Introduction: Recent Growth Trends Economic growth (the percentage change in real gross domestic product [GDP]) is a core measure of economic progress and well-being. Over time, the rates of job growth and average income growth closely track economic growth. A notable feature of the current economic expansion, which started in June 2009 and is now the longest expansion on record, has been its relatively modest economic growth rate. Whereas growth has averaged 4.3% in the previous 10 economic expansions, it has averaged 2.3% in this expansion. Some analysts thought a turning point had been achieved when growth accelerated to 3.1% from the third quarter of 2017 through the third quarter of 2018. This was the second-fastest period of sustained growth achieved in this expansion, second only to the 3.8% growth achieved from the second quarter of 2014 through the second quarter of 2015. However, in both of those cases, growth slowed in the following quarters. It has averaged 2.1% over the next four quarters, from the fourth quarter of 2018 to the presentânearly identical to the growth rate in this expansion before the third quarter of 2017. Growth is volatile, difficult to measure, and revised several times after it is initially released. Nevertheless, the pace of activity appears to have noticeably slowed. Growth in three of the past four quarters was 2.1% or lower, and private forecasters expect this slower pace to continue in the fourth quarter of 2019 and through 2020. The slower growth has been widespread throughout the country. The only regions not affected by the slowdown were the Southwest, Rocky Mountains, and New England. Although economic growth has slowed recently, it has not been negative or close to zero in any quarter since the fourth quarter of 2015. (The lowest growth rate since then was 1.1% in the fourth quarter of 2018.) Thus, the recent story so far is one of a transition to a soft landing (a more moderate rate of growth), not a recession or cessation of growth. In fact, for reasons discussed in this report, it is more likely that the fast-growth period was the aberration. Economic growth is only one measure of economic performance, and not all measures move in lockstep over short periods of time. The recent slowdown in economic growth was much more pronounced than the slowdown in employment growthâmonthly job growth was only slightly lower (191,000) from October 2018 to November 2019 than from July 2017 to September 2018 (203,000). The average monthly job growth rate from October 2010 to the present has been 199,000. In other words, to date, the economic growth slowdown has not made employers significantly less willing to take on additional workers. Although it is not unusual for economic growth to rise and fall within an expansion, it is nevertheless potentially useful for Congress to consider the reasons why growth rose from the third quarter of 2017 through the third quarter of 2018 (hereinafter, the faster-growth period ) and declined since the fourth quarter of 2018 (hereinafter, the slower-growth period ) when considering policy options to address growth going forward. These periods are chosen because quarterly growth rates are closely clustered together within those two periods. This report analyzes the most commonly discussed reasons. Growth by Sector Table 1 breaks GDP down into its component parts to highlight where the growth slowdown has been concentrated. Comparing the faster-growth period from the third quarter of 2017 to the third quarter of 2018 with the slower-growth period from the fourth quarter of 2018 to the third quarter of 2019, the slowdown has been concentrated in fixed business investment spending (specifically, private structures and equipment) and exports. Investment spending on structures, which include office buildings, factories, and power and communication infrastructure, fell from a growth rate of 3.7% in the former period to a 6.5% contraction in the latter period. The decline in structures has been widespread, but has been particularly notable in the category of mining exploration, shafts, and wellsâa category of spending that is highly sensitive to commodity prices. The slowdown in equipment spending has been most notable in transportation equipment. Other components of GDP have not grown rapidly recently, but nevertheless do not explain the slowdown. Growth in personal consumption spending (specifically, services) has slowed, but by less than overall growth has slowed. Residential investment (new house construction) shrank by about 1% in both periods, having no effect on the overall difference between the two. Growth in government purchases was a little higherâthereby boosting growthâin the latter period. Import growth was lower in the latter period, which, in national accounting, increased growth. Actual Growth Rates and Potential Growth Rates Although growth fluctuates considerably from quarter to quarter, economists believe that the economy can grow no faster than its internal speed limitâcalled the potential or trend growth rate âover longer periods of time. Over shorter periods of time, the primary determinant of growth is the business cycle. The business cycle refers to the repeated pattern of recessions (contractions in economic activity) followed by (longer) expansions, which are then followed by another recession, and so on. Average growth over an entire business cycle of normal length would be expected to be close to the potential growth rate. After recessions, in which output has fallen considerably, there is scope for a period of rapid catch-up growth that brings unused labor and capital resources back into use. The current economic expansion is already the longest recorded expansion in U.S. history, so at this point it would not be expected that the economy could grow faster than its potential growth rate for a sustained period because there is no scope for catch-up growthâthe economy's labor and capital inputs are close to fully employed. In these conditions, growth may temporarily exceed trend growth, but it would be expected to return to trend growth fairly quickly. At this point, the main debates are what the trend growth rate is and whether it can be raised through structural policy changes. Growth can rise or fall over a period of time for cyclical or structural reasons. Cyclical contributions to growth are mainly demand drivenâthey are a function of how fast spending in the economy is growing. The government can temporarily influence spending through fiscal and monetary policy. Cyclical effects can have a large influence on growth over a few quarters, but are, by their nature, temporary. Structural contributions to trend growth are mainly supply drivenâthey are a function of how quickly the labor force (both its quantity and quality), the capital stock, and productivity (i.e., how much output can be generated with a given set of inputs) are growing. The reason average growth has been low over the course of the expansion is because all three have grown at a slower pace compared to the 1950 to 2007 average, according to the Congressional Budget Office (CBO), as seen in Figure 1 . The labor force has grown more slowly because of the decline in labor force participation and the aging of the workforce, as the baby boomers have begun to transition to retirement. After stripping out cyclical factors, CBO projects that the labor force grew by 1.4% annually from 1950 to 2018, but will grow by 0.4% annually over the next 10 yearsâclose to the 0.6% growth rate recorded from 2008 to 2018. Average productivity growth declined by more than one-half and investment growth fell by more than one-third in the 2008-2018 period compared to 1950-2007. The reasons for the slowdown in the growth of investment and productivity are less clear and more debated. The recent faster-growth period was comparable to CBO's estimate of the trend growth rate from 1974 to 2001. If the faster-growth period was driven by an increase in trend growth, it could potentially continue indefinitely. CBO and other economic forecasters do not view this growth acceleration as having been driven by a structural acceleration in trend growth, however. CBO expects some improvement in productivity growth over the next 10 years, but projects that overall trend growth will continue to be held back by low growth in the labor force and capital stock. If CBO is correct, the current growth slowdown was inevitable at some point, as it represented growth reverting to trend. The next section describes some of the major economic developments since 2017 that might have boosted growth temporarily above trend, and some subsequent developments that may have contributed to the slowdown. Factors Affecting Growth Since 2017 Several explanations have been offered as to why growth accelerated beginning in 2017, including fiscal stimulus, regulatory relief, favorable financial conditions, and higher consumer and business confidence. Although these explanations seem to match the growth acceleration well, they have more trouble explaining why growth subsequently slowed, and they do not always match the exact timing of the acceleration. Several explanations have been offered for why growth decelerated beginning in 2018. The factors discussed below in more detail are a fading of fiscal stimulus, monetary policy tightening, trade policy uncertainty, and a slowdown in global growth. The timing of these factors does not match the timing of the slowdown precisely, which points to the possibility that a return to the trend growth rate was inevitable. The factors discussed below are not comprehensive; other factors that have likely contributed to slower growth in at least one quarter since the fourth quarter of 2018 include the FY2018 government shutdown, the rise in oil prices in 2018 (they have since declined), problems that slowed Boeing's production of the 737 MAX airplane, and the GM-United Auto Workers strike. However, these factors are not discussed at length because they were one-off occurrences that were temporary in nature and may have limited implications for policy going forward. Fiscal Policy Fiscal stimulus can boost aggregate demand (i.e., total spending) in the short run through higher government spending or lower taxes that are deficit financed. Increases in deficit-financed government spending on goods and services boost total spending in the economy directly because government spending is a component of GDP. Deficit-financed tax cuts increase total spending to the extent that they are spent by their recipients. The effect of fiscal stimulus on growth is temporary because, by nature, total spending cannot exceed total potential output for longâespecially when the economy is already close to full employment, as it is today. In addition, certain types of tax cuts alter incentives to work, save, and invest. These changes could affect potential output ( supply-side effects ) in addition to total spending ( demand-side effects ). Policy changes on both the tax and spending sides of the budget enlarged the deficit in FY2018 relative to the current-law baseline for that year. Notably, the tax cuts in the 2017 act, P.L. 115-97 , began in calendar year 2018, with the budgetary effects peaking in FY2019. The Bipartisan Budget Act of 2018 ( P.L. 115-123 ) increased the Budget Control Act's ( P.L. 112-25 's) discretionary spending caps, and those increasesâcombined with increases in discretionary spending not subject to the capsâincreased discretionary spending relative to the CBO baseline by $94 billion in FY2018. These discretionary spending changes provided fiscal stimulus compared to current law but not compared to recent policyâdiscretionary spending