Message to Congress Transmitting the Economic Report of the President

To the Congress of the United States:

In the past year, I have taken several major steps to implement an economic agenda that champions prosperity and success for the American people. This began with two crucial pro-growth policies: massive tax cuts and sweeping regulatory reform. These historic accomplishments, and many other achievements in our first year, have restored confidence within our families and businesses that the United States is, and always will be, the greatest place on Earth to pursue opportunity. I am proud to present the economic agenda my Administration has designed and begun implementing to enable every American to build a bright future—to achieve the American Dream.

The American people have long been awaiting an effective pro-growth agenda that inspires robust economic activity, spurs innovation, creates jobs, and improves families' financial security. The Federal Government's economic policy in recent decades, however, has been a story of one broken promise after another.

For too long, leaders have promised growth, but done little to change policies that drove business away and pushed our factories and jobs offshore. They promised prosperity, but layered on regulatory red tape that hurt workers and businesses in the struggle to keep up with the ever-increasing cost of complying with new rules. They promised to empower American citizens with opportunities and resources for their future. Instead, they enabled a bloated bureaucracy, special interest groups, and unaccountable international institutions. Consequently, my Administration inherited an economy with relatively slow growth. The median American's real household income from working had dropped lower than it was a decade ago. And the previous Administration's forecasts suggested that this would never get better.

My Administration's pro-growth policy agenda is reversing these trends and ending the disappointments of the past. No longer will we perpetuate the illusion that policies that encourage economic growth, job creation, and wage growth are out of our reach. No longer will we turn a blind eye to the regions of our country that have suffered from politicians' failed programs and misplaced priorities. No longer will we tolerate unfair and nonreciprocal trade practices that impoverish our workers. And no longer will we tolerate burdensome, backward, or perverse economic policies that guarantee bleak outcomes for our citizens.

Policies for a Pro-Growth Agenda

The primary components driving my Administration's pro-growth policy agenda—tax cuts, tax reform, and smart deregulation—have inspired enormous confidence in the economy and optimism that it will continue thriving.

We approached tax reform with the following principles: Our corporate tax system was uncompetitive with the rest of the world; the American middle class deserved a fairer, simpler tax code that lowered rates, exempted more income from taxation altogether, and limited costly deductions favoring special interests; and a smarter tax system would encourage business expansion, job creation, and wage growth.

On December 22, 2017, I signed into law the Tax Cuts and Jobs Act of 2017. My Administration worked closely with Congress to pass this historic bill, which brings much-needed tax relief to the middle class and to small businesses. For too long, our tax policy squeezed families and small businesses with unfairly high tax burdens. Our backward tax code drove companies, jobs, and profits abroad. Our corporate tax rate was 60 percent higher than that of our average economic competitor—it was the highest in the developed world. This came at a huge cost to our citizens: the median American's real household income collapsed at the beginning of this century, and it took 15 years to recover the losses.

The Report that follows shows that the corporate tax changes alone are expected to increase annual income for families by an average of $4,000. Americans at all income levels will receive a tax cut. The standard deduction nearly doubles, and the child tax credit fully doubles. Bringing down the business tax rate from 35 to 21 percent, and allowing firms to fully expense their investments in equipment and intellectual property, is encouraging robust economic activity by making America a more competitive place to do business. Other changes to the tax code are encouraging companies to bring back to America the nearly $3 trillion in wealth that they have parked overseas.

The enactment of the Tax Cuts and Jobs Act has inspired businesses to express their confidence in the economy even before the new law's complete implementation unleashes its full, tangible benefits, which include larger paychecks, greater profits, and lower tax burdens. My Administration has kept its commitment to making smarter, pro-growth economic policy, sending the crucial signal to businesses that America is once again the most promising place in the world to build, invest, create, expand, and hire. In response to our historic changes to the tax code, over 350 companies have, to date, announced billions in new investments in plant and equipment in the United States, along with improvements to workers' compensation or benefits, including raising the minimum wage for their employees, increasing 401(k) contributions, and giving bonuses. These improvements will affect more than 4.1 million employees.

As we knew when we set out to reform taxes and rein in the regulatory state, when America's enterprises are optimistic about where the economy is heading, they will expand their operations; invest more in plant and equipment, which raises workers' productivity; and, as a result, raise wages. We have recently seen capital spending again contribute to rising productivity, after holding productivity growth back under the previous Administration, and have also once again started to observe economic growth above the 3 percent level—which many claimed was impossible. The stock market reached record highs, creating trillions of dollars in wealth—reflecting consumers' and investors' confidence.

