Reform & Fiscal Responsibility News

President Obama’s Record, Results and Agenda on Income Inequality

“This is a make-or-break moment for the middle class, and for all those who are fighting to get into the middle class. Because what’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement.” -- Remarks by the President on the Economy in Osawatomie, Kansas, December 6, 2011

The President has been focused on working to ensure an America that grows together, rather than one in which the gains go disproportionately to the wealthy. His policies have already made a real contribution to achieving this ideal—benefiting millions of people, principally middle-class Americans and those struggling to get into the middle class—and he continues to push tirelessly for policies, including the Buffett Rule, that will help us get closer.

The best available data on incomes refute the baseless claim recently made by some that income inequality is worse under President Obama than it was under President George W. Bush. More fundamentally, whereas the previous Administration’s policies were tilted towards the wealthiest Americans, President Obama has been focused on the middle class and those working to get into the middle class.

Inequality Was Worse Under President Bush than Under President Obama

According to the latest data from economist Emmanuel Saez, when the last economic expansion ended in 2007, the fraction of income going to the top 1 percent was the highest since 1928 and the fraction of income going to the top 0.1 percent was the highest ever recorded (the data go back to 1913). The share of income going to the very top remains high, but has come down and was lower in both 2009 and 2010 than in any year from 2005 through 2008.

It is difficult to evaluate changes in inequality over very short periods of time, especially when these coincide with a deep recession and dramatic fluctuations in equity prices. But there is no basis in the data for claiming that inequality under President Obama is greater than the historic levels reached under President Bush. Any suggestion to the contrary is based on a combination of ignoring the most obvious facts and treating the dramatic recovery of the stock market in 2009 and 2010 as if it tells a deeper structural story about the economy.

Business Leaders Respond to President Obama's Executive Order on Infrastructure Permitting

Last week, President Obama signed an Executive Order directing Federal agencies to expedite permitting and review decisions for key infrastructure projects – a critical step in improving our nation’s infrastructure and maintaining our competitive edge. U.S. business leaders and members of the President’s Council on Jobs and Competitiveness put out statements in support of the new Executive Order:

NextEra Energy, Inc., Chairman and CEO Lew Hay issued the following statement on the "Executive Order on Improving Performance of Federal Permitting and Review of Infrastructure Projects" :

"America's infrastructure requires continued investment by the private sector and by many government agencies to enhance our global competitiveness and to ensure greater opportunity for the next generation of American entrepreneurs. Such investments in infrastructure, including clean and efficient power generation, are rightly subject to numerous federal regulations to protect the environment, to enhance the health and safety of the American people, to ensure transparency and accountability, and to serve the public interest. Yet the sum total of these regulations, combined with those of states and other jurisdictions, often delay the completion of needed infrastructure projects, or discourage investment in them in the first place. 

"President Obama's Executive Order will help reduce regulatory burdens on private and public infrastructure investment in a thoughtful and transparent manner. By encouraging concurrent reviews, avoiding duplicative requirements, and by expediting early engagement with all potential stakeholders, the President's new Steering Committee has the potential to greatly reduce regulatory uncertainty across the nation. 

Smarter Regulation: New Guidance on Reducing Cumulative Burdens

Ed note: This post originally appeared on the OMB blog

The Obama Administration has adopted a number of initiatives to promote smart, cost-justified regulation. On January 18, 2011, the President ordered an unprecedented government-review of existing rules. After a period of public comment, over two dozen agencies released ambitious reform plans, outlining hundreds of cost-saving reforms. A small fraction of those reforms, already finalized or formally proposed to the public, will save more than $10 billion over the next five years.

As the plans are implemented, far higher savings are anticipated. Just today, the Federal Register has on display a final rule from the Department of Labor that will bring our warning labels for hazardous chemicals in line with those of other nations. This rule will save employers a lot of money on training and updating of materials; improve safety and health protections for American workers; and reduce trade barriers for chemical manufacturers that sell their products abroad. The overall five-year savings will be in excess of $2.5 billion, most of it in the form of savings for employers. (Stay tuned; significant announcements from other agencies are expected in the near future.)

Today, we are taking another major step toward improving our regulatory system and eliminating unjustified costs. In some cases, the addition of new rules and requirements has unfortunate cumulative effects. Taken in isolation, a new rule may seem perfectly sensible, but it may overlap with existing requirements. The sheer accumulation of regulations can cause real harm, especially for small businesses and startups. As the President said last January, agencies must take into account “the costs of cumulative regulations.”

New Computer Contract Expected to Save Taxpayers $20-25M

Ed. note: This was originally posted on The Commerce Blog

As President Obama said when he launched the Campaign to Cut Waste in June 2011, “No amount of waste is acceptable, not when it’s your money. Just as families are living within their means, government should, too, so we can invest in the things that we know will create good jobs and grow the economy.” As part of those ongoing efforts to make government more accountable to the American people and cut wasteful spending, I am happy to report today that the Commerce Department has awarded a contract for computers that is expected to save taxpayers $20-25 million over the next five years.

Through the contract with Intelligent Decisions Inc., we will reduce our cost for desktops and laptops by 40 percent. The contract leverages the large volume of computers that Commerce purchases each year and standardizes specifications to achieve significant cost reductions. Making wise spending decisions like this will enable Commerce to focus resources on its primary mission, which is supporting innovation, helping American businesses create jobs, and driving U.S. competitiveness around the world.

Intelligent Decisions Inc., is a small business reseller offering products manufactured by Dell Inc. By awarding this contract to a small business, the Commerce Department will increase its small business participation for computer purchases by over thirty percent. Intelligent Decisions Inc.  will be providing valuable services to Commerce, including helping to better monitor its inventory of computers, improving delivery time, and loading custom images onto computers. Through the new contract, Commerce will be able to do the following:

• Reduce the thousands of employee hours required to award hundreds of separate contracts for computers;
• Reduce IT complexity and longer term support and maintenance costs by standardizing PC specifications across the Department; and
• Streamline the computer ordering process.

