Recent Slower Economic Growth in the United States: Policy Implications

Summary: The current economic expansion is the longest in recorded U.S. history, but it has not been characterized by rapid economic growth. From the beginning of the current economic expansion in the third quarter of 2009 to the second quarter of 2017, this expansion had the lowest economic growth rate of any expansion since World War II, averaging 2.2%. For the next five quarters, growth accelerated to 3.1%. However, growth has slowed since, averaging 2.1% over the next four quarters beginning in the fourth quarter of 2018. The slower growth rate has been widespread, but has been particularly concentrated in business investment and exports. Private forecasters expect this slower pace to continue in 2020. A similar growth pattern has not been observed in labor markets, as monthly employment growth was only slightly lower in the slower-growth period than in the faster-growth period.

Summary: A number of developments have influenced growth since 2017:

Summary: Fiscal policy . The federal budget deficit rose from 3.5% of gross domestic product (GDP) in FY2017 to 3.9% in FY2018. Deficit-financed tax or spending policy changes stimulate overall economic activity in the short run, but stimulus fades over time. The deficit increased partly as a result of P.L. 115-97 , which cut taxes beginning in calendar year 2018, with the budgetary effects peaking in FY2019. Monetary policy. The Federal Reserve raised short-term interest rates gradually from a range of 0.25%-0.5% in December 2016 to a range of 2.25%-2.5% in December 2018. Higher interest rates reduce interest-sensitive spending, such as business investment and consumer durables. Rates were then cut in 2019 to a range of 1.5%-1.75%. Regulatory policy . The Administration reported that 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. Deregulatory actions that reduced costs for businesses could boost their output levels. Trade policy . Since 2017, the Administration has proposed a series of escalating tariffs and other import restrictions on major trading partners, such as China. In response, affected countries have often proposed retaliatory trade restrictions on U.S. exports. Trade restrictions have a mixed direct effect on growth through their impact on U.S. exports and imports. However, they are generally thought to have a negative indirect effect on growth through their impact on real income, financial conditions, and business investment. Stock market . Stock prices (as measured by the S&P 500 index) rose by 38% between November 4, 2016, and January 26, 2018, with little volatility by historical standards. Since then, volatility has risen. Favorable financial conditions make it easier for firms to finance investment and may lead asset holders to consume more through a wealth effect . Global growth . Global growth fell from 3.8% in 2017 to 3.6% in 2018 to a projected 3.0% in 2019. This reduces foreign demand for U.S. exports, all else equal.

Summary: Over time, economists believe that the economy cannot grow faster than its trend or potential growth rate, which is determined by how quickly labor, the capital stock, and productivity grow. It appears that the growth rate has reverted to its trend growth rate since the fourth quarter of 20s18. Regulatory policy changes and fiscal stimulus may have contributed to the temporary increase in growth, but do not appear to have led to a permanent acceleration in trend growth.

Summary: This slower rate of growth would be problematic if growth continued to decelerate toward zero, but most forecasters do not expect this to happen. On the contrary, this slower rate of growth could make a recession less likely because it reduces the probability that the economy will overheat, which has been the cause of some past recessions. It is unusual for fiscal and monetary policy to remain stimulative when the economy has fully recovered from a recession. As a result, there is less remaining headroom than usual for the Federal Reserve to reduce interest rates (monetary stimulus) or Congress to increase the deficit (fiscal stimulus) going forward. Policymakers face a choice between maintaining existing fiscal and monetary stimulus to maintain growth and removing stimulus so that there is more scope to employ stimulus in the next recession.

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.

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.

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 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.

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.

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.

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.

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.

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.


Campaign and Election Security Policy: Overview and Recent Developments for Congress

Summary: In the United States, state, territorial, and local governments are responsible for most aspects of selecting and securing election systems and equipment. Foreign interference during the 2016 election cycleâand widely reported to be an ongoing threatâhas renewed congressional attention to campaign and election security and raised new questions about the nature and extent of the federal government's role in this policy area.

