Economic Sustainability
#17Key Findings
The United States falls into the middle ranks internationally (rank 17) in the category of economic sustainability.
The Biden administration has sought to advance circular economy principles. Critical infrastructure strategies rely heavily on private sector involvement. The last few years have seen the passage of significant climate legislation, strongly boosting clean energy manufacturing. The government aims to achieve net-zero emissions by 2050.
Labor market policies are largely shaped by the individual states. Federal laws prohibit workplace discrimination. The federal government funds active labor market programs, but the social safety net is relatively sparse. No federal-level comprehensive paid leave policy exists.
Revenues stem from a large variety of taxes. The tax system is very complicated, and does not produce enough revenue to fulfill major obligations. Deficits and overall debt levels remain concerning. Fiscal rules such as the debt ceiling are routinely modified. The U.S. is a key actor in shaping and funding the international financial architecture.
The Biden administration has sought to advance circular economy principles. Critical infrastructure strategies rely heavily on private sector involvement. The last few years have seen the passage of significant climate legislation, strongly boosting clean energy manufacturing. The government aims to achieve net-zero emissions by 2050.
Labor market policies are largely shaped by the individual states. Federal laws prohibit workplace discrimination. The federal government funds active labor market programs, but the social safety net is relatively sparse. No federal-level comprehensive paid leave policy exists.
Revenues stem from a large variety of taxes. The tax system is very complicated, and does not produce enough revenue to fulfill major obligations. Deficits and overall debt levels remain concerning. Fiscal rules such as the debt ceiling are routinely modified. The U.S. is a key actor in shaping and funding the international financial architecture.
Graph View
Graph View
How committed is the government to driving the transition toward a circular economy?
10
9
9
The government is clearly committed to transitioning to a circular economy.
8
7
6
7
6
The government is largely committed to transitioning to a circular economy.
5
4
3
4
3
The government is somewhat committed to transitioning to a circular economy.
2
1
1
The government is not at all committed to transitioning to a circular economy.
The Biden administration has demonstrated a clear commitment to advancing a transition toward a circular economy. It is resolute in its efforts to tackle climate change, promote clean energy, and adhere to principles of environmental justice. The National Climate Strategy includes elements related to the circular economy, such as the promotion of sustainable practices and waste reduction (Mildenberger 2021).
The administration has issued executive orders related to environmental sustainability and climate action. Executive Order 14008, titled “Tackling the Climate Crisis at Home and Abroad,” reaffirms the U.S. federal government’s commitment to taking immediate action to reduce greenhouse gas emissions (Nussdorf 2021). It establishes a National Task Force, chaired by the National Climate Advisor and consisting of representatives from various federal agencies, to coordinate the federal government’s response to the climate crisis (Brush and Bailey 2021). It directs the State Department to generate a strategy for integrating climate considerations into U.S. foreign policy and international relations.
One of the weaknesses of these executive branch-driven initiatives is their uncertain durability. Should Donald Trump win the next election, it would be quite easy for him to pass new executive orders overturning these plans.
In contrast, Biden’s landmark “Inflation Reduction Act of 2022” was actually a major green industrial strategy bill (Bistline 2023). It includes billions of dollars in funding for clean energy, climate resilience, and sustainable infrastructure.
Citations:
Laura Brush and Amy Bailey. 2021. “A Federal Policy Action Plan to Accelerate Local Climate Resilience.” Center for Climate and Energy Solutions.
John Bistline. 2023. “Emissions and Energy Impacts of the Inflation Reduction Act.” Science.
Benjamin Nussdorf. 2021. “Complications Combating the Climate Crisis in the Biden Administration.” Trends.
Matto Mildenberger. 2021. “The Development of Climate Institutions in the United States.” Environmental Politics.
The administration has issued executive orders related to environmental sustainability and climate action. Executive Order 14008, titled “Tackling the Climate Crisis at Home and Abroad,” reaffirms the U.S. federal government’s commitment to taking immediate action to reduce greenhouse gas emissions (Nussdorf 2021). It establishes a National Task Force, chaired by the National Climate Advisor and consisting of representatives from various federal agencies, to coordinate the federal government’s response to the climate crisis (Brush and Bailey 2021). It directs the State Department to generate a strategy for integrating climate considerations into U.S. foreign policy and international relations.
One of the weaknesses of these executive branch-driven initiatives is their uncertain durability. Should Donald Trump win the next election, it would be quite easy for him to pass new executive orders overturning these plans.
In contrast, Biden’s landmark “Inflation Reduction Act of 2022” was actually a major green industrial strategy bill (Bistline 2023). It includes billions of dollars in funding for clean energy, climate resilience, and sustainable infrastructure.
Citations:
Laura Brush and Amy Bailey. 2021. “A Federal Policy Action Plan to Accelerate Local Climate Resilience.” Center for Climate and Energy Solutions.
John Bistline. 2023. “Emissions and Energy Impacts of the Inflation Reduction Act.” Science.
Benjamin Nussdorf. 2021. “Complications Combating the Climate Crisis in the Biden Administration.” Trends.
Matto Mildenberger. 2021. “The Development of Climate Institutions in the United States.” Environmental Politics.
Graph View
How committed is the government to updating and protecting critical infrastructure?
10
9
9
The government is clearly committed to updating basic technical infrastructure.
8
7
6
7
6
The government is largely committed to updating basic technical infrastructure.
5
4
3
4
3
The government is somewhat committed to updating basic technical infrastructure.
2
1
1
The government is not at all committed to updating basic technical infrastructure.
The U.S. strategy for updating and protecting critical infrastructure is distributed across a combination of legislative and executive branch measures. While there is no single binding document, several key documents provide insight into this strategy and reflect the government’s commitment to achieving it.
In 2013 President Barack Obama issued Presidential Policy Directive 21. PPD-21 outlines the federal government’s approach to enhancing the security and resilience of critical infrastructure and established a risk management framework to identify and assess risks to critical infrastructure. Relatedly, the National Infrastructure Protection Plan (NIPP) was developed by the Department of Homeland Security. NIPP outlines a risk management framework for identifying, prioritizing, and protecting critical infrastructure sectors.
In March 2022, President Biden signed into law the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA). CIRCIA requires the Cybersecurity and Infrastructure Security Agency (CISA) to develop and implement regulations requiring covered entities to report covered cybersecurity incidents and ransomware payments to CISA.
As is characteristic of U.S. public policy, including that from the Democrats, U.S. critical infrastructure plans tend to rely heavily on the private sector. PPD-21 encourages collaboration between public and private sectors, acknowledging that much critical infrastructure in the United States is privately owned.
There are sector-specific orders relating to critical infrastructure as well. For example, President Joe Biden issued Executive Order 14028, which focuses on improving America’s cybersecurity.
Citations:
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/05/12/executive-order-on-improving-the-nations-cybersecurity
https://www.energy.gov/ceser/presidential-policy-directive-21
https://www.congress.gov/bill/117th-congress/house-bill/2471/text
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/05/12/executive-order-on-improving-the-nations-cybersecurity/
In 2013 President Barack Obama issued Presidential Policy Directive 21. PPD-21 outlines the federal government’s approach to enhancing the security and resilience of critical infrastructure and established a risk management framework to identify and assess risks to critical infrastructure. Relatedly, the National Infrastructure Protection Plan (NIPP) was developed by the Department of Homeland Security. NIPP outlines a risk management framework for identifying, prioritizing, and protecting critical infrastructure sectors.
In March 2022, President Biden signed into law the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA). CIRCIA requires the Cybersecurity and Infrastructure Security Agency (CISA) to develop and implement regulations requiring covered entities to report covered cybersecurity incidents and ransomware payments to CISA.
As is characteristic of U.S. public policy, including that from the Democrats, U.S. critical infrastructure plans tend to rely heavily on the private sector. PPD-21 encourages collaboration between public and private sectors, acknowledging that much critical infrastructure in the United States is privately owned.
There are sector-specific orders relating to critical infrastructure as well. For example, President Joe Biden issued Executive Order 14028, which focuses on improving America’s cybersecurity.