was a steady 6.2% of GDP in both FY2017 and FY2018. In other words, compared to the previous year, the legislative changes to boost discretionary spending prevented contractionary fiscal policy from occurring. Mandatory spending fell because spending on health programs and automatic stabilizers (benefits where spending levels are sensitive to economic conditions) grew more slowly in dollar terms than GDP. Statutory changes to mandatory spending levels in FY2018 were minimal, and thus were not responsible for the decline. CBO projected that the tax cuts would boost GDP growth relative to the baseline by 0.3 percentage points in both FY2018 and FY2019. This estimate included demand-side and supply-side effects. Thus, based on CBO's projections, the tax cuts can help explain why growth accelerated in the faster-growth period, but cannot explain why growth subsequently slowed, because fiscal stimulus from the tax cuts left growth unchanged in FY2019 from the previous year. Relative to the baseline, the boost to growth from the tax cuts is projected to gradually fade beginning in FY2020 and eventually reduce growth beginning in FY2025. The federal budget deficit rose from 3.5% of GDP in FY2017 to 3.9% of GDP in FY2018. The increase was caused by the decline in revenues from 17.2% of GDP in FY2017 to 16.5% of GDP in FY2018. By contrast, spending fell as a percentage of GDP between FY2017 and FY2018, which would reduce the deficit as a share of GDP, all else equal. The federal budget deficit as a percentage of GDP rose in FY2019 from 3.9% to 4.5%, which would seem to indicate additional fiscal stimulus to the economy. However, a closer look at the data reveals that the stimulus is more limited than the increase in the deficit would indicate. Part of the increase in the deficit is attributable to a rise in mandatory spending and net interest payments as a share of GDP, but the increase is not caused by policy changes in either of these cases. Instead, spending in these categories increased as economic conditions and programs' take-up rates changed. Part of the increase in the deficit is attributable to a further decrease in revenues as a percentage of GDP, but this is also not due to additional policy changes. Instead, it is primarily because this was the first full fiscal year in which P.L. 115-97 's tax cuts were in place. The main fiscal stimulus was a small boost to discretionary spending, from 6.2% of GDP in FY2018 to 6.3% in FY2019. Fiscal stimulus works by changing policy to increase spending or reduce revenue from year to year. With policy changes having a modest effect on spending and revenue as a share of GDP, additional stimulus compared to the previous year was modest in FY2019. In other words, fiscal policy was not projected to cause growth to slow, but neither was it projected to provide a further boost to growth from what had been provided the previous year. Monetary Policy The Federal Reserve (Fed) can temporarily influence growth through its control of short-term interest rates. The Fed tightened monetary policy from December 2016 to December 2018, with short-term interest rates gradually increased from a range of 0.25%-0.5% to a range of 2.25%-2.5%. This reduced the amount of monetary stimulus that the Federal Reserve was providing to the economy in response to higher growth by decreasing demand for interest-sensitive goods and services, such as business investment and consumer durables. This tightening mostly occurred during the higher-growth period, but because monetary policy affects the economy with a lag, the full economic effects of this tightening were not felt until after the last rate increase in December 2018. In 2019, the Fed changed course, reducing interest rates three times between August and October in response to slower growth and fears of a potential recession. After the last rate cut in October, interest rates were lower than the inflation rate again, marking a more stimulative (expansionary) course. Because of the lags in effectiveness, these reductions should provide a stimulative boost to the economy in the coming quarters. Regulatory Relief Throughout the Trump Administration, agencies have emphasized regulatory relief for businesses through legislation and the rulemaking process. On January 30, 2017, the Administration issued an executive order that required all agencies to identify at least two existing regulations to be repealed for each new regulation they proposed. To support this executive order, the Office of Information and Regulatory Affairs (OIRA) has published regulatory reform reports each year. Although not all of the regulatory changes reported provide relief for business, these reports provide a comprehensive list of regulatory actions that increase costs (which they classify as regulatory actions ) or reduce costs (which they classify as deregulatory actions ) on net and an estimate of net cost savings since FY2017. The reports do not include agencies defined as independent in 44 U.S.C. Â§3502, however, so deregulatory actions by independent agencies that promulgate economic rules, such as financial regulators, are omitted. For this reason, the table undercounts total regulatory and deregulatory actions. As shown in Table 2 , agencies have undertaken 393 deregulatory actions and 52 significant regulatory actions since FY2017, at a net benefit totaling $50.9 billion, based on agency estimates. Quantitative estimates of how regulations affect economic growth vary widely, and a comprehensive tally is difficult because of differences in methodology between estimates and the possibility that separate regulations may have interactive effects when considered jointly. The $50.9 billion estimate in Table 2 is not an estimate of the effect on GDP. Regulatory changes can have a broad array of costs and benefits that can be assigned monetary values (subject to a high degree of uncertainty), but not all of those costs and benefits affect the production of goods and services. Examples include effects on health, safety, and the environment. The fact that deregulatory actions have continued at a similar pace in the slower-growth period suggests the limits that these actions may have on overall growth. Deregulatory actions that affect single industries (or a subset of firms within an industry) can be important for output growth within that industry, but any given industry individually makes up a small share of the overall economy. Moreover, regulatory changes are likely to have one-off effects on GDP growth (i.e., they raise the level of output once), as opposed to permanently increasing growth rates (which would require output to continually grow more rapidly each year in the future). In other words, companies may respond to a regulatory change that lowers their costs by boosting output, but once that transition is complete, output will likely stay at the higher level and growth will likely revert to its previous pace. Stock Market and the Wealth Effect The stock market's performance may have contributed to faster growth. The S&P 500 index (an index of large stock prices) rose by 38% between November 4, 2016, and January 26, 2018, with relatively little volatility by historical standards. Higher equity prices can temporarily boost economic growth through their effects on companies and stockholders. When a stock rises in value, it improves the stock-issuing company's financial condition, which may induce more physical investment spending. As shown in Table 1 , business investment spending was noticeably higher in the faster-growth period than in the slower-growth period. For holders of stocks and other assets, a rise in their assets' value may also induce a wealth effect , whereby their consumption spending increases in response to their improved net worth. In terms of overall wealth, the ratio of household net worth to income is now higher than it was before the 2007-2009 financial crisis or the dotcom bubble, which burst in 2000. The exact size of the wealth effect is uncertain, however, because the direction of causation is unclearâusing stock prices as an example, more consumption could raise the value of firms producing the goods and services being consumed or higher stock prices could induce stockholders to consume more. The period of faster economic growth outlasted the period of the stock market's best performance, but the stock market did not perform poorly after January 2018. The S&P 500's value in August 2019 was about the same as in January 2018, with significant volatility over that period, featuring several steep and sudden declines followed by rebounds. Since October 2019, the stock market has steadily risen again. Consumer and Business Confidence Surveys on consumer sentiment showed an increase in confidence in December 2016âbefore growth accelerated. Confidence remained high through 2018, but was more volatile in 2019 (although it remained high compared to levels registered in the past two recessions). All else equal, higher consumer confidence may help explain why consumption growth was strong. Business confidence was high in 2018, but volatile in 2017 and the first half of 2019 and lower in the second half of 2019, according to surveys. All else equal, greater business confidence may lead firms to hire more workers and undertake more physical investment spending. As shown in Table 1 , physical investment spending grew much more quickly in the faster-growth period than the slower-growth period. In interpreting these developments, it is important to note that the direction of causation is unclearâgreater consumer and business confidence may be a reaction to higher economic growth, rather than a driver of economic growth. Trade Policy Uncertainty Since 2017, the Administration has proposed a series of escalating tariffs and other import restrictions on major trading partners, such as China and the European Union. In response, affected countries have often proposed retaliatory trade restrictions on U.S. exports. Collectively, these proposed and implemented trade restrictions have popularly been referred to as a trade war to denote the broader scope of trade restrictions undertaken compared to the past. This section considers the joint economic impact of restrictions on U.S. imports and retaliatory foreign restrictions on U.S. exports. In the short term, changes in trade policy disrupt the production of goods and services that are exported or imported, or that rely on exports and imports as intermediate goods. In national accounting, exports are part of GDP and imports are subtracted from GDP (because they are not goods and services produced in the United States). Thus, trade restrictions negatively affect GDP through their effects on U.S. exports and U.S. goods reliant on imports, but positively affect GDP through their effects on U.S. imports and U.S. import-competing goods in the short run. The data bear this out: although many factors affect trade, export and import growth have both declined to close to zero since overall growth has slowed. Export growth fell from an average of 3.0% from the third quarter of 2017 to the third quarter of 2018 to 0.2% from the fourth quarter of 2018 to the third quarter of 2019, and import growth fell from an average of 5.0% to 0.9% over the same periods. Besides the direct mixed effect that trade restrictions have had on growth through their effect on exports and imports, they are viewed as having a negative indirect effect on growth through their effect on real income (because U.S. consumers face higher prices on imports, their overall purchasing power falls), financial conditions (if trade restrictions cause asset prices to fall or interest rates to rise), and