Annex. Progress in structural reform

This Annex reviews actions taken on recommendations from previous Economic Surveys that are not covered in tables within the main body of the Key Policy Insights. Recommendations that are new to this Survey are listed at the end of the Executive Summary and the relevant chapter.

    

Recommendation

Actions taken since the 2016 Survey

A. Monetary and financial polices

Raise policy interest rates at a pace that gradually tightens financial conditions so as not to jeopardise the recovery and to promote a return of inflation to the Fed’s target.

Interest rates have been increased gradually and inflation is returning to target 

Continue to implement Dodd Frank and Basel III requirements.

The financial regulators have continued to implement Dodd Frank and Basel III requirements.

Implement the OECD Common Reporting Standard on automatic exchange of financial account information.

The United States has undertaken automatic information exchanges pursuant to FATCA from 2015 and entered into intergovernmental agreements (IGAs) with other jurisdictions to do so. The Model 1A IGAs entered into by the United States acknowledge the need for the United States to achieve equivalent levels of reciprocal automatic information exchange with partner jurisdictions. They also include a political commitment to pursue the adoption of regulations and to advocate and support relevant legislation to achieve such equivalent levels of reciprocal automatic exchange.

Reform the housing finance system to ensure access to mortgage credit by creditworthy homebuyers while providing better guarantees of financial stability and avoiding again exposing taxpayers to costly bailouts.

To reduce taxpayer risk during their conservatorships, the GSEs, at FHFA’s direction, have implemented an aligned risk measurement framework for evaluating business decisions and performance, reduced the size of their retained mortgage portfolios, and transferred to private credit investors a portion of the credit risk on their guarantees. Additionally, the GSEs continue to explore products and programmes to support access to mortgage credit where prudent to do so.

Leave the securitisation of mortgages to the private sector. This would entail privatising the Government Sponsored Enterprises, cutting off their access to preferential lending facilities with the federal government, subjecting them to the same regulation and supervision as other issuers of mortgage-backed securities, and dividing these entities into smaller companies that are not too big to fail.

The Administration has made housing finance reform a top priority and is considering legislative (and, if necessary, administrative) proposals. Administration goals include an end to GSE conservatorship, expansion of the market share for private lending, protection for taxpayers, and creation of a robust and sustainable housing finance system.

B. Fiscal policy

Cut the marginal corporate income tax statutory rate and broaden its base, notably by phasing out tax allowances.

Significant reforms were introduced in 2018

Boost public investment spending with long-term benefits: infrastructure, skills, innovation, health and environmental protection.

Plans have been announced

Boost investment in, and maintenance of infrastructure; in particular, promote mass transit. Use federal programmes to encourage co-ordination across State and local jurisdictions.

Plans have been announced

Make R&D tax credits refundable for new firms.

No action taken

Increase reliance on consumption taxes

No action taken

Make the personal tax system more redistributive by restricting regressive income tax expenditures

2017 tax reform reduced income tax expenditures.

C. Competition policy

Adapt antitrust policy to new trends in digitalisation, financial innovation and globalisation. Strengthen compliance with merger remedies.

 The anti-trust agencies are reacting to the changes in digitalisation including through preparing studies to examine the issues.

Continue to strengthen pro-competitive policies, including in telecoms.

 The Federal Communications Commission assesses the wireless market as being competitive. With respect to broadband deployment, progress has slowed. The President has signed an Executive Order to promote rural broadband development.

Use federal funding to remove unnecessary occupational licensing requirements and make others more easily portable across States.

The competition authorities have been supporting the reduction of licensing, including through friends of the court briefings. The infrastructure initiative also supports this.

D. Environmental policy

Work towards putting a price on carbon, such as by implementing the proposed $10 per barrel tax on oil and the Clean Power Plan.

 No action taken

E. Social and labour market policy

Use federal funding for targeted programmes to reduce disparities in student opportunities and encourage states to be ambitious in lifting educational attainment.

Implementing the Every Student Succeeds Act will see peer reviews of plans developed by State educational agencies.

Provide support to parents with young children by expanding access to paid family leave nationally. Require paid parental leave and improve access to quality childcare to help reduce wage gaps and improve career prospects.

 No action taken. The Administration has announced its intention to work with Congress to extend paid family leave to more American workers. The tax reform expanded eligibility and refundability of the Child Tax Credit.

Expand the Earned Income Tax Credit and raise the minimum wage.

The tax reform of 2017 increased the standard deduction.

Reduce pre-screening for employment on criminal records.

No action taken. States have municipalities have required the removal of questions on criminal records from application forms

Develop reskilling programmes with established effectiveness in helping people back to work.

 The Department of Labor is working to expand use of apprenticeships.

Continue to roll out the Affordable Care Act.

Uninsured rates remain around 14% of the population of ages between 19 and 64.

Work with employers in preventing the negative effects of job strain on mental health, prolonged sick leaves, job loss and disability-benefit claims.

No action taken

F. Innovation policy

Establish a national innovation office to increase coherence and continuity in implementation of the national innovation strategy.

The President has signed a Presidential Memorandum establishing a White House Office on American Innovation.

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