Economic Report
of the President
Transmitted to the Congress
February 1996
TOGETHER WITH
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996
For sale by the U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
ISBN 0-16-048501-0
C O N T E N T S
Page
ECONOMIC REPORT OF THE PRESIDENT .........................
1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*.
7
CHAPTER 1. ECONOMIC POLICY FOR THE 21ST CENTURY ..........
19
CHAPTER 2. MACROECONOMIC POLICY AND PERFORMANCE ......
41
CHAPTER 3. MAKING FISCAL POLICY CHOICES WITHIN AND
ACROSS GENERATIONS.
75
CHAPTER 4. DEVOLUTION ............................................................
107
CHAPTER 5. ECONOMIC EFFICIENCY AND REGULATORY RE-
FORM.
131
CHAPTER 6. PROMOTING COMPETITION IN TRADITIONALLY
REGULATED INDUSTRIES.
155
CHAPTER 7. INVESTING IN EDUCATION AND TRAINING ..............
191
CHAPTER 8. THE UNITED STATES IN THE WORLD ECONOMY .....
225
APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1995.
261
APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EM-
PLOYMENT, AND PRODUCTION.
273
* For a detailed table of contents of the Council’s Report, see page 13.
(iii)
ECONOMIC REPORT
OF THE PRESIDENT
3
ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:
FIFTY YEARS AGO, the CONGRESS passed and President Tru-
man signed the Employment Act of 1946, which committed the
U.S. Government to promote policies designed to create employ-
ment opportunities for all Americans. I am proud that my Adminis-
tration has made President Truman’s commitment a reality. Over
the past 3 years, we have created a sound economic foundation to
face the challenges of the 21st century.
Strong Economic Performance
Overall, the American economy is healthy and strong. In the first
3 years of this Administration nearly 8 million jobs were created,
93 percent of them in the private sector. The so-called ‘‘misery
index’’—the