Summary: This report provides congressional readers with a resource for understanding campaign and election security policy. This includes discussion of the federal government's roles; state or territorial responsibilities for election administration and election security; an overview of potentially relevant federal statutes and agencies; and highlights of recent congressional policy debates. The report summarizes related legislation that has advanced beyond introduction during the 116 th Congress. It also poses questions for consideration as the House and Senate examine whether or how to pursue legislation, oversight, or appropriations.

Summary: In the 116 th Congress, the FY2020 National Defense Authorization Act (NDAA; S. 1790 ; P.L. 116-92 ), enacted in December 2019, contains several provisions related to campaign and election security. Most provisions involve providing Congress or federal or state agencies with information about election interference. It also requires the Director of National Intelligence, in coordination with several other agencies, to develop a strategy for countering Russian cyberattacks against U.S. elections. In addition, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ; H.R. 1158 ), also enacted in December 2019, includes $425 million for payments to states, territories, and the District of Columbia to make general improvements to the administration of federal elections, including upgrades to election technology and security.

Summary: As of this writing, 116 th Congress legislation that has advanced beyond introduction in at least one chamber includes H.R. 1 ; H.R. 753 ; H.R. 1158 ; H.R. 2500 ; H.R. 2722 ; H.R. 3351 ; H.R. 3494 ; H.R. 3501 ; H.R. 4617 ; H.R. 4782 ; H.R. 4990 ; S. 482 ; S. 1060 ; S. 1321 ; S. 1328 ; S. 1589 ; S. 1790 ; S. 1846 ; S. 2065 ; and S. 2524 . Other bills also could have implications for campaign and election security even though they do not specifically reference the topic (e.g., those addressing cybersecurity generally or voter access). Several congressional committees also have held legislative or oversight hearings on the topic.

Summary: Federal statutesâsuch as the Help America Vote Act (HAVA); Federal Election Campaign Act (FECA); and the Voting Rights Act (VRA)âall contain provisions designed to make campaign finance, elections, or voting more secure. Several federal agencies are directly or indirectly involved in campaign and election security. These include, but are not limited to, the Department of Defense (DOD); Department of Homeland Security (DHS); Department of Justice (DOJ); Election Assistance Commission (EAC); and Federal Election Commission (FEC).

Summary: Securing federal elections is a complex policy challenge that crosses disciplinary lines. Some of the factors shaping that complexity include divisions of authority between the federal and state (or territorial or local) governments; coordination among federal agencies, and communication with state agencies; funding; changing elections technology; and the different needs of different sectors, such as campaigns, administrators, and vendors.

Summary: This report does not attempt to resolve ongoing policy debates about what campaign and election security should entail. The report cites other CRS products that contain additional discussion of some of the topics discussed herein. The report does not address constitutional or legal issues.

Election security is one of the most prominent policy challenges facing Congress. A November 2019 warning from the heads of several federal agencies illustrates the interdisciplinary and ongoing nature of the threat to American elections. According to the joint statement, in the 2020 election cycle, "Russia, China, Iran, and other foreign malicious actors all will seek to interfere in the voting process or influence voter perceptions. Adversaries may try to accomplish their goals through a variety of means, including social media campaigns, directing disinformation operations or conducting disruptive or destructive cyber-attacks on state and local infrastructure."

These are just the latest challenges in securing American elections. Traditionally, election administration emphasizes policy goals such as ensuring that all eligible voters, and only eligible voters, may register and cast ballots; that those ballots are counted properly; and that the voting public views that process as legitimate and transparent. Preserving election continuity is a chief concern. Election officials therefore have long prepared contingency plans that address various risks, such as equipment malfunctions, power outages, and natural disasters.

These traditional concerns remain, but have taken on new complexity amid foreign interference in U.S. elections. In addition to managing traditional security concerns about infrastructure and administrative processes (e.g., counting ballots), mitigating external threats to the accuracy of information voters receive, particularly from foreign sources, is a potential challenge for political campaigns, election administrators, and the public.

Addressing any one of these topics might involve multiple areas of public policy or law. Doing so also can involve complex practical challenges about which levels of government, or agencies, are best equipped or most appropriate to respond. How those entities can or should interact with political campaigns, the private sector, and voters, are also ongoing questions. Technical complexity in some areas, such as cybersecurity, and the federal structure of shared national, state or territorial, and local responsibility for administering federal elections make election security even more challenging.