Citations:
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/05/12/executive-order-on-improving-the-nations-cybersecurity
https://www.energy.gov/ceser/presidential-policy-directive-21
https://www.congress.gov/bill/117th-congress/house-bill/2471/text
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/05/12/executive-order-on-improving-the-nations-cybersecurity/
Graph View
How committed is the government to fully decarbonizing the energy system by 2050?
10
9
9
The government is clearly committed to transitioning to a decarbonized energy system.
8
7
6
7
6
The government is largely committed to transitioning to a decarbonized energy system.
5
4
3
4
3
The government is somewhat committed to transitioning to a decarbonized energy system.
2
1
1
The government is not at all committed to transitioning to a decarbonized energy system.
In 2020, Joe Biden ran for president on the most ambitious climate agenda of any major candidate in U.S. history (Tollefson 2020). In April 2021, Biden set a new national target of reducing emissions by 50% from 2005 levels by 2030 and achieving net-zero emissions by 2050.
Joe Biden has achieved more on the climate transition front than any of his predecessors, particularly due to his landmark Inflation Reduction Act of 2022 and his Infrastructure Investment and Jobs Act of 2021 – commonly known as the Bipartisan Infrastructure Law. Since the enactment of these laws, the United States has seen a surge in clean energy manufacturing (Vangala et al. 2022).
There are encouraging signs of progress (Elder 2021). Over a million electric vehicles were sold in the United States last year, bringing them to nearly 10% of new car sales in the United States. Americans can now access consumer tax credits for electric vehicles. One of the challenges to the expansion of electric vehicles is the lack of chargers. However, the Bipartisan Infrastructure Law provides billions of dollars in subsidies to build 500,000 electric charging points by 2030 under a National Electric Vehicle Infrastructure program (Case 2023). Moreover, the administration has allocated additional funds to maintain the existing chargers.
There are other areas of progress as well. In September 2022, the U.S. Senate ratified the Kigali Amendment on reducing hydrofluorocarbons (HFCs), and the Environmental Protection Agency (EPA) has taken action to phase out HFCs (Tan et al. 2023). In November 2022, the Biden administration released a new Methane Action Plan, which includes $20 billion in funding to reduce methane emissions from the oil and gas industry. Biden’s Inflation Reduction Act (IRA) also taxes methane emissions as a disincentive to firms (Lashof 2024).
While more action is still needed, Biden’s administration, in just three years, has achieved far more than any of its predecessors. The administration continues to show strong determination to tackle climate change as part of a bold investment and infrastructure program (Medlock 2021).
Citations:
Dan Lashof. 2024. “Tracking Progress: Climate Action under the Biden Administration.” https://www.wri.org/insights/biden-administration-tracking-climate-action-progress?utm_medium=social&utm_source=twitter&utm_campaign=socialmedia
Tammy Tan, Lisa Rennels, and Bryan Parthum. 2023. “The Social Costs of Hydrofluorocarbons and the Benefits from Their Expedited Phase-Down.” Nature.
Molly Case. 2023. “The Road to 2023: Developing Electric Vehicle Infrastructure to Accomplish Federal Goals.” Rutgers Business Law Review.
Shreyas Vangala, Kaylene Hung, and David South. 2022. “Revisiting the Biden Administration’s Approach to Climate Change.” Climate and Energy.
Samantha Medlock. 2022. “The Writing is (Again) On the Wall: How the Biden Administration’s Climate Agenda Addresses Adaptation and Resilience.” Trends.
Mark Elder. 2021. “Optimistic Prospects for U.S. Climate Policy in the Biden Administration.” Global Environmental Strategies.
Jeff Tollefson. 2020. “Can Joe Biden make good on his revolutionary climate agenda.” Nature.
Joe Biden has achieved more on the climate transition front than any of his predecessors, particularly due to his landmark Inflation Reduction Act of 2022 and his Infrastructure Investment and Jobs Act of 2021 – commonly known as the Bipartisan Infrastructure Law. Since the enactment of these laws, the United States has seen a surge in clean energy manufacturing (Vangala et al. 2022).
There are encouraging signs of progress (Elder 2021). Over a million electric vehicles were sold in the United States last year, bringing them to nearly 10% of new car sales in the United States. Americans can now access consumer tax credits for electric vehicles. One of the challenges to the expansion of electric vehicles is the lack of chargers. However, the Bipartisan Infrastructure Law provides billions of dollars in subsidies to build 500,000 electric charging points by 2030 under a National Electric Vehicle Infrastructure program (Case 2023). Moreover, the administration has allocated additional funds to maintain the existing chargers.
There are other areas of progress as well. In September 2022, the U.S. Senate ratified the Kigali Amendment on reducing hydrofluorocarbons (HFCs), and the Environmental Protection Agency (EPA) has taken action to phase out HFCs (Tan et al. 2023). In November 2022, the Biden administration released a new Methane Action Plan, which includes $20 billion in funding to reduce methane emissions from the oil and gas industry. Biden’s Inflation Reduction Act (IRA) also taxes methane emissions as a disincentive to firms (Lashof 2024).
While more action is still needed, Biden’s administration, in just three years, has achieved far more than any of its predecessors. The administration continues to show strong determination to tackle climate change as part of a bold investment and infrastructure program (Medlock 2021).
Citations:
Dan Lashof. 2024. “Tracking Progress: Climate Action under the Biden Administration.” https://www.wri.org/insights/biden-administration-tracking-climate-action-progress?utm_medium=social&utm_source=twitter&utm_campaign=socialmedia
Tammy Tan, Lisa Rennels, and Bryan Parthum. 2023. “The Social Costs of Hydrofluorocarbons and the Benefits from Their Expedited Phase-Down.” Nature.
Molly Case. 2023. “The Road to 2023: Developing Electric Vehicle Infrastructure to Accomplish Federal Goals.” Rutgers Business Law Review.
Shreyas Vangala, Kaylene Hung, and David South. 2022. “Revisiting the Biden Administration’s Approach to Climate Change.” Climate and Energy.
Samantha Medlock. 2022. “The Writing is (Again) On the Wall: How the Biden Administration’s Climate Agenda Addresses Adaptation and Resilience.” Trends.
Mark Elder. 2021. “Optimistic Prospects for U.S. Climate Policy in the Biden Administration.” Global Environmental Strategies.
Jeff Tollefson. 2020. “Can Joe Biden make good on his revolutionary climate agenda.” Nature.
Graph View
To what extent do existing labor market institutions support or hinder the transition to an adaptive labor market?
10
9
9
Labor market institutions are fully aligned with the goal of an adaptable labor market.
8
7
6
7
6
Labor market institutions are largely aligned with the goal of an adaptable labor market.
5
4
3
4
3
Labor market institutions are only somewhat aligned with the goal of an adaptable labor market.
2
1
1
Labor market institutions are not at all aligned with the goal of an adaptable labor market.
The federal government has some capacity to shape the adaptability of the U.S. labor market to sustainability, but it is ultimately limited by the system of federalism. Nonetheless, some initiatives are worthy of comment. One is “Tech Hire” (Gertner 2015). This was a $150 million program established by the Obama administration aimed at transitioning blue-collar manual workers to coding and other tech career paths, reducing reliance on polluting heavy industry as a source of blue-collar employment (Eyster et al. 2016). The Tech Hire program allocated grants to various initiatives, such as coding “boot camps” – intensive courses over a few months – to train individuals how to make computer code (Brock 2019).
Labor market policies are significantly shaped by labor law in the 50 different U.S. states. Some states, for example, have “right-to-work” laws under the 1947 Taft-Hartley Act. These laws allow beneficiaries of union-negotiated contracts to refuse to pay toward the union that negotiates those contracts, facilitating a free rider effect that diminishes private sector union membership.
It is notable that while public sector union density remains at about 1 in 3 public sector workers – similar to the levels reached during the heyday of American union density (peak density was about 35% of the non-farm workforce in 1954) – private sector density today is about 1 in 18.
Defenders of a flexible labor market, however, would praise such schemes for reducing the power of unions, who are associated with greater labor market rigidity (which is not always a bad thing) (Moody 2014).