In addition to reforming tax policies that drove business away, my Administration began a Government-wide effort to eliminate costly, obsolete regulations soon after taking office. For too long, the regulatory state had grown at the expense of our economy and wages. It ballooned far beyond what is needed to protect citizens from harm. The effect of excessive regulation is well known: it functions as a tax, stunting economic growth and generally discouraging productive activity. This undermined the operation of our markets, increased costs for consumers, and empowered Washington bureaucrats over American consumers. To date, we have stopped the growth of the regulatory state in its tracks. In our first year, we adopted a miniscule fraction of the "economically significant" rules churned out by other Administrations. We exceeded our policy of striking two regulations for each one we create, eliminating 22 regulations for every 1 we have adopted. By creating fewer rules and reliably committing to eliminating the unnecessary old ones, we have signaled to firms that they can invest in growing their business. Business confidence has skyrocketed in response.

But the best is yet to come. As we continue to implement the new tax bill and cut regulatory red tape, the following priorities round out our pro-growth, America-first agenda.

Infrastructure and Energy

A modernized, safer transportation infrastructure is imperative for connecting our citizens to opportunities. Delayed projects, insufficient investment, traffic congestion, and wear and tear are slowing America down. My Administration is dedicated to generating $1.5 trillion in new infrastructure investment and shortening the approval process so projects may be permitted in under two years.

Renewing our infrastructure must prioritize accountability and enable greater State and local control. We are committed to reversing the legacy of prolonged deadlines and the wasted resources that befell infrastructure projects in the past and that has deprived Americans of the infrastructure they deserve. President Obama's stimulus package was intended to significantly increase investment in infrastructure, create jobs, and improve the economy; however, only 3.5 percent of the over-$800 billion plan went to constructing transportation infrastructure. Taxpayers felt severely misled. Bureaucracy created years-long delays to breaking ground on many projects. And millions of promised "shovel-ready" jobs never appeared.

The American people are tired of empty promises. They know this Nation is capable of doing so much better. They want accountability for promised projects and jobs. They want decisionmaking to be done at the State and local levels, where folks know what needs to be done and how to do it. My Administration will work with Congress to develop an infrastructure plan that enables sophisticated projects to be approved and finished promptly.

Advancing the capabilities of our infrastructure means more than just rebuilding roads and bridges. Americans rely on the Internet to work, learn, and connect with each other, and it must be modernized to suit their needs. In his 1994 Economic Report of the President, President Clinton promised to connect "every classroom, every library, and every hospital in America" to the Internet by 2000. Decades later, 39 percent of rural Americans still lack highspeed broadband. And a quarter of America's K-12 students lack adequate Internet connectivity at school. It is intolerable to continue pretending that this is the best America can offer to our students. My Administration is working to expand accessibility and expedite the process of bringing the Internet to hard-to-reach areas.

As we plan for a reinvigorated infrastructure, we must also plan for the future of American energy by renewing our commitment to energy dominance. This encompasses energy independence, which ensures energy security for American families and businesses for decades to come, and global energy leadership, which consolidates our role as a major influence in the international energy sphere.

The United States is the world leader in combined total production of oil and natural gas. Technological ingenuity has unleashed the American energy supply, and domestic energy production is increasing for both petroleum and natural gas. Capitalizing on and expanding our energy supply solidifies our position as a global energy leader, reduces our reliance on imported energy, and provides opportunities for job creation and economic growth. Our untapped oil and natural gas fields are crucial resources for solidifying our energy security and independence. Increasing energy supply will also reduce electricity costs, lowering utility bills for American households—particularly low-income families, which are disproportionately affected by high utility bills. Lower electricity costs can also reinvigorate American manufacturing and job growth by decreasing manufacturing costs for American-made products.

To further unleash America's energy potential, we must also reduce the excessive regulatory burden that inhibits production. Since I took office, my Administration has been working to remove these barriers, enabling the private sector to create more jobs; increase wages for its employees; produce clean, affordable energy to power our economy; and increase American energy exports. Steady and secure supplies of coal, liquefied natural gas, refined products, and crude oil enable the United States to maintain our energy leverage in the international sphere. With our plentiful supply, the United States can reduce other nations' reliance on exporters that use energy as a geopolitical weapon. Diversifying our energy sources and furthering research on next-generation energy technologies will enable our Nation's firms to provide cleaner, more efficient, and more affordable energy for American citizens.

Trade and the International Sphere

International trade offers an opportunity to grow the economy, but it must be pursued with American interests in mind. We cannot continue to pursue a global order that disregards America's prosperity and the well-being of our citizens. My Administration believes in the benefits of free trade, and it is committed to robust trade relationships with other nations that value fairness and reciprocity. Some of our trading partners, however, do not share these values, and this places unsustainable stress on global trade. As such, the United States can no longer reward governments that distort the free market with illegal subsidies or handcuff American exporters with high tariffs and nontariff barriers.We can no longer tolerate unfair trade practices, such as forced technology transfer and industrial espionage. And we can no longer tolerate complacency toward unfair and nonreciprocal trade that undermines America's potential.