Election security in general appears to be a shared policy goal, but debate exists in Congress about which policy issues and options to pursue. Debate over the scope of the federal government's role in election security shapes much of that debate. State, territorial, and local governments are responsible for most aspects of election administration, including security.

This report provides congressional readers with an overview that includes

how campaign and election security has developed as a policy field; recent legislative activity, especially bills that have advanced beyond introduction; federal statutes and agencies that appear to be most relevant for campaign and election security; state, territorial, or local roles in administering elections, and federal support for those functions; and highlights of recent policy debates, and potential future questions for congressional consideration.

There is no single definition of "election security," nor is there necessarily agreement on which topics should or should not be included in the policy debate. Broadly speaking, election security involves efforts to ensure fair, accurate, and safe elections. This can include a variety of activities that happen before, during, and after voters cast their ballots.

A narrow definition of election security might address only efforts to protect traditional election infrastructure, such as voter registration databases, voting machines, polling places, and election result tabulations. More expansive definitions might also address issues affecting candidates and campaigns. This includes, for example, regulating political advertising or fundraising; providing physical or cybersecurity assistance for campaigns; or combating disinformation or misinformation in the political debate.

The policy debates discussed herein can affect different kinds of entities uniquely.

Perhaps most notably, security concerns affecting campaigns can differ from those for safeguarding elections and voting. Campaigns in the United States are about persuading voters in an effort to win elections. They are private, not governmental, operations and are subject to relatively little regulation beyond campaign finance policy. Elections are more highly regulated, although specific practices can vary, as their administration is primarily a state- or local-level responsibility. Provisions in state or local law, and, to a lesser degree, federal law, regulate how voters cast ballots and who may do so. Some security discussions include issues related to voter access, while others view access as a separate elections policy matter. This report briefly notes that access can be a component of campaign and election security policy debates, but the report does not otherwise address access issues.

This report does not attempt definitively to resolve ongoing policy debates about what campaign and election security entails or should entail, nor does it fully address all aspects of the policy issues discussed. Instead, it provides congressional readers with background information to consider that debate and decide whether or how to pursue legislation (including appropriations) or oversight. Because all the topics noted aboveâand others discussed throughout the reportâhave been components of the recent congressional debate over how to safeguard American campaigns, elections, and voting, this report uses the general term campaign and election security .

This report discusses federal agencies, statutes, and policies designed to prevent or respond to deliberate domestic or foreign security threats to campaigns, elections, or voting. Concepts discussed in the report also have implications for some unintentional threats, such as natural disasters or other emergencies that could affect campaigns, elections, or voting. Legislation cited in the report contains specific references to campaign and election security. This includes bill text that uses variations of terms such as campaign , election , or vote near variations of the terms interference or security . Some readers might view areas addressed herein as more or less directly related to campaign or election security, and alternative methodologies could yield other bills or policy topics for consideration.

The report does not include detailed attention to more traditional aspects of campaign finance, election administration, or voting, particularly voter mobilization. For example, the report discusses Help America Vote Act provisions that authorize funding states may use to help secure elections, but not provisions that authorize funding for the Election Assistance Commission generally. Similarly, the report briefly discusses Voting Rights Act provisions that prohibit voter intimidation, but it does not discuss other federal statutes enacted to make registration and voting easier. In addition, the report briefly notes lobbying statutes that might be relevant for regulating certain corporate or foreign activity related to U.S. election interference, but it does not substantially address lobbying as a policy area.

The report emphasizes domestic implications of campaign and election security. This includes attention to protections for U.S. campaigns and elections from the effects of foreign disinformation and misinformation efforts. The Appendix at the end of this report includes sanctions or immigration legislation that specifically references interference in U.S. elections, and which has advanced beyond introduction during the 116 th Congress. However, foreign policy implications of such interference, or a discussion of offensive operations and tactics that the United States might or might not use against foreign adversaries, are otherwise beyond the scope of this report.