business investment (because firms might hesitate to undertake large capital purchases if their business outlook is uncertain due to trade policy uncertainty). Although uncertainty is an inherently subjective measure, the International Monetary Fund (IMF) has attempted to quantify trade policy uncertainty, and finds that it was far higher in 2019 than at any point since the start of its index (1995). Finally, to the extent that trade uncertainty explains the appreciation of the dollar (discussed in the next section), this could partly or wholly offset any increase in net exports (exports less imports) that would be caused by U.S. tariffs. The trade dispute's precise effects on growth are uncertain because they mostly depend on second-order effects that are hard to measure, but they are generally thought to have been negative on net thus far. Goldman Sachs economists estimate that the trade dispute with China has reduced quarterly growth by between 0.2 and 0.4 percentage points each quarter from the second quarter of 2018 through the fourth quarter of 2019 (and could continue to reduce growth in future quarters, depending on what happens to trade policy in the future). They estimate that the trade restrictions' direct effects have positively affected growth, but that this has been more than offset by the negative indirect effects outlined above. CBO estimates that the direct effects of tariffs implemented to date will reduce the level of real GDP by 0.3% by 2020 (assuming the tariffs remain in place until then)âa somewhat smaller effect than Goldman Sachs estimated, partly because Goldman Sachs's estimate includes more recent trade policy developments. CBO projects the effect on GDP will wane over time, assuming the tariffs remain in place until 2029. The Organisation for Economic Co-operation and Development (OECD) estimates that trade restrictions, if unchanged, will reduce GDP growth by 0.5% by 2021. The timing of trade policy uncertainty's effects on business confidence and investment is hard to pinpoint, but the effects have likely increased over time. Announcements of trade policy changes began in the higher-growth period, but were phased in and ratcheted up over time. Further, confidence depends partly on how individuals believe the trade disputes will ultimately be resolved. Perceptions of whether trade disputes would be resolved or escalate are likely to have varied over time as U.S. and foreign policymakers' rhetoric on intentions and progress has fluctuated. One source of trade policy uncertainty was removed when the new U.S.-Mexico-Canada Agreement ( H.R. 5430 ) was signed into law, assuming all parties to the agreement ratify it. Other sources of uncertainty, such as trade relations with China, remain outstanding, albeit arguably diminished by the signing of the Phase 1 bilateral agreement on January 15, 2020. When the myriad of trade disputes are eventually resolved, uncertainty will no longer weigh on growth. However, if trade becomes radically more open or closed, that could affect long-term productivity, as it would affect the efficient use of economic resources through, respectively, more or less scope for comparative advantage. Slowdown in Global Growth and Strong Dollar According to the IMF, global growth fell from 3.8% in 2017 to 3.6% in 2018 to a projected 3.0% in 2019, which would be its slowest growth rate since the 2007-2009 financial crisis. It attributes half of the slowdown to the economic crises in Argentina, Iran, Turkey, and Venezuela, but the slowdown was widespread and included important U.S. trading partners such as the eurozone and China. For countries where exports are an important source of growth, such as China, trade policy uncertainty (discussed above) likely contributed to the slowdown. Slower global growth reduces demand for U.S. exports, which reduces U.S. growth, all else equal. As shown in Table 1 , U.S. export growth fell from an average of 3.0% from the third quarter of 2017 to the third quarter of 2018 to 0.2% from the fourth quarter of 2018 to the third quarter of 2019. U.S. interest rates have been higher than those of major trading partners for several years, and this difference widened during the period when the Fed was raising rates. Relatively higher economic growth and interest rates in the United States compared to the rest of the world contributed to a strengthening of the dollar exchange rate, as capital flowed into the United States to take advantage of relatively higher rates of return. When foreigners invest in U.S. assets, they must first buy U.S. dollars, which increases the value of the dollar, all else equal. In the flexible exchange rate era (beginning in the 1970s), the dollar's real value against a broad trade-weighted index reached its highest level since 2003 in December 2016, and it has remained relatively high since then. The mid-1980s and late 1990s were the only other periods when the dollar's value was comparably high. Trade policy uncertainty may also help explain why the dollar has appreciated, although the direction of the exchange rate effect is uncertain, theoretically. Trade restrictions on U.S. imports reduce the relative demand for foreign currency, boosting the value of the dollar. However, retaliatory tariffs on U.S. exports reduce the relative demand for the U.S. dollar, potentially offsetting some or all of the upward pressure on the dollar. If tariffs reduce growth in importing countries relative to U.S. growth, this could further reduce the demand for their currency relative to the dollar. Finally, the dollar is traditionally a safe haven currency that investors flock to when uncertainty risesâeven in cases where the uncertainty has emanated from the United States. When the dollar's value rises, U.S. exports are relatively more expensive in the rest of the world and U.S. imports are less expensive, all else equal. The fact that the dollar's value was high during the higher-growth period was largely a reflection of the strength of the U.S. economy, and one of the natural equilibration mechanisms that prevents economic overheating. A weaker dollar could potentially have supported growth through higher exports and lower imports during the slower-growth period, but this did not occur because growth in many major trading partners was relatively weaker than in the United States. Future Prospects and Policy Implications The consensus forecast is for the economy to continue growing at its recent moderate pace in the coming quarters. However, the current economic expansion is already the longest recorded expansion in U.S. history, so it is natural to wonder if the recent slowdown will turn into a recession in the near term. As noted above, the slowdown has returned the growth rate to the average for the overall expansion. A return to trend means growth has less room to decline in the future before it turns negative, which has been a feature of all previous recessions. Some recessions are caused by external shocks to the economyâidiosyncratic changes that reduce output, such as a spike in energy prices. Any given shock is less likely to result in negative growth if the economy is growing rapidly when the shock occurs than if it is growing slowly. However, a return to trend growth could counterintuitively make it less likely that the economy enters a recession because there is less of a risk that the economy will overheat. Some recessions are caused by the economy growing unsustainably quickly when it is already at full employment, which leads to higher inflation and, ultimately, a corrective crash in economic activity. By contrast, absent external shocks, growth at the trend rate could theoretically continue indefinitely. For this reason, fiscal and monetary stimulus may have helped prevent growth from slowing further in 2018, but additional stimulus to attempt to increase growth above trend could potentially be counterproductive. It is unusual for fiscal and monetary policy to still be easy (i.e., for the budget deficit to be high and interest rates to be low), as they are now, when the economy has already returned to full employment. Furthermore, growth during this expansion has been strong only during periods in which fiscal policy has been more stimulative. This raises questions about whether growth could remain sufficiently strong if fiscal and monetary stimulus were withdrawnâa problem that has not arisen in previous expansions since after the Great Depression, but one that many advanced economies have grappled with in this expansion. If growth were to slow further, the stimulus available to counteract it may be limited. As a result of fiscal and monetary policy remaining stimulative throughout the long economic expansion, policymakers have less headroom to respond to a future downturn. In the case of monetary policy, short-term interest rates are already relatively close to zero, limiting how much additional stimulus the Fed can provide through its conventional tool of cutting short-term rates. The Fed may find that this tool is quickly exhausted in the next recession, in which case it could be required to turn to unconventional tools such as large-scale asset purchases (popularly known as quantitative easing ) or negative interest rates to fight the recession. In the case of fiscal policy, the publicly held federal debt is the highest it has been as a share of GDP since World War II and is projected to continue to increase under current policy. The budget deficit is already larger than its historical average as a share of GDP and will automatically increase in a recession with no change in policy because of the budget's automatic stabilizers. Unprecedentedly high debt may make policymakers feel constrained to provide enough additional fiscal stimulus to counteract the recession. Or high debt may cause debt holders to refuse to finance enough stimulus, particularly because of the reliance on foreigners to finance the federal debt. Foreigners have held 40%-50% of the publicly held debt in recent decades. There are competing schools of thought on the best way to address this limited fiscal and monetary headroom. One school of thought argues for fiscal and monetary policy to be tightened now (by reducing deficits and raising interest rates, respectively) to gain additional headroom to be used in the next recession, and make it less likely that the economy will overheat at full employment. This strategy would be successful as long as the economy could withstand the withdrawal of stimulus and continue growing at a moderate pace. The other school of thought believes that fiscal and monetary stimulus should be used aggressively in response to any slowdown to avert a recession since the limited headroom would make a recession more likely to be deep and prolonged. This school of thought has been cited by Fed Chairman Jerome Powell as a justification for the Fed's decision to reduce interest rates three times in 2019. But this strategy could backfire if the economy nevertheless enters a recession at some point when headroom is still highly limited. Monetary and fiscal policy primarily influence short-term growth. Other policies can influence the long-term trend growth rate, but more indirectly, slowly, and imprecisely. Long-term growth is determined by growth in the labor force, changes in the quality of the labor force, growth in the capital stock, and productivity growth. Multiple policy areas influence each of those factors. For example, education and training influence the quality of the labor force; infrastructure spending contributes directly to the capital stock; health policy influences hours worked; and trade and technology policies influence productivity growth.