Local governments can hinder labor market adaptability through their licensing practices (Kleiner 2000). For example, some localities impose rigid licensing rules on who can be certified as a taxi driver, hairstylist, or interior designer, which inhibits people’s ability to switch careers (Gelhorn 1976).
Citations:
Walter Gelhorn. 1976. “The Abuse of Occupational Licensing.” University of Chicago Law Review.
Morris Kleiner. 2000. “Occupational Licensing.” Journal of Economic Perspectives.
Jon Gertner. 2015. “Inside Obama’s Stealth Startup.” Fast Company.
Kevin Brock. 2019. “Treating Code as Persuasive Argument.” In Rhetorical Machines, eds. J. Jones and L. Hirsu. Tuscaloosa: University of Alabama Press.
Lauren Eytner, Christin Durham, and Theresa Anderson. 2016. “Federal Investments in Job Training at Community Colleges.” Income and Benefits Policy Center.
Labor market policies are significantly shaped by labor law in the 50 different U.S. states. Some states, for example, have “right-to-work” laws under the 1947 Taft-Hartley Act. These laws allow beneficiaries of union-negotiated contracts to refuse to pay toward the union that negotiates those contracts, facilitating a free rider effect that diminishes private sector union membership.
It is notable that while public sector union density remains at about 1 in 3 public sector workers – similar to the levels reached during the heyday of American union density (peak density was about 35% of the non-farm workforce in 1954) – private sector density today is about 1 in 18.
Defenders of a flexible labor market, however, would praise such schemes for reducing the power of unions, who are associated with greater labor market rigidity (which is not always a bad thing) (Moody 2014).
Local governments can hinder labor market adaptability through their licensing practices (Kleiner 2000). For example, some localities impose rigid licensing rules on who can be certified as a taxi driver, hairstylist, or interior designer, which inhibits people’s ability to switch careers (Gelhorn 1976).
Citations:
Walter Gelhorn. 1976. “The Abuse of Occupational Licensing.” University of Chicago Law Review.
Morris Kleiner. 2000. “Occupational Licensing.” Journal of Economic Perspectives.
Jon Gertner. 2015. “Inside Obama’s Stealth Startup.” Fast Company.
Kevin Brock. 2019. “Treating Code as Persuasive Argument.” In Rhetorical Machines, eds. J. Jones and L. Hirsu. Tuscaloosa: University of Alabama Press.
Lauren Eytner, Christin Durham, and Theresa Anderson. 2016. “Federal Investments in Job Training at Community Colleges.” Income and Benefits Policy Center.
To what extent do existing labor market institutions support or hinder the transition to an inclusive labor market?
10
9
9
Labor market institutions are fully aligned with the goal of an inclusive labor market.
8
7
6
7
6
Labor market institutions are largely aligned with the goal of an inclusive labor market.
5
4
3
4
3
Labor market institutions are only somewhat aligned with the goal of an inclusive labor market.
2
1
1
Labor market institutions are not at all aligned with the goal of an inclusive labor market.
Several key federal statutes foster an inclusive labor market. These include the Civil Rights Act of 1964 (and its successor acts) and the Americans with Disabilities Act of 1990. These laws prohibit discrimination against workers based on race, religion, sex, or disability. The Supreme Court has recently interpreted the Civil Rights Act to extend protections to gay and transgender Americans as well. The Equal Pay Act of 1963 and the Fair Pay Act of 2009 provide women with protection against pay discrimination in the workplace.
The federal government also funds active labor market programs (Bradley 2015). The Workforce Innovation and Opportunity Act of 2014 finances job training, education, and support services (Spaulding 2015). The U.S. Employment Service (USES), a federal agency created in 1933 by Franklin Roosevelt during the New Deal, provides counseling services, job search and placement assistance, and information about job opportunities to the unemployed (Guzda 1983). The aim of the USES is to match prospective employers with prospective employees (Balducchi et al. 1997).
The federal government’s tax credit system aims to encourage labor market mobility (Liebman 1998). The Earned Income Tax Credit (EITC) offers increased benefits alongside earned income up to a certain level, rather than immediately diminishing (Hotz and Scholz 2001). The idea behind the EITC is to encourage unemployed individuals to seek employment, even in low-wage jobs, rather than rely on unemployment benefits (Meyer 2010). The child tax credit (CTC) is a federal benefit designed to alleviate some of the pressures of raising children and potentially encourage parents to remain in or enter the workforce (Goldin and Michelmore 2022). The CTC has been shown to reduce injuries and behavioral problems, especially for children of low-income parents (Rostad et al. 2020).
However, most employment law originates from state governments, and there is wide variation in these protections from state to state. Each state administers its own unemployment insurance program, although the federal government provides substantial funding to state governments for baseline provision (Chang 2019). Nonetheless, there is significant variation. In states like Massachusetts, Washington and Minnesota, an unemployed person could receive over $1,000 per week in unemployment insurance. In Mississippi, Arizona and Louisiana, support could be less than $300 per week (Hammermesh 2019). States have differing eligibility requirements in addition to the federal government’s baseline eligibility requirements (Isaacs 2018).
Citations:
David Bradley. 2015. “The Workforce Innovation and Opportunity Act and the One-Stop Delivery System.” Congressional Research Service.
Shayne Spaulding. 2015. “The Workforce Innovation and Opportunity Act and Child Care for Low-Income Parents.” Urban Institute.
Henry Guzda. 1983. “The U.S. Employment Service at 50: It Too Had to Wait Its Turn.” Monthly Labor Review.
David Balducchi, Terry Johnson, and R. Mark Gritz. 1997. “The Role of the Employment Service.” In Unemployment Insurance in the United States, eds. C. O’Leary and S. Wadner. Kalamazoo, MI: Upjohn Institute for Employment Research.
Jeffrey Liebman. 1998. “The Impact of the Earned Income Tax Credit on Incentives and Income Distribution.” Tax Policy and Economy.
Bruce Meyer. 2010. “The Effects of the Earned Income Tax Credit and Recent Reforms.” Tax Policy and the Economy.
VJ Holtz and JK Scholz. 2001. “The Earned Income Tax Credit.” Working Paper 8078. National Bureau of Economic Research.
Whitney Rostad, Joanne Klevens, Katie Ports, and Derek Ford. 2020. “Impact of the United States Federal Child Tax Credit on Childhood Injuries and Behavior Problems.” Children and Youth Services Review.
Jacob Goldin and Katherine Michelmore. 2022. “Who Benefits from the Child Tax Credit?” National Tax Journal.
Daniel Hammermesh. 1979. “Unemployment Insurance and Unemployment in the United States.” Policy Studies.
Kateline Isaacs. 2018. “Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws.” Congressional Research Service.
Yu-Ling Chang. 2015. “Unequal Social Protection under the Federalist System.” Journal of Social Policy.
The federal government also funds active labor market programs (Bradley 2015). The Workforce Innovation and Opportunity Act of 2014 finances job training, education, and support services (Spaulding 2015). The U.S. Employment Service (USES), a federal agency created in 1933 by Franklin Roosevelt during the New Deal, provides counseling services, job search and placement assistance, and information about job opportunities to the unemployed (Guzda 1983). The aim of the USES is to match prospective employers with prospective employees (Balducchi et al. 1997).
The federal government’s tax credit system aims to encourage labor market mobility (Liebman 1998). The Earned Income Tax Credit (EITC) offers increased benefits alongside earned income up to a certain level, rather than immediately diminishing (Hotz and Scholz 2001). The idea behind the EITC is to encourage unemployed individuals to seek employment, even in low-wage jobs, rather than rely on unemployment benefits (Meyer 2010). The child tax credit (CTC) is a federal benefit designed to alleviate some of the pressures of raising children and potentially encourage parents to remain in or enter the workforce (Goldin and Michelmore 2022). The CTC has been shown to reduce injuries and behavioral problems, especially for children of low-income parents (Rostad et al. 2020).