Because of the still-developing and complex policy challenges surrounding campaign and election security, other areas of law, policy, or practice might also be relevant but are not addressed here. The report references other CRS products that contain additional discussion of several such topics. The report does not provide legal or constitutional analysis. It also does not attempt to catalog all alleged or established instances of campaign and election interference or security concerns, or to independently evaluate allegations.

Highlights of recent legislative activity include the following. Additional discussion appears throughout the report.

The 115 th Congress (2017-2019) appropriated $380 million for FY2018 for improvements to the administration of federal elections, including upgrades to election technology and security. The 116 th Congress (2019-2021) appropriated $425 million for FY2020 in the consolidated appropriations bill ( H.R. 1158 ; P.L. 116-93 ) enacted in December 2019. The " Funding for States After the 2016 Election Cycle " section of this report contains additional detail. The 116 th Congress enacted S. 1790 ( P.L. 116-92 ), the FY2020 National Defense Authorization Act (NDAA), in December 2019. The legislation contains several provisions related to campaign and election security.

Table 1 below lists bills that have passed at least one chamber. The Appendix in this report briefly summarizes 116 th Congress legislation containing campaign and election security provisions that has advanced beyond introduction.

In addition, during the 116 th Congress, committees in both chambers have held hearings on these and related campaign and election security topics. The Committee on House Administration and Senate Committee on Rules and Administration exercise primary jurisdiction over federal elections. Several other committees oversee related areas, such as intelligence or voting rights issues. Another CRS product contains additional discussion of committee roles in federal campaigns and elections generally.

Development of Federal Role in Campaign and Election Security

Foreign interference is only the highest-profile and latest campaign and election security policy challenge. Physical security, to protect voters, ballots, and vote counts, has been an ongoing concern. Specifically, in modern history, the federal government's first role in securing elections was primarily about access and voting rights. In 1965, Congress enacted the Voting Rights Act (VRA), which protects voters against race- or color-based discrimination in registration, redistricting, and voting. More explicitly related to security, the VRA prohibits intimidation, threats, or coercion in voting. Congress primarily tasked the U.S. Department of Justice (DOJ) with enforcing the statute and related criminal provisions. Federal law enforcement agencies, especially the Federal Bureau of Investigation (FBI), also support states and localitiesâwhich retain primary responsibility for election administration in the United Statesâin investigating election crimes and providing physical security at the polls.

The federal role in election administration expanded after the disputed 2000 presidential election. In response, Congress authorized federal funding for the states, the District of Columbia, and territories to make improvements to the administration of federal elections. It also created the Election Assistance Commission (EAC) to administer those funds. Congress charged the agency with overseeing a voluntary voting system testing and certification program, and providing states and localities with voluntary election administration guidance, research, and best practices. These developments notwithstanding, securing campaigns and elections historically was not a major policy topic at the federal level, as most security matters were reserved for state- or local-level policy.

The policy environment changed dramatically during the 2016 election cycle, when media reports and subsequent congressional and federal-agency investigations documented Russian government interference with that year's U.S. presidential election. According to Special Counsel Robert Mueller's report, these interference efforts targeted private technology firms that provide election-related software and hardware; state and local government entities; and a major political party and nominee.

The investigations did not find that this activity was a determinative factor in the election outcome. However, the possibility of such activity, and of additional efforts to affect political attitudes or participation, remains. In July 2018 remarks at the Hudson Institute, then-Director of National Intelligence (DNI) Dan Coats, a former Senator, said that the Intelligence Community (IC) reported "aggressive attempts to manipulate social media and to spread propaganda focused on hot-button issues that are intended to exacerbate socio-political divisions" in elections.

To the extent that those efforts affect campaignsâincluding campaign security, or the information voters receive from campaignsâcampaign finance policy and law could be relevant. The Federal Election Campaign Act (FECA) originated in the 1970s amid concerns about limiting domestic political corruption. The act also contains a wide-ranging prohibition on foreign-national involvement in federal, state, or local U.S. elections. These provisions, and disclosure and disclaimer requirements for all "persons" who raise or spend funds to influence federal elections, are key elements of regulating both domestic and foreign efforts to affect political fundraising, spending, and advertising. Political committees (campaigns, parties, and political action committees [PACs]) are responsible for their own security measures, although, as noted elsewhere in this report, federal agencies (or private-sector entities) provide assistance in some cases.