Introduction: U.S. Natural Gas Sets a High Mark In 2019, the United States stands atop the international natural gas world. The United States is the largest producer of natural gas (NG) ( Figure 11 ), is the largest consumer of natural gas, has the most natural gas storage capacity, and has the biggest and most expansive pipeline network. Production from shale formations ( Figure 7 ) has transformed the United States from a growing importer of natural gas to an increasing exporter ( Figure 12 ), with some of the lowest prices in the world ( Figure 10 ). The United States is the 4 th largest exporter of natural gas ( Figure 17 ), but its capacity by pipeline and by ship is growing. How the United States transformed its natural gas sector is a story of market competition, technological innovation, and other factors. As natural gas has played a bigger role in the U.S. economy, congressional interest in it has grown, as measured by the number of bills introduced ( Figure 19 ). 1998â2008: Prices Spark Innovation In 1998, the United States was the 2 nd largest national producer of natural gas behind Russia ( Figure 11 ), and the largest consumer. U.S. consumption outpaced production that year by more than 1,400 billion cubic feet (BCF) or 7% of consumption, and the United States was viewed as a growing importer of natural gas. Natural gas comprised 24% of the U.S. energy mix in 1998, and that figure remained unchanged in 2008. Canada supplied about 97% of U.S. imports in 1998. Between 1998 and 2008, the difference between U.S. production and consumption averaged 1,764 BCF annually. In 1998, U.S. natural gas consumption was mainly in the industrial sector, but by 2008 natural gas used to generate electricity equaled its use in the industrial sector. During this same time period, average annual U.S. natural gas prices quadrupled, reaching a peak in June, 2008. From 1998 to 2008, the United States added to its LNG import capacity by expanding existing facilities and constructing new import terminals. Import capacity in 2008 was almost 4,800 BCF, with an additional 2,000 BCF added later. There were also more than 20 additional import projects at various stages of development, most of which were never built because the market did not need additional import capacity as the United States moved toward being an exporter. Shale Gas: Technological Breakthroughs In the mid-2000s, as LNG import terminals were capturing headlines in the U.S. effort to meet growing demand, some small and mid-size production companies were trying to figure out how to produce the massive resources of natural gas that were trapped in shale formations. Multi-stage hydraulic fracturing and improved directional drilling capability were the keys to unlocking these resources. During this time, there were wide swings in U.S. daily natural gas prices as market conditions changed, sometimes quickly. Nevertheless, prices trended upward until the loss of economic activity from the Great Recession decreased demand. As prices rose, interest in developing shale gas grew. Shale gas started to come to market near the end of 2008 concurrent with the start of the Great Recession. The increased supply of natural gas, together with reduced demand, caused prices globally to plummet ( Figure 10 ). New production in the northeast, especially in Pennsylvania, began to grow rapidly. The percentage of U.S. natural gas production from shale also started to rise. 2008â2018: Growing Importer to Net Exporter Between 2008 and 2018, U.S. production and consumption of natural gas rose, 51% and 28%, respectively, while domestic prices fell about 65%. Despite the fall in prices, U.S. production continued to increase almost every year between 2008 and 2018. The cost of producing shale gas fell as the industry innovated to remain competitive. In 2011, U.S. production started to outpace consumption and the interest in exporting U.S. natural gas took hold. During this period, natural gas became more incorporated in the nation's energy mix, especially in the electrical sector. As U.S. prices fell, the world took note. In 2010, Cheniere Energy became the first U.S. company to apply for a permit to export U.S. natural gas from the lower-48 states from its Sabine Pass facility (which was originally an import terminal), transporting it as LNG. Liquefaction facilities like Sabine Pass liquefy natural gasâconvert it to LNGâand store it in liquid state so that it can be shipped globally in specialized tankers. Liquefaction of natural gas is achieved by cooling the gas to -260" F. At this temperature, the natural gas becomes a liquid and occupies only 1/600 th of its gaseous volume making it economical to send by ship. U.S. companies were looking to exports of natural gas for additional demand and a way to access higher world prices. As the global economy improved, natural gas prices outside the United States began to climb, which increased the number of companies looking to export U.S. natural gas. By the end of 2009, the United States surpassed Russia as the world's largest producer of natural gas. Global production of natural gas rose 28% between 2008 and 2018. U.S. production outpaced other producers and its share of the global natural gas market rose from 18% to 22%, while Russia's fell from 20% to 17%. U.S. Exports on the World Stage The United States did not begin exporting LNG from the lower-48 states until February 2016. However, export of natural gas by pipeline, mainly to Mexico, more than doubled during the 2008 and 2018 timeframe. Mexico imported two-thirds of U.S. pipeline exports and about half of all U.S. gas exports in 2018. U.S. LNG export capacity is on the rise, with six different facilities in operation in 2019 with a capacity of approximately 2,700 billion cubic feet per year or 7.32 BCF per day. The United States is the world's 4 th largest exporter of natural gas overall, and the 6 th largest LNG exporter ( Figure 17 ). With another 3,000 BCF per year under construction, the United States is poised to rise in the export rankings and may have the most capacity, worldwide, within the next five years. Regionally, Asian countries have imported the most LNG from the United States (44%). Within Asia, the nations of South Korea, Japan, China, and India are the biggest consumers. However, in the first half of 2019, China's imports of U.S. LNG declined by 83% over the same time period in 2018, in part because of the trade dispute between the countries. Thirty-six countries have imported U.S. LNG since 2016. Almost half the gas has gone to countries with which the United States has a free trade agreement, a stipulation for an expedited Department of Energy permit. Both South Korea and Mexico, the two largest overall importers of U.S. LNG exports, have free trade agreements with the United States. Conclusion: Growth of Natural Gas Continues Between 2016 and the first half of 2019, U.S. LNG exports have grown by 489%. On a monthly basis, LNG exports were largest in May 2019 and are expected to continue to grow as additional port facilities become operational. Meanwhile, there has been no corresponding rise in U.S. natural gas prices due to increased exports. Since February 2016, there has been about, on average, a $1.74 price differential between U.S. spot prices and U.S. LNG export prices. In addition to the price of U.S. spot natural gas, the current price at which natural gas can be bought or sold, importers take into account the cost of liquefying the natural gas, transporting it, regasifying it, and moving it to consumers. Natural gas is expensive to liquefy and transport and requires sophisticated technology. Even though the United States is the largest producer of natural gas in the world, it is not the largest exporter. Russia, mainly through its pipeline exports to Europe, remains the largest overall exporter of natural gas. Qatar was the largest exporter of LNG in 2018, but Australia is projected to surpass it in 2019. Whereas the United States was the target market for LNG exporters in 2008, it is now a net exporter of natural gas and has seen its imports diminish by 27% since 2008. Industry analysts expect U.S. exports to rise significantly over the next few years. LNG now accounts for 35% of global natural gas trade. Energy issues have been a perennial topic of interest to Congress. Natural gas, especially since the advent of shale gas, has grown in importance and congressional interest. Exports of natural gas by pipeline and particularly LNG by ship have added to the significance of natural gas' interest to Congress. In the 116 th Congress, 100 bills have been introduced covering a wide variety natural gas related topics, from production, exports, infrastructure, the environment, and employment, among other things.