However, most employment law originates from state governments, and there is wide variation in these protections from state to state. Each state administers its own unemployment insurance program, although the federal government provides substantial funding to state governments for baseline provision (Chang 2019). Nonetheless, there is significant variation. In states like Massachusetts, Washington and Minnesota, an unemployed person could receive over $1,000 per week in unemployment insurance. In Mississippi, Arizona and Louisiana, support could be less than $300 per week (Hammermesh 2019). States have differing eligibility requirements in addition to the federal government’s baseline eligibility requirements (Isaacs 2018).
Citations:
David Bradley. 2015. “The Workforce Innovation and Opportunity Act and the One-Stop Delivery System.” Congressional Research Service.
Shayne Spaulding. 2015. “The Workforce Innovation and Opportunity Act and Child Care for Low-Income Parents.” Urban Institute.
Henry Guzda. 1983. “The U.S. Employment Service at 50: It Too Had to Wait Its Turn.” Monthly Labor Review.
David Balducchi, Terry Johnson, and R. Mark Gritz. 1997. “The Role of the Employment Service.” In Unemployment Insurance in the United States, eds. C. O’Leary and S. Wadner. Kalamazoo, MI: Upjohn Institute for Employment Research.
Jeffrey Liebman. 1998. “The Impact of the Earned Income Tax Credit on Incentives and Income Distribution.” Tax Policy and Economy.
Bruce Meyer. 2010. “The Effects of the Earned Income Tax Credit and Recent Reforms.” Tax Policy and the Economy.
VJ Holtz and JK Scholz. 2001. “The Earned Income Tax Credit.” Working Paper 8078. National Bureau of Economic Research.
Whitney Rostad, Joanne Klevens, Katie Ports, and Derek Ford. 2020. “Impact of the United States Federal Child Tax Credit on Childhood Injuries and Behavior Problems.” Children and Youth Services Review.
Jacob Goldin and Katherine Michelmore. 2022. “Who Benefits from the Child Tax Credit?” National Tax Journal.
Daniel Hammermesh. 1979. “Unemployment Insurance and Unemployment in the United States.” Policy Studies.
Kateline Isaacs. 2018. “Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws.” Congressional Research Service.
Yu-Ling Chang. 2015. “Unequal Social Protection under the Federalist System.” Journal of Social Policy.
To what extent do existing labor market institutions support or hinder the mitigation of labor market risks?
10
9
9
Labor market institutions are fully aligned with the goal of protecting individuals against labor market risks.
8
7
6
7
6
Labor market institutions are largely aligned with the goal of protecting individuals against labor market risks.
5
4
3
4
3
Labor market institutions are only somewhat aligned with the goal of protecting individuals against labor market risks.
2
1
1
Labor market institutions are not at all aligned with the goal of protecting individuals against labor market risks.
The social safety net in the United States is relatively sparse, especially when relying solely on the federal baseline (Hacker 2002). Programs such as the Supplemental Nutritional Assistance Program (SNAP, otherwise known as food stamps), Temporary Aid to Needy Families (TANF, a form of means-tested child benefit), and Medicaid (public health insurance for the poor) assist to some extent with managing labor market risks like unemployment. However, there are many gaps in the federal social safety net (Soss and Schram 2007). There is no federal comprehensive paid leave, which negatively affects those facing health issues or parenthood.
For the first four decades of the Social Security Act of 1935, agricultural and domestic service workers were excluded from most of its protections, including unemployment insurance and the state pension (Lieberman and Lapinski 2001). It wasn’t until 1972 that Congress amended the legislation to include these groups, who were disproportionately workers of color (Ward 2005). Two-thirds of Black women worked in excluded occupations at the passage of the Social Security Act (Skrenty 1996).
The reliance of the U.S. healthcare system on employer-provided healthcare is a significant barrier to labor market flexibility (Maioni and Marmor 2019). About half of Americans receive their healthcare from their employer or their partner’s or parent’s employer (Lockhart 2012). Similarly, paid leave policies are not universally mandated by law but depend on individual contracts with employers (Ramanathan 2021). Given the weakness of unions, these contracts are typically crafted to reflect the interests of employers rather than the best interests of employees (Milkman 2019).
Citations:
Milkman, Ruth. 2019. “The World We Have Lost: US Labor in the Obama Years.” In Looking Back on President Barack Obama’s Legacy, ed. W. Rich. Palgrave.
Maioni, Antonia, and Theodore Marmor. 2019. “Healthcare.” In The United States and Canada, ed. P. Quirk. Oxford: Oxford University Press.
Deborah Ward. 2005. The White Welfare State. Ann Arbor: University of Michigan Press.
John Skrenty. 1996. The Ironies of Affirmative Action. Chicago: University of Chicago Press.
Kumar, Ramanathan. 2021. “From Civil Rights to Social Policy: The Political Development of Family and Medical Leave Policy.” Studies in American Political Development.
Robert Lieberman and John Lapinski. 2001. “American Federalism, Race, and the Administration of Welfare.” British Journal of Political Science 31 (2): 303-329.
Jacob Hacker. 2004. “Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Social Policy Retrenchment in the United States.” American Political Science Review.
Joe Soss and Sanford Schram. 2007. “A Public Transformed? Welfare Reform as Policy Feedback.” American Political Science Review.
For the first four decades of the Social Security Act of 1935, agricultural and domestic service workers were excluded from most of its protections, including unemployment insurance and the state pension (Lieberman and Lapinski 2001). It wasn’t until 1972 that Congress amended the legislation to include these groups, who were disproportionately workers of color (Ward 2005). Two-thirds of Black women worked in excluded occupations at the passage of the Social Security Act (Skrenty 1996).
The reliance of the U.S. healthcare system on employer-provided healthcare is a significant barrier to labor market flexibility (Maioni and Marmor 2019). About half of Americans receive their healthcare from their employer or their partner’s or parent’s employer (Lockhart 2012). Similarly, paid leave policies are not universally mandated by law but depend on individual contracts with employers (Ramanathan 2021). Given the weakness of unions, these contracts are typically crafted to reflect the interests of employers rather than the best interests of employees (Milkman 2019).
Citations:
Milkman, Ruth. 2019. “The World We Have Lost: US Labor in the Obama Years.” In Looking Back on President Barack Obama’s Legacy, ed. W. Rich. Palgrave.
Maioni, Antonia, and Theodore Marmor. 2019. “Healthcare.” In The United States and Canada, ed. P. Quirk. Oxford: Oxford University Press.
Deborah Ward. 2005. The White Welfare State. Ann Arbor: University of Michigan Press.
John Skrenty. 1996. The Ironies of Affirmative Action. Chicago: University of Chicago Press.
Kumar, Ramanathan. 2021. “From Civil Rights to Social Policy: The Political Development of Family and Medical Leave Policy.” Studies in American Political Development.
Robert Lieberman and John Lapinski. 2001. “American Federalism, Race, and the Administration of Welfare.” British Journal of Political Science 31 (2): 303-329.
Jacob Hacker. 2004. “Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Social Policy Retrenchment in the United States.” American Political Science Review.
Joe Soss and Sanford Schram. 2007. “A Public Transformed? Welfare Reform as Policy Feedback.” American Political Science Review.
Graph View
To what extent do existing tax institutions and procedures support or hinder adequate tax revenue flows?
10
9
9
The tax system is fully aligned with the goals of ensuring adequate tax revenues.
8
7
6
7
6
The tax system is largely aligned with the goals of ensuring adequate tax revenues.
5
4
3
4
3
The tax system is only somewhat aligned with the goals of ensuring adequate tax revenues.
2
1
1
The tax system is not at all aligned with the goals of ensuring adequate tax revenues.
The United States enjoys a diverse tax base, with federal revenues coming from income tax, payroll tax, corporate tax, and consumption tax (Kwak 2013). However, the U.S. tax system is famously complicated, with a bewildering array of deductions, tax expenditures, and loopholes (Parlow 2013). This complexity enables those with the means to hire professionals to help them legally reduce their tax contributions (Graetz 2003). The U.S. tax system does not produce enough revenue to eliminate the deficit and provide sufficient resources to fulfill major obligations in the long run.