Regulatory Reform Progress

To promote economic growth and job creation, we need cost-justified, evidence-based regulation. Which is why, almost exactly a year ago, President Obama issued an Executive Order calling for a government-wide review of regulations to reduce costs, to eliminate unnecessary burdens, and to get rid of what the President has called “absurd and unnecessary paperwork requirements that waste time and money.”  Twenty-six executive agencies produced final plans, spanning over 800 pages and offering more than 500 proposals. Sixteen independent agencies followed suit, responding to a historic request from the President to eliminate unjustified costs on their own.

And today, agency updates on regulatory reform progress can be found here.

Super Duper Space Toolbox

President Barack Obama talks with Matthew Ritsko, the winner of the 2011 Presidential Securing Americans' Value and Efficiency (SAVE) award, in the Oval Office, Jan. 9, 2012. Ritsko, a financial manager at NASA's Goddard Space Flight Center, proposed the space agency create a "lending library" where specialized space tools and hardware purchased by one NASA organization will be made available to other NASA programs and projects. (Official White House Photo by Pete Souza)

From the start of the Administration, President Obama has been committed to delivering the American people an efficient, effective government that cuts waste and uses taxpayer dollars wisely. Recognizing that frontline federal workers know best where the waste is, he has made federal employees an essential partner in that effort. 

In 2009, the President launched the SAVE Award – an annual contest to enlist frontline Federal workers in the effort to cut waste and make government work better for the American people. This year, we received nearly 20,000 entries, and 48,000 votes were cast rating the ideas. Last November, the American people then voted on a final four of the best ideas, and the winner was Matthew Ritsko of Crofton, Maryland. Today, Matthew came to the Oval Office to discuss his idea with the President.

By the Numbers: 1.4 Billion

As part of the Obama Administration’s Campaign to Cut Waste, Vice President Biden today announced the U.S. Mint would suspend the production of Presidential dollar coins for circulation. Today, nearly 1.4 billion surplus dollar coins are sitting in Federal Reserve vaults due to lack of demand for the coins.

No longer making $1 coins for circulation will save taxpayers at least $50 million per year in production and storage costs. Rather than producing the 1.6 billion additional dollar coins it was on pace to produce through 2016, the Mint will only make enough coins to sell to the collectors who want them. The existing inventory of coins will be used to meet regular circulating demand, and will be drawn down over time.

Today’s announcement took place at a Cabinet meeting about the President’s commitment to cut waste and eliminate misspent dollars across the Federal Government.  At the meeting, Vice President Biden also announced that the Department of Justice had recovered more than $5.6 billion in fraud across the government in 2011, as well as steps the Department of Health and Human Services is taking to prevent Medicare prescription drug fraud.

By the Numbers: 782 Percent

Enlisted service members are often lured into easy credit offers. Installment loan companies often have offices near military bases and market their loans online exclusively to the military. The Department of Defense found that many of these installment lenders don't disclose the cost of the loans they offer and service members sometimes pay annual rates as high as 782 percent for two-week installment loans.

According to the Department of Defense, nearly 50 percent of enlisted service members are under the age of 25. They often lack experience in managing finances and a cushion of savings to help them through emergencies, making it more likely they might turn to a high-interest loan.  Even older military members often move to new locations where they may be unfamiliar with local financial institutions and susceptible to deceptive marketing practices.

To protect all consumers, including service members, from these types of unscrupulous financial practices, the Consumer Financial Protection Bureau was established as part of the Wall Street Reform and Consumer Protection Act that President Obama signed into law last June. President Obama has nominated Richard Cordray as Director of the Bureau, and Cordray’s confirmation by the Senate will allow CFPB to establish robust federal supervision over financial service providers such as high cost lenders and debt collectors that have never been regulated before, as well as banks and credit unions. CFPB will be able to combat practices by these financial institutions and others that harm consumers, helping our service members to avoid hidden fees and keep more money in their wallets.

Although the Senate blocked an attempt to vote on Cordray’s nomination today, President Obama vowed not to back down from ensuring consumers--and particularly our service members--are fully protected from unfair, abusive, or deceptive practices by financial services providers. 

From the Archives: What Wall Street Reform Means for You

President Obama signed the Wall Street Reform and Consumer Protection Act last June to prevent another financial crisis like the one in 2008 that erased trillions of dollars of household debt, left millions of Americans without jobs, and collapsed some of nation’s biggest financial institutions as well as our housing market.

The financial crisis was the result of a fundamental failure from Wall Street to Washington. Wall Street took irresponsible risks that they didn’t fully understand and Washington didn’t have the authority to properly monitor or constrain risk-taking at the largest firms. When the crisis hit, the government didn’t have the tools to break apart or wind down a failing financial firm without putting the American taxpayer and the entire financial system at risk.

The Wall Street Reform Act changed that. It established the Consumer Financial Protection Bureau to oversee and regulate banks and a whole range of financial industries--including some that had never been regulated before like payday lenders, private mortgage brokers, and debt collectors--to ensure we have the tools to avoid another crisis. And CFPB is the first-ever government agency charged with protecting and empowering American consumers-- the people who keep their money in banks, pay for goods and services with their credit cards, and rely on mortgages to buy homes or pay for college.

Unfortunately, the Senate is blocking the confirmation of the Richard Cordray, who President Obama has appointed to lead the Consumer Financial Protection Bureau. Without a Director in place, the Bureau's abilities to protect Americans from unfair, abusive, and deceptive practices at the hands of the financial industry are hamstrung, and our economy remains at risk.