Jurisdiction of House Committees When legislation is introduced in the House or received from the Senate, it is referred to one or more committees primarily on the basis of the jurisdictional statements contained in clause 1 of House Rule X. These statements define the policy subjects on which each standing committee may exercise jurisdiction on behalf of the chamber. The statements themselves tend to address broad policy areas and not specific departments, agencies, or programs of the federal government. Many federal departments and agencies handle a wide variety of policy areas that do not fit neatly within the subject matter jurisdiction of one or another standing committee. Because committee jurisdiction often is expressed in general policy terms, it is possible for more than one committee to claim jurisdiction over different aspects of a broad subject that may encompass a myriad of specific programs and activities. Additional guidance and context to the referral of measures addressing particular policy areas can be found in notes and annotations written by the House Parliamentarian located below the jurisdictional statements of each standing committee in the House Manual . Take the subject of roads for example. When it comes to the design and planning of road construction or maintenance, the House Transportation and Infrastructure Committee exercises jurisdiction on the basis of its responsibility defined in clause 1(r)(11) of Rule X for the "Construction or maintenance of roads or post roads (other than appropriations therefor)." However, as suggested by the parenthetical in this jurisdictional statement, the amount of money made available for road construction or maintenance through the annual appropriations process is a matter within the domain of the House Committee on Appropriations, which has jurisdiction over the "Appropriation of the revenue for the support of the Government." Furthermore, in addition to federal spending that occurs through the annual appropriations process, funding for the construction and maintenance of the nation's roadways may also be drawn from the Highway Trust Fund, which accrues revenue mainly from the collection of federal gasoline taxes. The use of general revenues to fund a particular federal activityâin this case, highwaysâis by precedent considered a matter of revenue collection and within the purview of the House Committee on Ways and Means, which has jurisdiction over "Revenue measures generally." Additional committees as well may exercise jurisdiction over aspects of the nation's roadways, depending on how subjects within their jurisdictions are connected to issues involving roads. Referral of Legislation in the House When a Member introduces a bill or resolution, or when legislation from the Senate is received in the House, clause 2 of House Rule XII directs the Speaker to refer the measure to committee in such manner as to ensure to the maximum extent feasible that each committee that has jurisdiction under clause 1 of Rule X over the subject matter of a provision thereof may consider such provision and report to the House thereon. Multiple referralâreferring a measure to more than one committeeâis common in the House as a result of the standing rules governing jurisdiction (Rule X) and the referral of legislation to committee (Rule XII). When language in a measure is within a committee's jurisdiction, it will trigger ("to the maximum extent feasible") a referral of the measure to that committee. In practice, the entire bill is sent to each committee of referral with the expectation that each committee will act only on matters that fall within its jurisdiction. Committees often monitor their own legislative actions and those of their counterparts for any jurisdictional issues that may arise when a committee reports its recommended changes to the House. When legislation is multiply referred, the Speaker identifies a "primary" committee of referral, which is the panel understood to exercise jurisdiction over the main subject of the measure. House Rule XII further provides the Speaker with the authority to refer legislation to more than one committee either at the point of introduction (an "initial additional referral"), or after another committee has filed its report (a "sequential referral"). The Speaker may also divide a measure into its component parts and refer individual pieces to different House panels (a "split referral"), but split referrals are rare in current practice. The Speaker is empowered to place time limits on any referral and always does so in the case of a sequential referral. In most cases, once the primary committee has reported to the House, the Speaker will set a deadline for additional committees of referral to report or be automatically discharged from further consideration. Although the Speaker has the authority to do so, rarely are time limits established on deliberations of a primary committee, or extended beyond the deadline imposed by a sequential referral. Due to their presumed expertise on matters within their jurisdiction, committees of primary or sole referral generally enjoy deference from the House on whether or not to report legislation to the full chamber. With House approval, the Speaker may appoint Members from relevant committees of jurisdiction to a special, select, or ad hoc committee in order to receive and review specific matters and report to the House its findings or recommendations. Rule XII further indicates that the Speaker "may make such other [referral] provision as may be considered appropriate." House rules vest these powers of referral in the Speaker; in practice, the House Parliamentarian makes day-to-day referral decisions acting as the Speaker's nonpartisan and disinterested agent. Worth noting is that House rules and procedures for referring legislation have changed in recent decades. For instance, prior to January 3, 1975, House rules provided no formal mechanism for a measure to be referred to two or more committees with a jurisdictional claim to the measure's subject matter. The ability of the Speaker to refer legislation to more than one committee was first established in House rules through the adoption of H.Res. 988 (93 th Congress), the Committee Reform Amendments of 1974, which became effective at the start of the 94 th Congress (1975-1976). Furthermore, at the outset of the 98 th Congress (1983-1984), Speaker O'Neill announced a policy of identifying a "primary" committee of jurisdiction when legislation was multiply referred, and beginning in the 104 th Congress (1995-1996) the designation of a primary committee of referral by the Speaker has been a requirement of House rules. Additional Factors Affecting Jurisdiction and Referral Clause 1 of House Rule X is the main determinant of House committee jurisdiction, but other factors may also influence how legislation is referred. For instance, some committees have crafted written memoranda between them memorializing their common understanding of the jurisdictional boundaries guiding the referral of measures on topics that are jurisdictionally ambiguous, or over which multiple committees make a claim. Such memoranda cannot override the explicit jurisdictional statements of Rule X, but they can be viewed as explanations of the committees' common understanding of these statements. In some cases, committees have published these memoranda in the Congressional Record . The act of referring measures to committees also can serve as a determinant of House committee jurisdiction. According to Hinds' Precedents of the U.S. House of Representatives , when the House refers "a bill or resolution to any committee ... jurisdiction is thereby conferred." Consequently, once a measure has been referred to a committee, precedent is established for future referrals to that committee of measures of the same type. This is true even in the case of an erroneous reference to committee. If the error is not corrected, jurisdiction is conferred on the committee by the referral. If a measure is enacted into law, amendments to the law are presumed to be within the originating committee's jurisdiction. The referral of certain kinds of measures may also be defined in statute. The House rulebook contains 35 different sets of statutory legislative procedures (also called "expedited" or "fast-track" procedures) that apply only to a narrow class of items described in the statute itself. Some statutory procedures contain "automatic referral" provisions specifying the committee(s) to which a particular item would be referred if one were introduced or received by the House. For instance, if the Defense Base Closure Commission reports to Congress a recommendation to relocate or close U.S. military bases, the Defense Base Closure and Realignment Act of 1990 ( P.L. 101-510 ) allows for expedited consideration of a House or Senate joint resolution disapproving the commission's recommendation. If such a joint resolution were introduced in the House, Section 2908(b) of that act indicates that it "shall be referred to the Committee on Armed Services." Jurisdiction and Referral to House Subcommittees The jurisdictions of subcommittees are not explicitly stated in House rules. The jurisdiction of a subcommittee is generally determined by the full committee that created it. In many cases, the full committee will establish the jurisdictions of its subcommittees in the rules that committees are required to adopt during the first few months of a new Congress. If a subcommittee's jurisdiction is not defined by its parent committee, measures are generally referred to subcommittee or retained by the full committee at the discretion of its chair. Some committees rely more heavily on their subcommittees to process legislation and make recommendations than do other committees. Legislative and Oversight Jurisdiction An important distinction can be drawn between legislative and oversight jurisdiction. Legislative jurisdiction describes the authority of a committee to receive and report measures to the House. Oversight jurisdiction refers to a committee's ability to review matters within its purview, for instance by conducting hearings and investigations. Legislative jurisdiction is defined in clause 1 of Rule X, while clause 2 of the same rule directs all standing committees to "review and study on a continuing basis the application, administration, execution, and effectiveness of laws and programs addressing subjects within its [legislative] jurisdiction." Several committees are given additional oversight duties in clause 3 of Rule X, and the fourth clause of that rule specifies additional functions committees are expected to fulfill. Clause 4(f) of Rule X, for instance, instructs each standing committee to submit to the Budget Committee its "views and estimates" on policy proposals contained in the President's budget submission to Congress that fall within its jurisdiction. Some committees interpret their oversight responsibilities more broadly than others do, which can lead to jurisdictional disputes over which committee is best equipped to conduct hearings, investigations, or other oversight activities. Many policy areas are complex and multidimensional, and considering how subject matter responsibilities are allocated broadly across committees, more than one committee may be involved in overseeing specific aspects of a general subject. Similar to the example of roads explained above in which a number of committees can play a role based on their subject matter (legislative) jurisdictions, oversight of a given area might also be shared by committees exercising different Rule X responsibilities.