The Internal Revenue Service (IRS) is the primary federal agency responsible for tax administration in the United States. It collects taxes and enforces tax laws at the federal level. In recent years, it has modernized its systems, allowing for online tax filing and the use of data analytics.
There are reasonable tax enforcement and compliance efforts, including audits and penalties for noncompliance (Alstadsæter et al. 2019). In addition to the IRS, the U.S. Treasury has the Financial Crimes Enforcement Network (FinCEN), which analyzes financial data to identify potential financial crimes, such as money laundering or financing terrorism. Tax evasion cases are then prosecuted by the Department of Justice, which works closely with these agencies (Slemrod 2007).
Biden’s Inflation Reduction Act addressed long-standing IRS funding deficiencies by providing $79.4 billion in stable, long-term funding through 2031. This funding aims to improve tax compliance by cracking down on high-income individuals and corporations who often avoided paying their lawfully owed taxes and to enhance service for millions of Americans who do pay their taxes. The funding will enable the IRS to modernize its IT infrastructure, administer new energy tax credits, and rebuild the agency’s administrative capacity.
Citations:
Joel Slemrod. 2007. “Cheating Ourselves: The Economics of Tax Evasion.” Journal of Economic Perspectives.
Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman. 2019. “Tax Evasion and Inequality.” American Economic Review.
Jeffrey Parlow. 2013. “The Necessity of Complexity in the Tax System.” Wyoming Law Review.
Michael Graetz. 2003. “100 Million Unnecessary Returns: A Fresh Start for the US Tax System.” Yale Law Journal.
Sunjoo Kwak. 2013. “Tax Base Composition and Revenue Volatility.” Public Budgeting and Finance.
The Internal Revenue Service (IRS) is the primary federal agency responsible for tax administration in the United States. It collects taxes and enforces tax laws at the federal level. In recent years, it has modernized its systems, allowing for online tax filing and the use of data analytics.
There are reasonable tax enforcement and compliance efforts, including audits and penalties for noncompliance (Alstadsæter et al. 2019). In addition to the IRS, the U.S. Treasury has the Financial Crimes Enforcement Network (FinCEN), which analyzes financial data to identify potential financial crimes, such as money laundering or financing terrorism. Tax evasion cases are then prosecuted by the Department of Justice, which works closely with these agencies (Slemrod 2007).
Biden’s Inflation Reduction Act addressed long-standing IRS funding deficiencies by providing $79.4 billion in stable, long-term funding through 2031. This funding aims to improve tax compliance by cracking down on high-income individuals and corporations who often avoided paying their lawfully owed taxes and to enhance service for millions of Americans who do pay their taxes. The funding will enable the IRS to modernize its IT infrastructure, administer new energy tax credits, and rebuild the agency’s administrative capacity.
Citations:
Joel Slemrod. 2007. “Cheating Ourselves: The Economics of Tax Evasion.” Journal of Economic Perspectives.
Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman. 2019. “Tax Evasion and Inequality.” American Economic Review.
Jeffrey Parlow. 2013. “The Necessity of Complexity in the Tax System.” Wyoming Law Review.
Michael Graetz. 2003. “100 Million Unnecessary Returns: A Fresh Start for the US Tax System.” Yale Law Journal.
Sunjoo Kwak. 2013. “Tax Base Composition and Revenue Volatility.” Public Budgeting and Finance.
To what extent do existing tax institutions and procedures consider equity aspects?
10
9
9
The tax system is fully aligned with the goal of ensuring equity.
8
7
6
7
6
The tax system is largely aligned with the goal of ensuring equity.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of ensuring equity.
2
1
1
The tax system is not at all aligned with the goal of ensuring equity.
As Picketty and Saez (2007) have argued, federal income tax in the United States is “progressively designed, but its progressive nature is often undermined. Marginal rates increase as income rises. For example, the federal tax brackets range from 10% to 37%.”
Tax deductions, credits, and exemptions are used to promote horizontal equity by providing targeted relief to specific groups based on their circumstances (Roberts and Hite 1994). The Earned Income Tax Credit (EITC), for example, is phased out at higher income levels. The American Opportunity Credit and the Lifetime Learning Credit allow individuals to deduct some educational expenses from their tax bills, but these are only available to lower-income Americans (Crandall-Hollick 2014).
The Affordable Care Act (Obamacare) also provides tax credits to low- and middle-income families to subsidize the costs of healthcare (Saltzman et al. 2015). The legislation also imposes a 3.8% net investment income tax on high-income individuals with investment income (Hinde 2017).
Capital gains are taxed at a lower rate than income, which can lead to perverse situations where quite wealthy individuals pay a lower amount of tax than a middle-class family (Mehotra and Ott 2016). However, long-term capital gains are taxed at rates that are supposed to reflect income. Capital gains taxes range from 0% to 20% (Robbins 2018).
The alternative minimum tax (AMT) is designed to ensure wealthy individuals pay a minimum amount of tax, regardless of their ability to take advantage of deductions (Feenberg and Poterba 2004). The Trump administration lowered the maximum AMT from 39.6% to 28%. The Inflation Reduction Act of 2022 imposes a corporate alternative minimum tax of 15% on the adjusted financial statement income of large corporations.
“Inheritance tax (known in the United States as the estate tax) does not apply at the federal level for the vast majority of properties (Brunson 2019). Since the Trump presidency, estates under $11 million pay no inheritance tax (Smith 2021). Altogether, the redistributive capacity of the tax system in the United States is low, leading to massive income and wealth inequality.”
Citations:
Smith, Laura. 2021. “Trump and Congress.” Policy Studies.
Samuel Brunson. 2019. “The Aftermath of the Death Tax.” Indiana Law Journal.
Daniel Feenberg and James Poterba. 2004. “The Alternative Minimum Tax and Effective Marginal Tax Rates.” National Tax Journal.
Ajay Mehrotra and Julia Ott. 2016. “The Curious Beginnings of the Capital Gains Tax Preference.” Fordham Law Review.
Jacob Robbins. 2018. “Capital Gains and the Distribution of Income in the United States.” National Bureau of Economic Research.
Jesse Hinde. 2017. “Incentive(less)? The Effectiveness of Tax Credits and Cost-Sharing Subsidies in the Affordable Care Act.” American Journal of Health Economics.
Evan Saltzman, Christine Eibner, and Alain Enthoven. 2015. “Improving The Affordable Care Act: An Assessment Of Policy Options For Providing Subsidies.” Health Affairs.
Margot L. Crandall-Hollick. 2014. “The American Opportunity Tax Credit: Overview, Analysis, and Policy Options.” Congressional Research Service.
Thomas Picketty and Emmanuel Saez. 2007. “How Progressive is the U.S. Federal Tax System? A Historical and International Perspective.” Journal of Economic Perspectives.
Michael Roberts and Peggy Hite. 1994. “Progressive Taxation, Fairness, and Compliance.” Law and Policy.
Tax deductions, credits, and exemptions are used to promote horizontal equity by providing targeted relief to specific groups based on their circumstances (Roberts and Hite 1994). The Earned Income Tax Credit (EITC), for example, is phased out at higher income levels. The American Opportunity Credit and the Lifetime Learning Credit allow individuals to deduct some educational expenses from their tax bills, but these are only available to lower-income Americans (Crandall-Hollick 2014).
The Affordable Care Act (Obamacare) also provides tax credits to low- and middle-income families to subsidize the costs of healthcare (Saltzman et al. 2015). The legislation also imposes a 3.8% net investment income tax on high-income individuals with investment income (Hinde 2017).
Capital gains are taxed at a lower rate than income, which can lead to perverse situations where quite wealthy individuals pay a lower amount of tax than a middle-class family (Mehotra and Ott 2016). However, long-term capital gains are taxed at rates that are supposed to reflect income. Capital gains taxes range from 0% to 20% (Robbins 2018).
The alternative minimum tax (AMT) is designed to ensure wealthy individuals pay a minimum amount of tax, regardless of their ability to take advantage of deductions (Feenberg and Poterba 2004). The Trump administration lowered the maximum AMT from 39.6% to 28%. The Inflation Reduction Act of 2022 imposes a corporate alternative minimum tax of 15% on the adjusted financial statement income of large corporations.