Today, election security is one of the most rapidly evolving policy issues facing Congress and the federal government. Both chambers have passed legislation on the topic during the 116 th Congress. Multiple House and Senate committees have held investigative and oversight hearings. Congress and the Obama and Trump Administrations have tasked federal agencies with new responsibilities for supporting states and thwarting future possible interference. The Intelligence Community has warned that countering foreign interference in U.S. elections "will require a whole-of-society approach, including support from the private sector and the active engagement of an informed public."

The U.S. Constitution and federal statutes regulate the division of governmental responsibility for elections. No existing statute is devoted specifically to election security, although, as discussed below, some statutes address aspects of the topic. Most broadly, the Constitution's Elections Clause assigns states with setting the "Times, Places and Manner" for House and Senate elections, and also permits Congress to "at any time â¦ make or alter such Regulations." As discussed in the " State and Local Role in Election Security " section of this report, the federal government thus plays a largely supporting role in election administration generally, and in election security specifically.

Two election-specific statutes can be particularly important for campaign and election security. Relevant legislation typically proposes amending one or both. First, the Help America Vote Act (HAVA, 2002) is the only federal statute devoted to assisting states with election administration. Congress relied on HAVA to establish the Election Assistance Commission, provide for a voluntary federal voting system testing and certification program, and authorize federal funding states could use to help secure their elections. Second, FECA's disclaimer and disclosure provisions, and the prohibition on foreign national fundraising or spending in U.S. elections, can be particularly relevant for concerns about foreign interference in U.S. elections. Several other statutes could be relevant in specific cases. Table 2 below provides a brief summary.

No single federal agency has responsibility for providing election or campaign security. Only two federal agenciesâthe Election Assistance Commission (EAC) and the Federal Election Commission (FEC)âare devoted entirely to campaigns and elections.

The EAC administers congressionally appropriated federal funding, oversees a voluntary voting system testing and certification program, and provides voluntary election administration guidance, research, and best practices. The FEC is responsible for administration and civil enforcement of FECA. Other departments and agencies, primarily with responsibilities for other areas of public policy, support campaign and election security in specific cases. Some agency roles developed from a January 2017 "critical infrastructure" designation. Additional detail appears below.

Additional information about agency roles appears below, and in the " Coordination By and Among Selected Federal Agencies " section of this report.

The EAC is the only federal agency focused specifically on assisting states with election administration. Congress has charged the EAC with administering funding states may use to help secure their elections.

The EAC also provides states and localities with election administration assistance, adopting voluntary voting system guidelines (VVSG, discussed below), providing for systems to be tested to the VVSG, and certifying systems as meeting the guidelines. It also conducts research about state election administration and voting, and shares information about best practices. Although not mandated by Congress, the EAC also participates in activities related to the designation of election systems as critical infrastructure, such as serving on the Election Infrastructure Subsector Government Coordinating Council (EIS-GCC) and on the EIS-GCC executive committee.

The FEC enforces civil compliance with FECA provisions and commission regulations regarding campaign finance. This includes activities related to fundraising, spending, advertising disclaimers, and financial disclosure reports. These provisions are relevant for some aspects of security affecting political candidates or campaigns, parties, political action committees (PACs), or other entities (e.g., independent spenders that are not political committees) that raise or spend funds to affect federal campaigns. The FEC does not regulate election administration or voting matters.

DHS provides states and localities with assistance mitigating risks to their election systems, especially concerning cybersecurity.

DHS is the sector-specific agency (SSA) responsible for securing the election infrastructure subsector. Additional information appears later in this report. DHS's Cybersecurity and Infrastructure Security Agency (CISA) is responsible for most of the department's election security activities, including the Election Security Initiative (ESI). DHS protects major presidential candidates through the U.S. Secret Service (USSS). The Secret Service is also the lead security agency for "national special security events" (NSSEs), such as presidential nominating conventions.

The Department of Justice enforces several federal statutes, discussed above, that could be relevant for campaign and election security. Within DOJ, the FBI is the lead federal law enforcement agency supporting state and local election administration, and is the lead federal agency in investigating and prosecuting foreign influence campaigns.