Key Considerations for Federal Workers’ Reentry to Workplaces We have previously reported on how federal agencies were planning to protect their federal workers during a pandemic, as well as lessons learned from the H1N1 pandemic, the most recent pandemic experienced by our nation prior to COVID-19. Based on these lessons, and further informed by more recent events, we have identified key issues for federal agencies to consider as their employees reenter the workplace. Maintain Continuous Communication with Employees Agencies should maintain continuous communication with employees, and their representatives, during a pandemic. In particular, agencies should identify employee concerns and communicate human capital guidance such as pay, leave, staffing, and other human capital flexibilities to employees to help to ensure the continuity of agencies’ operations and mission essential functions. It is important that employees understand the policies and requirements of their agencies, and the alternatives, such as telework, that may be available to them. Continuous communication will also help agencies to provide real-time information to employees as conditions evolve. Identify Mission-Essential Functions and Employees, and Classify Their Exposure Risk Level Employees who must work onsite during a pandemic will face varying levels of exposure risk. The level of risk depends, in part, on whether or not they will be in close proximity to people potentially infected with the virus. As a first step, it is important that agencies identify mission essential functions that cannot be performed remotely, as well as the related number of employees who will perform those functions and their risk of exposure. Agencies should consider how they will continue to update their determinations and monitor the associated risks, as these factors could affect decisions on reentry as conditions evolve. Make Decisions about Reentry Based on Local Conditions It is important for federal agencies to factor-in local conditions of the pandemic at the component and facility level in their determinations regarding workforce reentry rather than applying across-the-board decisions based on agencies’ headquarters locations. Agencies should consider making decisions about reentry, including precautions and safeguards agencies take, based on the local prevalence of the pandemic at each site. As agencies consider local conditions for reentry, they should share information and cooperate with other agencies located in the same area. These reentry decisions could change over time as the pandemic progresses, such as if there is a second or third wave of outbreaks. It is important that agencies’ plans to protect their workforce for a pandemic are operational at all levels of the organization; particularly for those workers who have to perform mission-essential functions onsite. Have Appropriate Protection Measures in Place to Protect Employees To protect employees as they reenter their workplaces, agencies should have appropriate protection measures in place, by exposure risk level. For example, an agency could make changes to the work environment to reduce workplace hazards, such as by installing sneeze guards as a barrier between employees who must have frequent contact with other employees or the public. Additionally, an agency could provide personal protective equipment (PPE), such as surgical masks, gloves, and N-95 respirators, to employees which, if used correctly, can help prevent some exposures. Agencies will want to ensure that they have an adequate supply of hygiene supplies, such as hand sanitizers, and a plan for distributing those supplies within the agency. Some basic hygiene precautions, such as encouraging employees to wash their hands or use a hand sanitizer after they cough, sneeze, or blow their noses, can be implemented in every workplace. Agencies will also want to provide supplemental cleaning programs for common areas. Implement Social Distancing Strategies Avoiding crowded settings through social distancing strategies is one of the best ways to prevent infection during an influenza pandemic. Agencies can implement various social distancing strategies to avoid situations that increase workers’ risk of exposure to a pandemic virus. For those functions that can be performed remotely, agencies may consider maximizing the use of telework, which is discussed in greater detail later in this statement. Other strategies agencies should consider include avoiding unnecessary travel, restricting in-person meetings and gatherings, and allowing flexible schedules to reduce the number of employees in the building at the same time. Agencies should also consider workplace reconfiguration (such as building walls or partitions between workstations), office-specific protocols (such as limiting personal contacts among staff), and making decisions about reopening office fitness and childcare centers as part of separate risk-based decision processes. Establish Protocols to Prioritize and Distribute Antivirals and Vaccines When medical countermeasures—such as antivirals and vaccines—are developed, it will be important for agencies to decide the extent to which these countermeasures will be provided to employees. In cases where countermeasures are going to be provided to employees, agencies should consider actions necessary to procure them, and establish clearly- defined, well-documented, and consistently-applied protocols to prioritize and allocate their distribution. Decennial Census— Considerations Made as Area Offices Resume Field Operations The Bureau presents an illustrative example on continuity of operations and decision making for resumption of operations. The Bureau has both permanent staff in headquarters and a large local field infrastructure of 248 Area Census Offices (ACO) with short-term staff to implement the decennial census. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, just a day before invitations to respond to the 2020 Census were scheduled to arrive in mailboxes across the country, and as peak census operations were set to begin. In March and April 2020, the Bureau suspended operations until June 1 and extended key operations. Since that time, the Bureau announced it would resume operations at additional ACOs each week, and as of June 11 all ACOs had resumed operations. Key aspects of reopening Bureau ACOs included (1) a phased approach to resuming operations, (2) operational changes in response to challenges related to COVID-19, (3) addressing worker safety concerns, (4) communicating pandemic plans to ensure continued operations, and (5) contingency planning for risks. Phased Approach to Resuming Operations The Bureau took a phased approach to resuming operations at its ACOs. To make these decisions, the Bureau considered multiple factors including whether the state in which each ACO was located had begun phased reopening, whether data on federally established health criteria supported the decision to restart, and whether the Bureau could meet the safety needs of ACO employees and the public. In our late May survey of ACO managers, responses on the Bureau’s efforts to reopen offices varied. For example, 66 percent of ACO managers responding to our late May survey reported satisfaction with the process of recalling office staff, 68 percent with readiness to conduct field operations, and 75 percent with readiness to conduct office operations. Operations resumed in a phased manner not only by office, but also by function. As the Bureau resumed operations, it was able to resume operations that required less physical interaction, such as Update Leave, in which field staff deliver questionnaires to homes that might not receive mail delivered to their doors. Operations that require interviewing residents, such as Non-Response Follow Up, were delayed until August. Operational Changes to Maintain Social Distance in Response to Challenges Related to COVID-19 The Bureau has also made a number of changes to its 2020 Census operations to minimize face-to-face interactions. The Bureau modified its Update Leave operation, directing field staff to update the addresses by observation when delivering a questionnaire, instead of knocking on doors to speak with residents. To reduce in-person contact for the Group Quarters operation, which enumerates facilities such as prisons, nursing facilities, and college dormitories, Bureau officials told us they were contacting facilities to encourage them to shift from in-person enumeration to electronic responses. In late April, the Bureau also authorized its ACOs to call those facilities that had previously opted to respond by providing a paper listing of residents. Census staff asked the facilities to mail the listing back to the ACO rather than having the ACO send staff to pick up the paper listing. Addressing Worker Safety Concerns The Bureau stated that it will coordinate with federal, state, and local health officials to put appropriate protocols and procedures in place and ensure adequate PPE and cleaning supplies. In early May, the Bureau announced that it had ordered this equipment for all field staff and that these materials would be secured and provided before resumption of operations. Bureau officials told us they are distributing PPE and cleaning supplies to its 248 ACOs on a rolling basis, prioritizing delivery to those ACOs that were resuming major field operations, such as Update Leave. In our late May survey, ACO manager satisfaction was relatively high regarding PPE for staff conducting Update Leave (66 percent), the largest field operation being conducted at the time. In contrast, managers at that time reported some of their