“Inheritance tax (known in the United States as the estate tax) does not apply at the federal level for the vast majority of properties (Brunson 2019). Since the Trump presidency, estates under $11 million pay no inheritance tax (Smith 2021). Altogether, the redistributive capacity of the tax system in the United States is low, leading to massive income and wealth inequality.”
Citations:
Smith, Laura. 2021. “Trump and Congress.” Policy Studies.
Samuel Brunson. 2019. “The Aftermath of the Death Tax.” Indiana Law Journal.
Daniel Feenberg and James Poterba. 2004. “The Alternative Minimum Tax and Effective Marginal Tax Rates.” National Tax Journal.
Ajay Mehrotra and Julia Ott. 2016. “The Curious Beginnings of the Capital Gains Tax Preference.” Fordham Law Review.
Jacob Robbins. 2018. “Capital Gains and the Distribution of Income in the United States.” National Bureau of Economic Research.
Jesse Hinde. 2017. “Incentive(less)? The Effectiveness of Tax Credits and Cost-Sharing Subsidies in the Affordable Care Act.” American Journal of Health Economics.
Evan Saltzman, Christine Eibner, and Alain Enthoven. 2015. “Improving The Affordable Care Act: An Assessment Of Policy Options For Providing Subsidies.” Health Affairs.
Margot L. Crandall-Hollick. 2014. “The American Opportunity Tax Credit: Overview, Analysis, and Policy Options.” Congressional Research Service.
Thomas Picketty and Emmanuel Saez. 2007. “How Progressive is the U.S. Federal Tax System? A Historical and International Perspective.” Journal of Economic Perspectives.
Michael Roberts and Peggy Hite. 1994. “Progressive Taxation, Fairness, and Compliance.” Law and Policy.
To what extent do existing tax institutions and procedures minimize compliance and collection costs?
10
9
9
The tax system is fully aligned with the goal of minimizing compliance and collection costs.
8
7
6
7
6
The tax system is largely aligned with the goal of minimizing compliance and collection costs.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of minimizing compliance and collection costs.
2
1
1
The tax system is not at all aligned with the goal of minimizing compliance and collection costs.
The U.S. federal government has promoted electronic filing, which reduces paperwork and speeds up processing time. This minimizes both compliance and collection costs (Chang and Limato 2017).
The Internal Revenue Service (IRS) provides extensive online resources to help taxpayers find information about their tax liabilities, reducing the need for human interaction and thereby lowering compliance costs. Simultaneously, the IRS engages actively with taxpayers through various assistance programs designed to educate Americans about their tax responsibilities (Krause 2000). These programs are aimed at both individuals and businesses (Engel and Hines 1999).
The IRS uses a risk calculation to determine where to allocate resources for compliance. It employs data analytics to efficiently identify patterns of noncompliance (Hoopes et al. 2012).
On the other hand, the U.S. tax system is known for its complexity. This does not promote transparency or comprehensibility. The sheer volume of laws and exemptions is very difficult for individuals to navigate without professional assistance (Mock and Shurtz 2014). Americans have become highly reliant on tax preparation software to file accurate returns (Zelenak 2010). As a result, the IRS has sometimes demonstrated leniency with misfiled taxes due to confusion. For example, the IRS has a voluntary disclosure scheme that invites individuals to disclose unpaid taxes from previous years without penalty. Biden’s Inflation Reduction Act added another layer of complexity to the federal tax code. The new provisions will increase the administrative burden on the IRS and the tax compliance burden on taxpayers.
Citations:
Lawrence Zelnak. 2010. “Complex Tax Legislation in the TurboTax Era.” Columbia Journal of Tax Law.
Rodney Mock and Nancy Shurtz. 2014. “The TurboTax Defense.” Florida Tax Review.
Jeffrey Hoopes, Devan Mescall, and Jeffrey Pittman. 2012. “Do IRS Audits Deter Corporate Tax Avoidance?” The Accounting Review.
Eduardo Engel and James Hines. 1999. “Understanding Tax Evasion Dynamics.” Working Paper 6903. National Bureau of Economic Research.
Kate Krause. 2000. “Tax Complexity: Problem or Opportunity?” Public Finance Review.
Bea Chiang, Jeffrey Limato. 2017. “The Use of Technology in Tax Preparation: A Closer Examination of Electronic Filing and Filing Errors.” Corporate Accounting and Finance.
The Internal Revenue Service (IRS) provides extensive online resources to help taxpayers find information about their tax liabilities, reducing the need for human interaction and thereby lowering compliance costs. Simultaneously, the IRS engages actively with taxpayers through various assistance programs designed to educate Americans about their tax responsibilities (Krause 2000). These programs are aimed at both individuals and businesses (Engel and Hines 1999).
The IRS uses a risk calculation to determine where to allocate resources for compliance. It employs data analytics to efficiently identify patterns of noncompliance (Hoopes et al. 2012).
On the other hand, the U.S. tax system is known for its complexity. This does not promote transparency or comprehensibility. The sheer volume of laws and exemptions is very difficult for individuals to navigate without professional assistance (Mock and Shurtz 2014). Americans have become highly reliant on tax preparation software to file accurate returns (Zelenak 2010). As a result, the IRS has sometimes demonstrated leniency with misfiled taxes due to confusion. For example, the IRS has a voluntary disclosure scheme that invites individuals to disclose unpaid taxes from previous years without penalty. Biden’s Inflation Reduction Act added another layer of complexity to the federal tax code. The new provisions will increase the administrative burden on the IRS and the tax compliance burden on taxpayers.
Citations:
Lawrence Zelnak. 2010. “Complex Tax Legislation in the TurboTax Era.” Columbia Journal of Tax Law.
Rodney Mock and Nancy Shurtz. 2014. “The TurboTax Defense.” Florida Tax Review.
Jeffrey Hoopes, Devan Mescall, and Jeffrey Pittman. 2012. “Do IRS Audits Deter Corporate Tax Avoidance?” The Accounting Review.
Eduardo Engel and James Hines. 1999. “Understanding Tax Evasion Dynamics.” Working Paper 6903. National Bureau of Economic Research.
Kate Krause. 2000. “Tax Complexity: Problem or Opportunity?” Public Finance Review.
Bea Chiang, Jeffrey Limato. 2017. “The Use of Technology in Tax Preparation: A Closer Examination of Electronic Filing and Filing Errors.” Corporate Accounting and Finance.
To what extent do existing tax institutions and procedures internalize negative and positive externalities?
10
9
9
The tax system is fully aligned with the goal of internalizing externalities.
8
7
6
7
6
The tax system is largely aligned with the goal of internalizing externalities.
5
4
3
4
3
The tax system is only somewhat aligned with the goal of internalizing externalities.
2
1
1
The tax system is not at all aligned with the goal of internalizing externalities.
The complex U.S. tax system contains a variety of incentives for activities associated with positive externalities. For example, the federal government provides tax credits for renewable energy projects (Newell et al. 2019). The Investment Tax Credit (ITC) and the Production Tax Credit (PTC) support investment and production in wind, solar, and other renewables (Sherlock 2020).
Another example of a tax institution that internalizes positive externality is the Low-Income Housing Credit. It encourages the construction and refurbishment of affordable housing by providing tax credits to developers working on projects in this area.
Negative externalities are more often addressed at the state level through the tax system (Hines 2007). For example, many states impose various “sin taxes” on alcohol, tobacco, recreational drugs, gambling, fast food, and sugar (Perkins 2014). The federal government briefly had a luxury tax, introduced in 1990, which applied to high-end cars, planes, yachts, and fur coats (Green 2010). However, the tax proved so unpopular with the wealthy that it was repealed by the Bill Clinton administration in 1993 (Conlon et al. 2022).
Citations:
James Hines. 2007. “Taxing Consumption and Other Sins.” Journal of Economic Perspectives.
Rachel Holmes Perkins. 2014. “Salience and Sin: Designing Taxes in the New Sin Era.”