Immediately after taking office, I began revising our Nation's trade policies to promote the interests of the American people. My Administration is in the process of improving the North American Free Trade Agreement and the Korea–United States Free Trade Agreement. In the coming year, we will also seek to negotiate new, better trade deals, and we will hold accountable any country that engages in unfair trade practices through tough and focused action.

With a tougher, smarter, and more clear-eyed agenda, we can rejuvenate our trade deals, boost our exports, and improve the economic prospects of our citizens and communities. By following through on this agenda, we will become a stronger and more secure Nation that can offer better opportunities to our people. For far too long, the United States put up with unfair trade policies that left our workers behind. Previous Administrations pursued unenforceable multilateral trade deals and let other countries get away with unfair practices. We will not perpetuate a trade agenda that exports our factories and jobs, weakens our manufacturing and defense industrial bases, and diminishes our economic and national security.

Innovation, Intellectual Property, and Cybersecurity

America has long been one of the most productive, innovative, and forwardthinking nations in the world. In recent decades, however, Government policy has not properly recognized the importance of innovation for growth and the value of America's distinct entrepreneurial spirit. Renewed commitment to enforcing our intellectual property rules encourages innovation by signaling that inventions will be rewarded and protected, and it enables the United States to maintain its long-standing advantages in science and technology. Protecting our evolving technologies and ideas from theft and forced technology transfers, to which American enterprises are increasingly subject abroad, is not only in America's economic interest—it conveys our great pride in the capabilities of America's innovators and the value of their ideas.

Protecting the results of American ingenuity—such as new technology, research findings, and other forms of innovation—is crucial to our future economic and wage growth. The IP Commission estimates that stolen intellectual property reduces GDP by 1 to 3 percent a year—an annual loss in the range of $185.7 billion to $557.1 billion. Given this threat to our economy, my Administration is partnering with the private sector to protect American technologies, intellectual property, and innovators. We are striving to ensure an economic climate that values innovation, encourages the private sector to invent, and enables the private sector to protect itself from all forms of industrial espionage, including cyber theft. And we will take action when necessary. As the threats to our economy have become more complex and widespread, it has become increasingly important to empower our companies and citizens with tools that help protect against cyberattacks, cyber theft, and other malicious activities that endanger our citizens' privacy, our national security, and our economic success.

Investing in the Future Americans Deserve

My Administration is proud of the economic success that the United States has achieved over the past year, and we are dedicated to sustaining this progress. We are working hard to reverse policies that drove many businesses to other countries, taking jobs with them. In 2017, our strengthened economy created 2.2 million jobs, and the unemployment rate was at its lowest level in seventeen years. Maximizing growth and opportunity, however, must include two key priorities that did not receive enough attention for a very long time: workforce enablement and support for distressed communities. We are dedicated to ending the low labor force participation rate inherited from the previous administration, and to uplifting our Nation's communities that have borne the highest costs of bad policies, in the forms of poverty, despair, and drug addiction.

Within the communities that suffered the most when businesses left is a silent Nation of Americans who have dropped out of the workforce. Although our overall low rates of unemployment are encouraging, the labor force participation rate for prime-age men is lower now than it was in every year between 1948 and the start of the Great Recession. This means that as bad policies ran their course, too many of our citizens lost hope, were discouraged by Government programs from working, or struggled to find opportunities and stopped looking. And while most of America is working and enjoying the benefits of our now-robust economy, we cannot forget that there are still millions of people who have been left behind. We are committed to addressing this deeply troubling situation by reversing the economic policies that disregarded so many of our citizens for so long and to creating new, focused remedies. My Administration's Rural Prosperity Task Force is working to solve problems such as disproportionately high rural poverty rates and inadequate broadband access. The Investing in Opportunity Act of the Tax Cuts and Jobs Act provides tax incentives to invest in low-income communities. Combined with our focus on job creation and workforce development, we are driving a renewed commitment to the communities in our Nation that have been neglected for far too long.

My Administration is not only concerned about the economic consequences of the dismal tax, trade, immigration, welfare, and regulatory policies of the past, which drove Americans from the labor force. We are also concerned that the low labor force participation rate excludes Americans from many other benefits of civil society.