lowest satisfaction rates when asked about PPE adequacy for their office and field workers more generally (34 and 43 percent, respectively). ACO managers reported higher satisfaction in late May than in early April with their ACO’s ability to safely manage employees and operations during the pandemic (increasing from 55 to 65 percent on average across three questions on this topic). Despite this increase in confidence, managers expressed concerns regarding worker safety in open-ended comments. For example, in late May managers expressed concerns regarding how fingerprinting of large numbers of staff—necessary to fulfill the census mission—could be conducted safely under conditions of social distancing. In addition, more than 15 comments in early April and 11 in late May expressed concerns about the ability of the ACO management teams to telework. These included concerns about the inadequate number of laptops and who was expected to report to their local office. Communicating Pandemic Plans to Ensure Continued Operations The Bureau created a COVID-19 Internal Task Force to create a communications plan and appropriate workforce flexibilities. The Bureau sent emails to regional staff with updated information on delaying field operations and prepared documents to answer questions about the delays, office operating status, payroll, hiring, and training. Responses to our surveys of ACO managers highlighted the need for the Bureau to ensure open lines of communications. Between early April and late May, respondent satisfaction increased regarding the timeliness and clarity of Bureau communication about its pandemic plan; however, satisfaction in these areas remained relatively low. Specifically, reported satisfaction increased for communication timeliness (from 35 to 45 percent) and clarity (from 42 to 51 percent). More than 50 ACO managers commented about communication challenges such as conflicting direction from different sources and guidance received shortly before the implementation date. Contingency Planning for Risks Including an Epidemic In May 2019, we reported that the Bureau did not have contingency plans for many identified risks including for major disasters—such as an epidemic—and recommended that it develop contingency plans for all risks that did not have one. The Bureau updated its risk register for major disasters to include a contingency plan. According to the Bureau’s March 2020 risk register, the contingency plan for any major disaster—including an epidemic—is rapid response, meaning the Bureau would develop a plan to address the risk once it was realized. Bureau officials told us that, depending on the type of major disaster, response would vary widely and even if they had a more detailed contingency plan for a pandemic it would have never addressed the magnitude of the current national emergency that is taking place across the country. Key Practices for Ensuring Telework Contributes to Continuity of Operations during the Current Pandemic and Provides an Expanded Workforce Option in the Future We have identified key practices in telework-related literature and guidelines that federal agencies should implement in developing telework programs. Also, in 2011, we reported that the Office of Personnel Management, the General Services Administration, and the Federal Emergency Management Agency had suggested several practices to federal agencies, in various telework or emergency-related guidance documents, for how to ensure telework is part of continuity of operations planning. These practices generally align with those we previously identified. Based on this prior work, we have identified several practices that may be especially useful for agencies to help ensure telework programs contribute to continuity of operations during COVID-19 and other major emergencies. These practices may be especially important if substantial numbers of employees remain out of their workplaces for an extended period or if agencies need to reverse their reentry decisions based on changing public health circumstances. In addition, agencies’ experiences with telework during the current pandemic may suggest opportunities to increase the availability of telework in the future. These practices can be grouped into four general categories: (1) policies and guidance related to telework; (2) technology; (3) performance management; and (4) program evaluation. Policies and Guidance Related to Telework Major emergencies, such as a pandemic, underscore the importance of establishing and updating clear policies and guidance related to telework as agencies’ continuity of operations may depend on employees working remotely for extended periods. Agencies should assess whether their policies and guidance were sufficient to ensure that their workforces were telework ready and understood the agency’s expectation of employees regarding teleworking during this emergency. The current crisis presents an opportunity for agencies to assess their established policies or requirements to ensure that they (1) balance employees’ personal circumstances and work responsibilities, and (2) effectively facilitated communication and engagement among teleworkers, managers, and coworkers. Agencies should institute processes for communicating human-capital guidance for emergencies (e.g., pay, leave, benefits) to ensure they worked effectively. For example, agencies should consider whether emergency employees (including COOP employees) knew in advance about their mission critical status. If not, agencies should ensure that, in case of future emergencies including a potential resurgence of COVID-19, employees are notified about requirements to report for work, remain at work, work at home, or report to an alternative work site when government operations are disrupted. Similarly, agencies should consider whether their guidance on workplace health and safety issues was adequate to ensure that teleworkers had safe and adequate places to work off-site, and whether information- security training was provided to all individuals, or managers of individuals, who teleworked during the current pandemic. It is important for agencies to correct any identified deficiencies in the guidance and training to improve the use of telework going forward, including for future emergency situations that may again require telework. Technology We have reported that technology concerns are frequently cited barriers to telework. To effectively use telework as a tool to continue operations during major emergencies, agencies must have an appropriate information technology infrastructure in place that allows large numbers of employees to telework simultaneously. As such, it is important for agencies to assess the extent to which their telework infrastructure was adequate to support increased telework, especially during peak periods, including whether technical support was sufficient, and address any access and security issues they identify. Performance Management Ensuring established organizational performance standards are met is important to maintaining agency operations whether employees are physically present in the office or working remotely. During extended periods of remote work, this could include setting expectations and preferences for how employees communicate with supervisors before telework arrangements begin. Agencies should consider whether their existing procedures and standards meet the needs of employees who teleworked and whether they ensured that telework did not diminish employee and organizational performance. Program Evaluation Evaluation of telework may help agencies better understand the impact their increased use of telework had on their ability to achieve goals and accomplish missions, and could allow them to make adjustments to telework moving forward as employees are expected to return to their duty stations. As part of such an evaluation, agencies should assess whether their processes, procedures, and tracking systems to collect data provided the information needed to evaluate telework. In conclusion, federal agencies have a responsibility to provide safe workplaces for employees to perform their jobs. The evolving and growing challenges from the COVID-19 pandemic present critical workforce safety issues for federal agencies to assess and address as they seek to continue their operations. As I have discussed today, agencies should consider a number of factors when making decisions about employees reentering workplaces. Lessons learned from previous pandemic emergencies, as well as from telework use to ensure continuity of operations, can be helpful as agencies navigate ongoing workforce safety and productivity challenges. Consideration of these factors and lessons learned from agencies’ current experiences may better prepare agencies to address and respond to challenges from ongoing and future emergencies. Chairman Connolly, Ranking Member Hice, and Members of the Subcommittee, this concludes my prepared statement. I would be happy to respond to any questions you may have. GAO Contact and Staff Acknowledgments If you or your staff have any questions about this testimony, please contact J. Christopher Mihm at (202) 512-6806 or MihmJ@gao.gov, or Michelle B. Rosenberg at (202) 512-6806 or RosenbergM@gao.gov. Individuals making key contributions to this testimony include Clifton G. Douglas, Jr., Alexandra Edwards, Sarah E. Veale (Assistant Directors), Keith O’Brien (Analyst-in-Charge), Ulyana Panchishin, Maya Chakko, Karin Fangman, Steven Putansu, and Jacqueline Chapin. Key contributors for the earlier work that supports this testimony are listed in each product. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.


