fromautomobile saety to energy eciency and creditcards, this approach has been ruitul. In act, inthe Administrations rst two years, the net ben-ets o regulation were estimated to exceed $35

billionover 10 times the amount in the rst twoyears o the George W. Bush Administration, andover three times the amount in the correspond-ing period in the Clinton Administration. In act,ewer regulations were issued by Executive Agen-cies in the rst three years o this Administrationthan in the rst three years o the previous

Administration.

To improve the regulatory process, thePresident issued a new Executive Order callingor attention to the best available evidence, care-

ul consideration o costs and benets, greatercoordination among agencies, and selection ofexible and least burdensome alternatives, andhas called on independent Federal regulators toollow suit in their rulemakings. The ExecutiveOrder also called or an unprecedented Govern-ment-wide review o existing rules. The reviewproduced over 500 reorm proposals across allExecutive agencies. Already, we are on track tosave more than $10 billion dollars in just the nearterm, with much more savings to come.

In the coming year, agencies will continue topursue the regulatory reorms identied in theretrospective review process, producing billionsmore in savings by simpliying rules, eliminatingredundancies, and identiying more cost-eectiveways o doing things.

Documents

Building a Strong Economy