To address this, we are committed to making it possible for all working-age, able-bodied Americans to contribute to our economy and society. Strengthening work requirements as a condition of welfare assistance will help more individuals experience the many benefits of work and vastly improve the financial situations of those receiving assistance. We are targeting for reform all Government programs that provide incentives to avoid work. Workforce development programs play a key role in helping individuals who are receiving assistance to find jobs and earn incomes that will enable them to move from dependency to self-sufficiency. For this reason, we are advancing programs that teach or update job skills, promote lifelong learning, offer training in trades, and better connect our industries with the future workforce. We are prioritizing greater availability of paid parental leave and affordable, high-quality childcare for the workforce in order to strengthen our families and enable more women to fully participate in the workforce. And we are committed to ensuring that America's elementary and secondary schools and institutions of higher education equip students with the skills they need to achieve lifelong success.

To boost our workforce and heal our society, we must also contend with crisis levels of drug abuse, addiction, and overdose. Drug overdose deaths numbered 63,632 in 2016. Partly because of this crisis, life expectancy in the U.S. dropped in 2015 and 2016—the first time it has fallen in consecutive years since 1963. Not only do drug addiction and overdoses take lives too soon; they leave traumatized family members and distraught communities in their wake. When we speak of investing in the future, those affected by addiction are some of our citizens who will need the most support.

To date, we have taken many measures to alleviate the opioid crisis. We are focused on addressing the vast, illicit supply of these drugs, particularly by investing in the infrastructure of interdiction. We are shoring up detection capabilities in international mail-processing centers, using fentanyl-detecting dogs and screening technologies, and attacking the light and dark webs where transnational criminal marketplaces operate. And we have increased funding and resources to the States to strengthen their responses to the opioid epidemic, including the creation of the State Targeted Response to the Opioid Crisis grant program. We have improved policies to make it easier to find and crack down on bad actors, to expand access to treatment for addicts, to invent new solutions for treating addiction, and to further develop nonaddictive pain management treatments through partnerships with innovative companies. We continue to prioritize solving this terrible crisis, alleviating the suffering it has caused, and preventing future anguish. As we discover the best ways to diminish drug abuse and addiction in our country, we must have an economy capable of giving opportunities to build a brighter future to the victims of the opioid crisis and similar kinds of adversity.

Fulfilling the promise of a brighter future must also include developing solutions to a concern shared by many Americans: the rising cost of healthcare. In the past, government attempts to improve healthcare gave rise to mandates, rules, and healthcare tax and spending programs that, perversely, increased what the average American family paid for healthcare. My Administration fought to repeal the individual mandate, no longer forcing the American people to buy the expensive plans that bureaucrats designed for them. My Administration is committed to providing Americans with more affordable health coverage options by promoting choice and competition in healthcare markets, and by addressing health behaviors that can promote a longer, healthier life—which insurance alone cannot do. Troubled by the growing unsustainability of the Federal-State Medicaid program, we are committed to improving the program for both its beneficiaries and the taxpayers who finance it.

We are also committed to preventing Government expansion from stifling innovation in the healthcare sector, and to preventing international freeriding that takes advantage of our pharmaceutical innovation. We are focused on correcting policies that hinder drug price competition, addressing a top concern of the American people: that they cannot afford the medications they need. We have made it a high priority to ensure that safe, generic alternatives to important drugs are approved on a faster timeline, making last year a record one for generic drug approvals.

Finally, my Administration has worked to counter the disappointing history of the services that have been provided to our veterans. We are pursuing stringent accountability within the Department of Veterans Affairs and seeking to provide much stronger support and opportunities to our veterans. The brave men and women who have served our Nation have made countless sacrifices. We owe them nothing less as they build their futures and plan for retirement.

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We have made great strides in our first year, and we remain committed to policies that grow our economy and improve each citizen's chance to succeed. My vision for this term is to increase American families' prosperity; to encourage job creation and wage growth by regaining a competitive business climate with smarter tax and trade policy, and also deregulation; to capitalize on our resources and technology to achieve energy dominance; to invest in infrastructure to make commerce more vibrant and connect citizens with opportunities; to encourage innovation as one of our most powerful national security and economic tools; and to enable our distressed communities to prosper by combating workforce development issues and the opioid crisis.

To achieve this vision, we will not rely on the belief that the Government knows best and can solve every problem. Instead, we will continue crafting an economic program that lays the groundwork for the conditions that will enable our citizens to achieve success and prosperity. We will continue to take pride in making policies that honor the dignity and ingenuity of the American people, and in dedicating our work to the welfare of each of our citizens.

From the outset, my Administration has valued nothing more highly than bringing freedom, prosperity, and opportunity to all American families. To that end, we are dedicated to empowering them with a robust economy. The economic agenda outlined here is designed to make it possible for the American people to dream of, and to achieve, the bright future they deserve.

DONALD J. TRUMP

The White House

February 2018