Several agencies contribute to or produce intelligence about election security threats. For example, a declassified version of a January 2017 Intelligence Community Assessment (ICA) documenting Russian attempts to influence 2016-cycle U.S. elections contained information and analysis from the CIA, FBI, and NSA. The " Coordination By and Among Selected Federal Agencies " section below provides additional discussion of the IC campaign and election security roles.

The State Department's Global Engagement Center (GEC) is charged with coordinating federal efforts to counter foreign propaganda and disinformation efforts aimed at undermining U.S. national security interests. The GEC partners with other U.S. government agencies, including those within the State Department, at the Defense Department, and elsewhere. The Departments of Justice, State, and the Treasury all can be involved in administering sanctions for election interference. As noted previously, sanctions policy generally is beyond the scope of this report. Via the FY2020 NDAA bill ( S. 1790 ; P.L. 116-92 ), Congress assigned various agencies, especially DHS and the DNI, additional campaign and election security responsibilities. Most provisions involve providing Congress or federal or state agencies with information about election interference. The Appendix of this report provides additional detail.

Table 3 provides a brief overview of selected agency roles in campaign and election security.

Coordination By and Among Selected Federal Agencies

Because no single federal agency is solely responsible for campaign and election securityâand because state and local governments have most practical responsibility for election securityâcoordination among agencies and governments is an ongoing congressional concern. Adding to the complexity of the election security challenge, government agencies, in some cases, both support and regulate private actorsâsuch as political campaignsâand sometimes rely on those private entities to provide threat information.

Highlights of federal coordination issues appear below. Because some of these relationships appear to be in development, some information about agency coordination, or the lack thereof, remains unclear in the public record. Similarly, some information about coordination among intelligence-gathering agencies is publicly unavailable, beyond the scope of this report, or both. As such, other formal or information coordination among or by agencies likely occurs but is not reflected here.

Department of Homeland Security Coordination Roles

DHS takes a lead role in coordinating the federal support for campaign and election security. Most of the DHS coordination role stems from a January 2017 "critical infrastructure" designation that treats election infrastructure as an essential service requiring federal support and protection. The designation established the Elections Infrastructure Subsector (EIS) within the Government Facilities Sector, which includes various government buildings and equipment.

As a result of the critical infrastructure designation, DHS prioritizes support for the subsector, including to those state and local election jurisdictions that choose to accept such assistance. This includes sharing information about threats; and conducting cyber hygiene and risk and vulnerability assessments. The critical infrastructure designation applies to physical and technical resources related to elections, such as communications technology, voting equipment, and polling places. It does not apply to political campaigns. The designation does not give DHS regulatory authority over federal elections.

DHS serves as the Sector-Specific Agency (SSA) for the EIS. As SSA, the agency plays various coordinating roles among public and private entities, as highlighted below.

As SSA, DHS coordinates information sharing among various governmental and nongovernmental entities (e.g., vendors) responsible for election administration. In this role, DHS also coordinates activities for the EIS Government Coordinating Council (GCC). The EIS-GCC includes representatives from DHS, EAC, and state and local governments. DHS also works with a Sector Coordinating Council (SCC), which consists of industry representatives (e.g., voting-machine manufacturers). DHS also funds the Elections Infrastructure Information Sharing and Analysis Center (EI-ISAC), a voluntary membership organization of state and local election jurisdictions run by the private Center for Internet Security. The EI-ISAC coordinates security information sharing among these entities.

Election Assistance Commission Coordination Roles

As the only federal agency devoted specifically to election administration, the EAC helps facilitate communication between state or local election administrators and other federal agencies, and vice versa. EAC commissioners serve on the EIS Government Coordinating Council (EIS-GCC), coordinated by DHS, and on the EIS-GCC executive committee.

Intelligence Community Coordination Roles

As noted previously, the IC includes more than a dozen agencies from throughout the federal government. Highlights of the IC role in coordination surrounding campaign and election security appear below.