Rebecca Green. 2010. “The Ethics of Sin Taxes.” Public Health Nursing.
Christopher Conlon, Nirupama Rao, and Yinan Wang. 2022. “Who Pays Sin Taxes? Understanding the Overlapping Burden of Corrective Taxes.” Review of Economics and Statistics.
Sherlock, Molly. 2020. “The Renewable Electricity Production Tax.” Congressional Research Service.
Richard Newell, William Pizer, and Daniel Raimi. 2019. “U.S. Federal Government Subsidies for Clean Energy: Design Choices and Implications.” Energy Economics.
Another example of a tax institution that internalizes positive externality is the Low-Income Housing Credit. It encourages the construction and refurbishment of affordable housing by providing tax credits to developers working on projects in this area.
Negative externalities are more often addressed at the state level through the tax system (Hines 2007). For example, many states impose various “sin taxes” on alcohol, tobacco, recreational drugs, gambling, fast food, and sugar (Perkins 2014). The federal government briefly had a luxury tax, introduced in 1990, which applied to high-end cars, planes, yachts, and fur coats (Green 2010). However, the tax proved so unpopular with the wealthy that it was repealed by the Bill Clinton administration in 1993 (Conlon et al. 2022).
Citations:
James Hines. 2007. “Taxing Consumption and Other Sins.” Journal of Economic Perspectives.
Rachel Holmes Perkins. 2014. “Salience and Sin: Designing Taxes in the New Sin Era.”
Rebecca Green. 2010. “The Ethics of Sin Taxes.” Public Health Nursing.
Christopher Conlon, Nirupama Rao, and Yinan Wang. 2022. “Who Pays Sin Taxes? Understanding the Overlapping Burden of Corrective Taxes.” Review of Economics and Statistics.
Sherlock, Molly. 2020. “The Renewable Electricity Production Tax.” Congressional Research Service.
Richard Newell, William Pizer, and Daniel Raimi. 2019. “U.S. Federal Government Subsidies for Clean Energy: Design Choices and Implications.” Energy Economics.
Graph View
To what extent do existing budgetary institutions and procedures support or hinder sustainable budgeting?
10
9
9
Budgetary institutions and policies are fully aligned with the goals of sustainable budgeting.
8
7
6
7
6
Budgetary institutions and policies are largely aligned with the goals of sustainable budgeting.
5
4
3
4
3
Budgetary institutions and policies are only somewhat aligned with the goals of sustainable budgeting.
2
1
1
Budgetary institutions and policies are not at all aligned with the goals of sustainable budgeting.
The U.S. federal government has several institutions designed to assist with the budgeting process. Chief among these are the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB). They play key roles in projecting the fiscal impact of policies, facilitating better-informed decision-making (Schick 2008). The White House and Congress publish documents intended to provide accountability, clarity, and justification for budgeting decisions.
Some federal programs are subject to performance-based budgeting rules. Under the Government Performance and Results Act of 1993, federal agencies must set performance targets and report on their progress toward those targets (Kravchuk and Schack 1996). Failure to meet these targets can have budgetary implications. The federal government also plans for contingencies and emergencies (Radin 2000). For example, the Disaster Relief Fund provides resources to respond to natural emergencies.
The budgeting process itself is reasonably transparent. The president is required by statute to present a budget to Congress. This budget outlines the president’s key spending priorities, but the budget document is more of a bargaining chip than a fully accepted fiscal plan (Joyce 1996). Following the president’s proposal are weeks of negotiations between the White House, congressional leaders and ordinary members of Congress. The Congressional Budget and Impoundment Act of 1974 sets out a formalized process for budgeting in Congress, but Congress usually misses its own internal deadlines (Hogan 1985).
Members often complain that the final results of negotiations are presented to them at the last minute, requiring them to vote on complex and important budget documents without nearly enough time for proper scrutiny (Schick 1975).
The existence of fiscal rules has a limited effect on curtailing debt and, in many ways, generates more harm than good (Wray and Nersisyan 2022). The Unite States has a statutory debt ceiling, a limit set by Congress on how high the national debt can reach (Kowalcky and LeLoup 1993). If the national debt approaches this limit, Congress must either raise the ceiling, increase public revenues, cut spending, or default. This leads to regular conflicts over the debt ceiling, which become entangled in other policy and partisan debates (Buchanan and Dorf 2013). Thus, the effectiveness of fiscal rules ultimately depends on the norms and political culture surrounding them, as well as the prevailing economic conditions. Because of massive partisan polarization, budget negotiations have become much more problematic in Congress, leading to a 23-day government shutdown during the Trump administration.
Citations:
L. Randall Wray and Yeva Nersisyan. 2022. “Does the National Debt Matter?” In Debating Modern Monetary Theory, eds. C. Lapavitsas and R. Rowthorn. Routledge.
Linda Kowalcky and Lance LeLoup. 1993. “Congress and the Politics of Statutory Debt Limitation.” Public Administration Review.
Neil Buchanan and Michael Dorf. 2013. “Bargaining in the Shadow of the Debt Ceiling.” Columbia Law Review.
Joseph Hogan. 1985. “Ten Years After: The Congressional Impoundment and Budget Act of 1974.” Public Administration.
Schick, Allen. 1975. “The Battle of the Budget.” Proceedings of the Academy of Political Science.
Philip Joyce. 1996. “Congressional Budget Reform: The Unanticipated Implications for Federal Policy Making.” Public Administration Review.
Robert Kravchuk and Ronald Schack. 1996. “Designing Effective Performance-Measurement Systems under the Government Performance and Results Act of 1993.” Public Administration Review.
Beryl Radin. 2000. “The Government Performance and Results Act and the Tradition of Federal Management Reform: Square Pegs in Round Holes?” Journal of Public Administration and Research Theory.
Allen Schick. 2007. The Federal Budget: Politics, Policy, and Process. Washington, D.C.: Brookings Institution Press.
Some federal programs are subject to performance-based budgeting rules. Under the Government Performance and Results Act of 1993, federal agencies must set performance targets and report on their progress toward those targets (Kravchuk and Schack 1996). Failure to meet these targets can have budgetary implications. The federal government also plans for contingencies and emergencies (Radin 2000). For example, the Disaster Relief Fund provides resources to respond to natural emergencies.
The budgeting process itself is reasonably transparent. The president is required by statute to present a budget to Congress. This budget outlines the president’s key spending priorities, but the budget document is more of a bargaining chip than a fully accepted fiscal plan (Joyce 1996). Following the president’s proposal are weeks of negotiations between the White House, congressional leaders and ordinary members of Congress. The Congressional Budget and Impoundment Act of 1974 sets out a formalized process for budgeting in Congress, but Congress usually misses its own internal deadlines (Hogan 1985).
Members often complain that the final results of negotiations are presented to them at the last minute, requiring them to vote on complex and important budget documents without nearly enough time for proper scrutiny (Schick 1975).
The existence of fiscal rules has a limited effect on curtailing debt and, in many ways, generates more harm than good (Wray and Nersisyan 2022). The Unite States has a statutory debt ceiling, a limit set by Congress on how high the national debt can reach (Kowalcky and LeLoup 1993). If the national debt approaches this limit, Congress must either raise the ceiling, increase public revenues, cut spending, or default. This leads to regular conflicts over the debt ceiling, which become entangled in other policy and partisan debates (Buchanan and Dorf 2013). Thus, the effectiveness of fiscal rules ultimately depends on the norms and political culture surrounding them, as well as the prevailing economic conditions. Because of massive partisan polarization, budget negotiations have become much more problematic in Congress, leading to a 23-day government shutdown during the Trump administration.
Citations:
L. Randall Wray and Yeva Nersisyan. 2022. “Does the National Debt Matter?” In Debating Modern Monetary Theory, eds. C. Lapavitsas and R. Rowthorn. Routledge.
Linda Kowalcky and Lance LeLoup. 1993. “Congress and the Politics of Statutory Debt Limitation.” Public Administration Review.
Neil Buchanan and Michael Dorf. 2013. “Bargaining in the Shadow of the Debt Ceiling.” Columbia Law Review.
