Economic Issues - United States Policy on Economic Issues: a Dossier
What is a Dossier?Via the dossiers, we try to highlight the priorities of the US Government with regard to specific foreign policy policy issues. We provide statements by U.S. public officials, but also reports, hearings, and journal articles.
[...] Financial firms, markets, and transactions are more interconnected than ever before, and the breadth and depth of these linkages require us to coordinate across borders. Without internationally consistent standards, large financial firms will tend to move their activities to jurisdictions where standards are looser and expectations of government support are stronger. This can intensify risk throughout the system. Financial reform will not be complete until we achieve a level playing field with high-quality standards across the world's major financial centers covering the most globally mobile activities, such as capital and derivatives. That's why the recent Basel agreement to strengthen the quality and consistency of bank capital is so important. The new rules will increase the proportion of capital that must be in the form of common equity--the form that can best absorb losses--and will restrict forms, such as deferred tax assets, which have little value during a crisis. Banks will be required to hold more capital against the risky products and activities that caused such damage two years ago. In addition, the Basel Committee agreed to apply a leverage ratio to banks. Excessive leverage, even in seemingly safe investments, carries substantial risk. And the Basel Committee will impose minimum liquidity requirements to help banks weather unexpected funding shocks. The new Basel III requirements will be a bedrock of the new, more resilient global financial system, and as Secretary Geithner said last week, America will deliver on its commitment to implement Basel III. (Under Secretary for International Affairs Lael Brainard, September 2010)
Major US Government Statements
A select list of major statements with policy value.
Latest US Government Statements
The most recent statements in reverse chronological order.
-05/10/12 Foreign Direct Investment in the United States: An Economic Analysis [255 Kb] Source: CRS Report for Congress. Foreign direct investment in the United States declined sharply after 2000, when a record $300 billion was invested in U.S. businesses and real estate. (Note: The United States defines foreign direct investment as the ownership or control, directly or indirectly, by one foreign person [individual, branch, partnership, association, government, etc.] of 10% or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise. 15 CFR §806.15 [a].) In 2010, according to U.S. Department of Commerce data, foreigners invested $236 billion in U.S. businesses and real estate. Foreign direct investments are highly sought after by many state and local governments that are struggling to create additional jobs in their localities. While some in Congress encourage such investment to offset the perceived negative economic effects of U.S. firms investing abroad, others are concerned about foreign acquisitions of U.S. firms that are considered essential to U.S. national and economic security.
-05/10/12 Immigration-Related Worksite Enforcement: Performance Measures [294 Kb] Source: CRS Report for Congress.
-05/10/12 Job Growth During the Recovery [293 Kb] Source: CRS Report for Congress.
Fact Sheet: Administration Support For Insourcing and Increasing Investment in the United States. Source: White House, January 2012.
Report: Investing in America: Building an Economy That Lasts. Source: White House, January 2012.
-07/01/11 The Debt Limit: History and Recent Increases Source: CRS Report for Congress.
-07/01/11 Job Creation in the Manufacturing Revival Source: CRS Report for Congress.
U.S. INBOUND FOREIGN DIRECT INVESTMENT. Source: Council of Economic Advisers, June 2011.
-04/29/11 Reducing the Budget Deficit: The President's Fiscal Commission and Other Initiatives Source: CRS Report for Congress.
-04/07/11 Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy Source: CRS Report for Congress.