Key Federal Actions to Respond to and Recover from COVID- 19 and Our Recommendations for Executive Action and Matters for Legislative Action In response to the national public health and economic threats caused by COVID-19, four relief laws were enacted as of June 2020, including the CARES Act in March 2020. These laws have appropriated $2.6 trillion across the government. Six areas—the Paycheck Protection Program (PPP), Economic Stabilization and Assistance to Distressed Sectors, unemployment insurance, economic impact payments, the Public Health and Social Services Emergency Fund, and the Coronavirus Relief Fund— account for 86 percent of the appropriations (see fig. 1). Total federal spending data are not planned to be readily available until July 2020. It is unfortunate that the public will have waited more than 4 months since the enactment of the CARES Act for access to comprehensive obligation and expenditure information published by federal agencies about the programs funded through these relief laws. In the absence of comprehensive data, we collected obligation (government financial commitments) and expenditure data from agencies, to the extent practicable, as of May 31, 2020. For the six largest spending areas, we found that obligations totaled $1.3 trillion and expenditures totaled $643 billion. The majority of the difference was due to PPP, for which the Small Business Administration (SBA) obligated $521 billion. The amounts for loan guarantees will not be considered expenditures until the loans are forgiven, and, for those that are not forgiven, whether they are timely repaid. We also collected spending data on other programs affected by the federal response. For example, we found that the Department of Health and Human Services (HHS) has provided $7 billion in COVID-19 Medicaid funding related to a temporary increase in the Federal Medical Assistance Percentage (FMAP), the statutory formula the federal government uses to match states’ Medicaid spending. Based on the information we collected, government-wide spending totaled at least $677 billion, as of May 31, 2020. Given the sweeping and evolving public health and economic crisis, agencies from across the federal government were called on for immediate assistance, requiring an unprecedented level of dedication and agility among the federal workforce, including those serving on the front lines, to quickly establish services for those infected with the virus. Consistent with the urgency of responding to serious and widespread health issues and economic disruptions, agencies have given priority to moving swiftly where possible to distribute funds and implement new programs. In moving quickly, however, agencies made trade-offs, and they have made only limited progress so far in achieving transparency and accountability goals. In particular, we identified several challenges related to the federal response to the crisis, as well as recommendations to help address these challenges, including the following: Viral testing. The Centers for Disease Control and Prevention (CDC) reported incomplete and inconsistent data from state and jurisdictional health departments on the amount of viral testing occurring nationwide, making it more difficult to track and know the number of infections, mitigate their effects, and inform decisions on reopening communities. However, HHS issued guidance on June 4, 2020, to laboratories that identifies required data elements to collect and how to report them to CDC. Distribution of supplies. The nationwide need for critical supplies to respond to COVID-19 quickly exceeded the quantity of supplies contained in the Strategic National Stockpile, which is designed to supplement state and local supplies during public health emergencies. HHS has worked with the Federal Emergency Management Agency and the Department of Defense to increase the availability of supplies. However, concerns remain about the distribution, acquisition, and adequacy of supplies. Paycheck Protection Program. As of June 12, 2020, the Small Business Administration (SBA) had rapidly processed over $512 billion in 4.6 million guaranteed loans through private lenders to small businesses and other organizations adversely affected by COVID-19. As of May 31, 2020, SBA had expended about $2 billion in lender fees. SBA moved quickly to establish a new nationwide program, but the pace contributed to confusion and questions about the program and raised program integrity concerns. First, borrowers and lenders raised a number of questions about the program and eligibility criteria. To address these concerns, SBA and the Department of the Treasury (Treasury) issued a number of interim final rules and several versions of responses to frequently asked questions. However, questions and confusion remained. In June 2020, Congress passed, and the President signed into law, the Paycheck Protection Program Flexibility Act of 2020, which modified key program components. Second, to help quickly disburse funds, SBA allowed lenders to rely on borrower certifications to determine borrowers’ eligibility, raising the potential for fraud. We recommend that SBA develop and implement plans to identify and respond to risks in PPP to ensure program integrity, achieve program effectiveness, and address potential fraud. SBA neither agreed nor disagreed, but we believe implementing this recommendation is essential. Economic impact payments. The Internal Revenue Service (IRS) and Treasury moved quickly to disburse 160.4 million payments worth $269 billion. The agencies faced difficulties delivering payments to some individuals, and they face additional risks related to making improper payments to ineligible individuals, such as decedents, and fraud. For example, according to the Treasury Inspector General for Tax Administration, as of April 30, almost 1.1 million payments totaling nearly $1.4 billion had gone to decedents. We recommend that IRS consider cost-effective options for notifying ineligible recipients how to return payments. IRS agreed. Unemployment insurance (UI). States are implementing three new, federally funded UI programs created by the CARES Act and, as of May 2020, states had received 42 million UI claims. The Department of Labor (DOL) has taken steps to help states manage demand, but DOL is developing its approach to overseeing the new UI programs. We will be evaluating DOL’s monitoring efforts in future reports. Further, the UI program is generally intended to provide benefits to individuals who have lost their jobs; under PPP, employers are generally required to retain or rehire employees. According to DOL, no mechanism currently exists that could capture information in real time about UI claimants who may receive wages paid from PPP loan proceeds. We recommend that DOL, in consultation with SBA and Treasury, immediately provide help to state unemployment agencies that specifically addresses PPP loans and the risk of improper payments associated with these loans. DOL neither agreed nor disagreed with the recommendation, but noted it was planning forthcoming guidance. Contract obligations. Government-wide contract obligations in response to the COVID-19 pandemic totaled about $17 billion as of May 31, 2020. Goods procured include ventilators, and services contracted for include vaccine development. In addition, the CARES Act provided $1 billion for Defense Production Act purchases—$76 million of which was awarded to increase production of N95 respirators. Evolving Lessons Learned from Initial COVID-19 Response and Past Emergencies Highlight Areas for Continued Attention The nation has made some progress in fighting COVID-19. However, the virus continues to pose risks to all Americans, and there is a concern of another wave of infection this fall. This could coincide with the seasonal influenza and hurricane season—further straining federal agencies responsible for responding to these events, as well as the health care system. Additionally, the nation’s initial response to COVID-19 highlights the challenges presented by an inherent fragmentation across responsibilities and capabilities in the federal biodefense response and health care system, which includes private, public (local, state, and federal governments), and nonprofit entities. Lessons from the initial response, as well as experience from past economic crises, disasters, and emergencies, highlight areas where continued attention and oversight are needed—with the focus on improving ongoing response efforts and preparing for potential additional waves of infection. These lessons include the following: Establishing clear goals and defining roles and responsibilities for the wide range of federal departments and other key players are critically important actions when preparing for pandemics and addressing an unforeseen emergency with a whole-of-government response. Providing clear, consistent communication in the midst of a national emergency—among all levels of government, with health care providers, and to the public—is key. Collecting and analyzing adequate and reliable data can inform decision-making and future preparedness—and allow for midcourse changes in response to early findings. Establishing transparency and accountability mechanisms early on provides greater safeguards and reasonable assurance that federal funds reach the intended people and are used for the intended purposes. Such mechanisms also help ensure program integrity and address fraud risks. While Congress has taken a number of actions to help address the pandemic, it continues to consider additional actions—both to improve ongoing efforts and implement new ones—and develop plans for congressional oversight of the nation’s response to and recovery from COVID-19. Congressional oversight plays a vital role in spurring agency progress on matters of national importance. On the basis of our work on past large-scale government responses to economic downturns and other crises, we recommend Congress consider taking legislative action in the following areas: Aviation-preparedness plan. In 2015, we recommended that the Department of Transportation (DOT) work with federal partners to develop a national aviation-preparedness plan for communicable disease outbreaks. DOT agreed, but as of May 2020, maintained that HHS and DHS should lead the effort. Thus far, no plan exists. We recommend that Congress take legislative action to require DOT to work with relevant agencies and stakeholders to develop a national aviation-preparedness plan to ensure safeguards are in place to limit the spread of communicable disease threats from abroad while at the same time minimizing any unnecessary interference with travel and trade. Full access to death data. The number of economic impact payments made to decedents highlights the importance of consistently using key safeguards in providing government assistance to individuals. IRS has access to the Social Security Administration’s full set of death records, but Treasury and its Bureau of the Fiscal Service, which distribute payments, do not. We recommend that Congress provide Treasury with access to the Social Security Administration’s full set of death records and require that Treasury consistently use it to help reduce similar types of improper payments. Medicaid. We previously found that during economic downturns—when Medicaid enrollment can rise and state economies weaken—the FMAP formula does not reflect current state economic conditions. We previously developed a formula that offers an option for providing temporary automatic, timely, and targeted assistance. We recommend that Congress use this formula for any future changes to the FMAP during the current or any future economic downturn to help ensure that the federal funding is targeted and timely. In the report we issued yesterday, we also describe potential indicators that could be used to monitor public health and economic recovery. The report also contains 41 enclosures that contain information about a wide range of federal programs or initiatives that were created, expanded, or funded in the COVID-19 relief laws. In conclusion, both Congress and the administration have acted to respond to public health and economic threats posed by COVID-19. Federal agencies and personnel acted quickly to stand up new programs or expand existing programs to, among other things, aid individuals, states, and businesses. But much work remains in protecting the health and well-being of Americans, both today and in the coming months, as the nation may be forced to simultaneously confront new waves of COVID-19 infections and seasonal influenza. In our initial report we make recommendations to help improve the effectiveness of the federal government’s ongoing response. Our ongoing oversight will continue to focus on improving the government’s response and recovery efforts as well as the nation’s preparedness for future outbreaks. Chairman Clyburn, Ranking Member Scalise, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions that you may have at this time. GAO Contact For further information about this testimony, please contact A. Nicole Clowers, Managing Director, Health Care, at (202) 512-7114 or clowersa@gao.gov; Katherine Siggerud, Chief Operating Officer, at (202) 512-5600 or siggerudk@gao.gov; or Orice Williams Brown, Managing Director, Congressional Relations, at (202) 512-4400 or williamso@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.