Executive action to-do list for achieving strong, stable, and broad-based U.S. economic growth
When the Biden administration was handed the keys to the White House in January, it also was handed a number of broad executive powers that could, at the stroke of a pen, begin the process of substantially altering the way the U.S. economy works. Making the most fundamental, structural reforms to the economy, such as expanding workers’ bargaining rights, achieving universal paid leave, or better taxing large accumulations of capital, will require legislation, but the executive branch can take important steps on its own.
Like presidents before him, President Joe Biden is quickly making use of these authorities, which include executive orders, agency regulations, and various forms of subregulatory guidance. To underscore the exciting opportunities for further executive actions, the Washington Center for Equitable Growth is publishing our Executive Action Agenda, a series of factsheets on economic policy proposals that can help combat inequality and ensure strong, stable, and broad-based economic growth.
This is not the first time Equitable Growth has written about these policy recommendations, but these new publications outline the steps that specific agencies or other executive offices can take to actualize long-sought reforms. They also provide lists of experts with whom policymakers can consult. Here’s a rundown of the series so far.
- Executive action to coordinate federal countercyclical regulatory policy. Regulatory actions that encourage banks to lend, firms to invest, and consumers to spend can increase demand and reduce unemployment during the current, and future, downturns. But identifying and implementing these effective countercyclical regulatory policies governmentwide requires coordination and expertise. This factsheet proposes that the new administration establish an office within the White House National Economic Council that would instruct regulators across the government to identify and implement countercyclical regulations—for example, promulgating rules that reduce energy prices, mortgage insurance premiums, or student loan debt during economic downturns. Yale Law professor Yair Listokin first proposed this idea in his 2019 book, Law and Macroeconomics: Legal Remedies to Recessions, and it was a cornerstone of his Vision 2020 essay published last year.
- Executive action to combat wage theft against U.S. workers. Some employers frequently violate labor standards by paying workers less than the minimum wage. When these violations occur, they cut the victimized workers’ pay by 20 percent, on average. Cracking down on lawbreaking companies that don’t pay workers what they are owed is a straightforward way for the Biden administration to raise the incomes and living standards of U.S. workers and their families. The U.S. Department of Labor can take several steps to reduce labor law violations, including asking for a large increase for the department’s Wage and Hour Division in the president’s fiscal year 2022 budget request; prioritizing strategic enforcement to use resources as effectively as possible; pursuing co-enforcement with community-based organizations; and protecting workers from misclassification as independent contractors. This factsheet builds on foundational work from Janice Fine, Jenn Round, and Hana Shepherd of Rutgers University and Daniel Galvin of Northwestern University.
- Executive action to reform the cost-benefit analysis of U.S. tax regulations. Since April 2018, the federal government has required a cost-benefit analysis for many more tax regulations than in the past. More than 2 years later, it is clear this experiment has failed because the analyses provide little information relevant to assessing the merits of those regulations, especially with respect to unmerited windfalls to favored groups. The Biden administration should eliminate the expanded requirement, and the U.S. Department of the Treasury should instead provide a qualitative and, when feasible, quantitative evaluation of tax regulations. This recommendation is based on a September 2020 report from Equitable Growth Director of Tax Policy and chief economist Greg Leiserson.
- Executive action to coordinate antitrust and competition policies across the federal government. Growing market power disrupts the operation of free and fair markets, and harms consumers, businesses, and workers. It exacerbates inequality and compounds the harms of structural racism. Originally part of a comprehensive report Equitable Growth published in November 2020, this proposal recommends the new administration establish a White House Office of Competition Policy within the White House National Economic Council to coordinate the work of antitrust enforcement and regulatory agencies and promote rulemaking that catalyzes competition and reverse those that entrench incumbents or suppress competition.
- Executive action to improve U.S. economic measurements. With the rise of economic inequality over the past four decades, most income growth has accrued to those at the top of the income distribution. As a result, aggregate Gross Domestic Product growth increasingly reflects the fortunes of the wealthy and masks the lack of progress for most Americans. To better reflect economic reality, GDP growth should be broken out for Americans in different income brackets. Equitable Growth calls this measure GDP 2.0. The U.S. Department of Commerce’s Bureau of Economic Analysis has begun producing a promising prototype of GDP 2.0, but BEA plans to produce statistics just once per year on a lag of at least 2 years. To support quicker and more frequent reporting, this factsheet recommends that the Biden administration direct BEA to estimate the cost of producing these statistics quarterly and then include that amount in the president’s annual budget request. The administration should also ask Congress to permit the use of IRS tax return data to improve statistical reporting. To advance racial equity, the administration should equip researchers, agencies, and Congress with data tools that better describe the experiences of workers of color and their families.
Executive action is a key tool for the new administration to influence how, and for whom, the economy operates. Equitable Growth’s Executive Action Agenda, launched over the past few weeks with the five policy recommendations listed above, outlines how President Biden can act unilaterally to advance strong, stable, and broad-based growth.