Joseph Hogan. 1985. “Ten Years After: The Congressional Impoundment and Budget Act of 1974.” Public Administration.
Schick, Allen. 1975. “The Battle of the Budget.” Proceedings of the Academy of Political Science.
Philip Joyce. 1996. “Congressional Budget Reform: The Unanticipated Implications for Federal Policy Making.” Public Administration Review.
Robert Kravchuk and Ronald Schack. 1996. “Designing Effective Performance-Measurement Systems under the Government Performance and Results Act of 1993.” Public Administration Review.
Beryl Radin. 2000. “The Government Performance and Results Act and the Tradition of Federal Management Reform: Square Pegs in Round Holes?” Journal of Public Administration and Research Theory.
Allen Schick. 2007. The Federal Budget: Politics, Policy, and Process. Washington, D.C.: Brookings Institution Press.
Graph View
How committed is the government to utilizing research and innovation as drivers for the transition to a sustainable economy and society?
10
9
9
The government is clearly committed to utilizing research and innovation as drivers for the transition to a sustainable economy and society.
8
7
6
7
6
The government is largely committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
5
4
3
4
3
The government is somewhat committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
2
1
1
The government is not at all committed to utilizing research and innovation as drivers for the transition toward a sustainable economy and society.
The federal government’s commitment to using research and innovation as drivers for transitioning to a sustainable economy and society largely depends on the partisan affiliation of the administration in the White House (Karol 2019). Broadly speaking, Democrats support a transition to sustainability, whereas Republicans often question the need for or importance of such a transition (Gustafson et al. 2019).
Nonetheless, some core institutional features drive this transition through R&D (Brown and Hess 2016). The Advanced Research Projects Agency-Energy (ARPA-E) funds clean energy research, including projects that might appear somewhat speculative or high risk and, therefore, less likely to attract private capital (Wurzelmann 2012). The Department of Energy (DOE), the National Institutes for Health (NIH), the National Oceanic and Atmospheric Administration (NOAA), the National Aeronautics and Space Administration (NASA), the National Institute of Standards and Technology, and the National Science Foundation (NSF) are agencies that play a significant role in funding research and development projects.
The federal government has a National Innovation and Entrepreneurship Strategy and a variety of programs to support innovation. The Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (SBTT) programs provide funding to small businesses, including startups, to conduct research and development with potential for future commercialization (Qian and Hayes 2014).
The frequency of monitoring research and innovation outcomes depends on the nature of the research, the agency involved, and the specific objectives of the program. Typically, grant recipients are required to monitor progress and report on outcomes. The agency usually conducts its own evaluations and analyses, producing reports on how goals were or were not met and where improvements can be made for the future. Most of these reports are publicly available.
Citations:
Haifen Qian, and Kingsley Haynes. 2013. “Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy.” Journal of Technology Transfer.
Sam Wurzelmann. 2012. “Advanced Research Projects Agency Energy (APRA-E): Innovation through the US Department of Energy.” Center for Climate and Energy Solutions.
Abel Gustafson et al. 2019. “The Development of Partisan Polarization over the Green New Deal.” Nature.
David Karol. 2019. Red, Green, and Blue: The Partisan Divide over Environmental Issues. Cambridge: Cambridge University Press.
Kate Brown and David Hess. 2016. “Pathways to Policy: Partisanship and Bipartisanship in Renewable Energy Legislation.” Environmental Politics.
Nonetheless, some core institutional features drive this transition through R&D (Brown and Hess 2016). The Advanced Research Projects Agency-Energy (ARPA-E) funds clean energy research, including projects that might appear somewhat speculative or high risk and, therefore, less likely to attract private capital (Wurzelmann 2012). The Department of Energy (DOE), the National Institutes for Health (NIH), the National Oceanic and Atmospheric Administration (NOAA), the National Aeronautics and Space Administration (NASA), the National Institute of Standards and Technology, and the National Science Foundation (NSF) are agencies that play a significant role in funding research and development projects.
The federal government has a National Innovation and Entrepreneurship Strategy and a variety of programs to support innovation. The Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (SBTT) programs provide funding to small businesses, including startups, to conduct research and development with potential for future commercialization (Qian and Hayes 2014).
The frequency of monitoring research and innovation outcomes depends on the nature of the research, the agency involved, and the specific objectives of the program. Typically, grant recipients are required to monitor progress and report on outcomes. The agency usually conducts its own evaluations and analyses, producing reports on how goals were or were not met and where improvements can be made for the future. Most of these reports are publicly available.
Citations:
Haifen Qian, and Kingsley Haynes. 2013. “Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy.” Journal of Technology Transfer.
Sam Wurzelmann. 2012. “Advanced Research Projects Agency Energy (APRA-E): Innovation through the US Department of Energy.” Center for Climate and Energy Solutions.
Abel Gustafson et al. 2019. “The Development of Partisan Polarization over the Green New Deal.” Nature.
David Karol. 2019. Red, Green, and Blue: The Partisan Divide over Environmental Issues. Cambridge: Cambridge University Press.
Kate Brown and David Hess. 2016. “Pathways to Policy: Partisanship and Bipartisanship in Renewable Energy Legislation.” Environmental Politics.
Graph View
How committed and credible is the government in its activities to guide the effective regulation and supervision of the international financial architecture?
10
9
9
The government is clearly committed to ensuring the stability of the global financial system.
8
7
6
7
6
The government is largely committed to ensuring the stability of the global financial system.
5
4
3
4
3
The government is somewhat committed to ensuring the stability of the global financial system.
2
1
1
The government is not at all committed to ensuring the stability of the global financial system.
The United States plays a vital role in regulating and supervising the international financial architecture. As the major funder of international financial institutions such as the International Monetary Fund (IMF) and the World Bank, the United States has significant influence. The United States also plays an active role in international forums such as the G7, G20, the Financial Stability Board (FSB), and the Basel Committee on Bank Supervision. Through the Basel Committee, the United States participated in developing Basel III, an international regulatory framework that aims to strengthen bank capital requirements and enhance the resilience of the global banking system.
Domestic legislation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2009, following the 2007 – 2008 financial crisis, aims to regulate the financial sector, with the United States being the central global player. Dodd-Frank created the Financial Stability Oversight Council (FSOC), which monitors and addresses systemic risks in global finance. It brings together key regulatory agencies to identify and respond to emerging threats to financial stability.
Domestic agencies play a vital role in fostering the stabilization, regulation, and supervision of the international financial architecture. The Federal Reserve, the world’s most important central bank, conducts stress tests on major banks to assess their ability to withstand adverse economic conditions.
Dodd-Frank also established the Consumer Financial Protection Bureau, which has worked to mitigate some of the most problematic aspects of the casino banking sector, aiming to prevent abusive financial practices.
President Joe Biden has taken active steps on the world stage to coordinate responses to unregulated finance and create a more humane financial architecture. He has supported a global minimum corporate tax rate and attempted to crack down on international tax havens. However, Biden’s home state, Delaware, has historically acted as a tax refuge within the United States, so his senatorial career was not particularly proactive in this regard.
Domestic legislation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2009, following the 2007 – 2008 financial crisis, aims to regulate the financial sector, with the United States being the central global player. Dodd-Frank created the Financial Stability Oversight Council (FSOC), which monitors and addresses systemic risks in global finance. It brings together key regulatory agencies to identify and respond to emerging threats to financial stability.
Domestic agencies play a vital role in fostering the stabilization, regulation, and supervision of the international financial architecture. The Federal Reserve, the world’s most important central bank, conducts stress tests on major banks to assess their ability to withstand adverse economic conditions.
Dodd-Frank also established the Consumer Financial Protection Bureau, which has worked to mitigate some of the most problematic aspects of the casino banking sector, aiming to prevent abusive financial practices.
President Joe Biden has taken active steps on the world stage to coordinate responses to unregulated finance and create a more humane financial architecture. He has supported a global minimum corporate tax rate and attempted to crack down on international tax havens. However, Biden’s home state, Delaware, has historically acted as a tax refuge within the United States, so his senatorial career was not particularly proactive in this regard.