- 11/25/2009: The Global Financial Crisis: Analysis and Policy Implications Source: CRS
- 10/02/2009: The Global Financial Crisis: Analysis and Policy Implications Source: CRS
- June 2009: White Paper: Financial Regulatory Reform
- 08/21/2009: The Global Financial Crisis: Analysis and Policy ImplicationsSource: CRS
- 08/25/2009: Financial Market Supervision: European PerspectivesSource: CRS
- 07/13/2009: Hedge Fund: Should they be regulated?Source: CRS
- 06/05/09 The Global Financial Crisis: Increasing IMF Resources and the Role of Congress Source: CRS report for Congress
- 04/07/09 The Global Financial Crisis: Foreign and Trade Policy EffectsSource: CRS
Greece's Debt Crisis: A National Tragedy of European Proportions. Nikolaos Zahariadis, Mediterranean Quarterly, Fall 2010, pp. 38-54. On 3 September 2009, Greek prime minister Constantine Karamanlis called for a snap election halfway into his second term. Despite widespread outcry from his own party and opinion polls that predicted a loss, he insisted this was best for the country. It was certainly best for him, for the victorious socialists under George Papandreou announced three weeks after their victory on 4 October 2009 that the government’s budget deficit would hit 12.5 percent — twice as high as previous estimates. Not long thereafter, the country teetered on the brink of bankruptcy, crushed by high borrowing costs. Although initially remote, the prospect of national default became the only way out of the crisis. What happened? Is it the result of national failure or the outcome of a flawed European Monetary Union (EMU)? READ MORE
The Rise of the New Global Elite. Chrystia Freeland, The Atlantic, Jan/Feb 2011, var. pages. "The changing economy has created a new class of business megastars. Super-rich and often self-made, they tend to be ambivalent about the rest of us, and they increasingly form a nation unto themselves." READ MORE
Making Transatlantic Economic Relations Work. Henning Meyer and Stephen Barber, Global Policy, January 2011, pp. 106-111. Relative to security issues, Transatlantic Economic Relations (TER) has been neglected by politicians and underexplored by academics and yet is of increasing importance. This article argues that TER is characterised by the mutual dysfunctionality of the political agenda and its institutional structure. The traditional narrow agenda, which has focused almost exclusively on reducing non-tariff trade barriers, is a principal reason for this. This article uses the case of industrial and labour relations to demonstrate that greater engagement with major stakeholders and broadening the political agenda are key to breaking the deadlock. The article also argues for institutional innovations that could in principle be transferred to other neglected policy areas of TER. READ MORE
Out of Balance: The Fragile World Economy. Stephen Fidler and Alexander Nicoll, Survival, December-Janaury 2010, pp. 89-106. The world's economic system is in transition as governments try to manage the tensions generated by the financial crisis that began in September 2008. While the crisis has had financial, economic and political consequences, a further set of effects could be termed geopolitical and geo-economic: broadly, the impact on the way that countries relate to each other politically and economically. It had been clear well before the crisis that emerging economies, and particularly China, were playing a more important role in world affairs. However, the crisis accelerated that process and helped create a more fluid situation in international affairs, in which the instincts of governments are more towards national responses, and established global institutions and regional organisations are no longer seen as the automatic port in a storm, or as the only route to international solutions. Two years after the 2008 crisis, the state of apparent flux in international economic relations could be but an interlude before harsher realities once again force further international coordination and create pressures for a new global compact to be forged. READ MORE
How Do Rising Powers Rise? Andrew F. Hart and Bruce D. Jones, Survival, December-January 2010, pp. 63-88. The idea that a single group of emerging powers, principally the BRIC states, are reshaping global politics is now prevalent. However, the basis of their newfound power is not well understood. Their influence is primarily a function of their regional clout, and their outsized weight in multilateral institutions; but also because the goals of US policy frequently play to emerging-power advantages. Investigation of how the emerging powers are choosing to wield this influence in the economic, financial, and security realms finds that, although they have some blocking power, the most prevalent strategies thus far have been to bargain hard to protect their own interests and national space, and to balance the growing influence of their BRIC counterparts. READ MORE
International financial regulation after the crisis. Barry Eichengreen, Daedalus, Fall 2010, var. pp. [...] cooperation could create a viable alternative to the uncontrolled bankruptcy of troubled financial institutions on the one hand and emergency rescues on the other. To the extent that a rescue is financed by taxpayer money, present or future, it is rightly seen as unfair. [...] because banks know they will receive assistance in the event that the bets they make go bad, they have an incentive to place bigger and riskier bets. READ MORE
How to Reform the IMF. Randall W. Stone, Current History, November 2010, pp. 342-348. International governance—the broad set of rules, international organizations, and informal understandings that facilitate cooperation among states in the contemporary world—has reached a decisive moment. The world’s essentially liberal international institutions, participatory but US-led, expanded rapidly after the end of the cold war. Now they face new challenges, as they will be forced to adapt to dramatic economic growth in emerging markets in Asia and Latin America. Under particularly heavy challenge is the role that the United States plays in international financial institutions, most notably the International Monetary Fund (IMF) and the World Bank, where America has traditionally exerted a degree of informal influence out of proportion to its formal voting rights. READ MORE
The Global Budget Race. Douglas J. Besharov, Douglas M. Call, The Wilson Quarterly, Autumn 2010, var. pp. Like many other countries, the United States is buried under a pile of mounting debt. Tunneling out will mean making some tough choices that can’t be put off much longer. News stories regularly remind us that most national governments in the developed world are essentially insolvent. The United States has one of the worst balance sheets, with a projected debt in 2050 of $123 trillion. Of course, what can’t happen won’t happen, as economist Herbert Stein taught us. Long before that point, most countries will get their finances in order—either after a careful analysis of the alternatives or because they will be unable to borrow money and will be forced to take corrective action. How capably they respond will determine their future economic competitiveness and their standard of living. Those countries that do a better job of bringing revenues and spending into balance—in a way that fosters a healthy and productive citizenry—will have a competitive advantage in the global economy, and they may be able to avoid economic decline. READ MORE