In July 2019, then-DNI Coats created an IC Election Threats Executive (ETE) position to serve as the DNI's principal elections adviser and to coordinate IC election security work. Coats also directed IC agencies to assign a senior executive to serve as the point-of-contact for that agency's election security work and to serve on a new IC Election Executive and Leadership Board. U.S. Cyber Command and the NSA monitors foreign threats to U.S. elections. This reportedly includes a recently established Election Security Group. In addition, the FY2020 NDAA bill requires the DNI to appoint a national counterintelligence officer within the National Counterintelligence and Security Center to coordinate election security counterintelligence, particularly regarding foreign interference and equipment issues.

Coordination Roles and Selected Other Federal Agencies

In addition to coordination on IC threat assessments noted above, multiple federal agencies have collaborated on campaign and election security educational resources for political committees, election administrators, or voters. Agencies also have issued joint warnings. The State Department's Global Engagement Center (GEC) is charged with coordinating federal efforts to counter foreign propaganda and disinformation. The State Department also works with the Treasury Department and Justice Department to administer sanctions for election interference.

The FY2020 NDAA bill ( S. 1790 ; P.L. 116-92 ), enacted in December 2019, requires the DNI to "develop a whole-of-government strategy for countering the threat of Russian cyberattacks and attempted cyberattacks against election systems and processes in the United States." Congress specified that the strategy should include protecting federal, state, and local election systems, voter registration databases, voting tabulation equipment, and systems for transmitting election results. Congress also required the DNI to develop the strategy "in coordination" with the Secretaries of Defense, Homeland Security, State, and the Treasury, and with the Directors of the CIA and FBI.

Federal Agency Roles and Campaign Security

Perhaps because the 2017 critical infrastructure designation does not apply to political campaigns or other political committees, it appears that no federal agency has specific responsibility for coordinating security preparations for these entities. However, federal law enforcement agencies, particularly the FBI, can and do receive reports of, and investigate, suspected criminal activity. In preparation for the 2020 elections, the FBI also established a "Protected Voices" program that provides political campaigns, private companies, and individuals with information about how to guard against and respond to cyberattacks and foreign influence campaigns. In addition, DHS (CISA), the FBI, and ODNI have jointly briefed some 2020 federal political campaigns on security threats and best practices.

Federal election law takes a mostly voluntary approach to election security. Congress has set some security requirements for federal elections, such as directing election officials to provide a certain level of technological security for their HAVA-mandated computerized voter registration lists. Most election security standards are set at the state or local levels.

Some examples of the voluntary election security guidance the federal government provides are the research, best practices, and technical assistance described in the " Selected Federal Agencies " section of this report. HAVA also charges the EACâwith assistance from the agency's advisory bodies and NISTâwith developing voluntary voting system guidelines (VVSG), accrediting laboratories to test voting systems to the VVSG, and certifying systems as meeting the VVSG. The proposed update to the VVSG that was in development as of this writing (VVSG 2.0) includes some security-related principles and guidelines, such as ensuring that voting systems are auditable, limiting and logging access to voting systems, and preventing or detecting unauthorized physical access to voting system hardware.

Participation in the federal voting system testing and certification program is voluntary under federal law. The testing and certification program covers the "voting system" as defined by HAVA, which does not include some components of the election system, such as voter registration databases and election night reporting systems. Changes to one part of a voting system, such as updating software to patch security vulnerabilities, might require recertification of the system under the policies in effect as of this writing, and updates to the VVSG require approval by a three-vote majority of the EAC's commissioners.

Federal Funding for Securing Election Systems

Congress has responded to the threats that emerged during the 2016 election cycle, discussed above, in part with funding. Since the 2016 elections, it has provided funding for helping secure election systems both to states, territories, and the District of Columbia (DC), and to federal agencies.

Funding for States After the 2016 Election Cycle

The Consolidated Appropriations Act, 2020 ( H.R. 1158 ; P.L. 116-93 ), and the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), included $425 million and $380 million, respectively, for payments under provisions of HAVA that authorize funding for general improvements to the administration of federal elections. The explanatory statements accompanying the bills listed the following election security-specific purposes as potential uses of the funds:

replacing voting equipment that only records a voter's intent electronically with equipment that utilizes a voter-verified paper record; implementing a post-election audit system that provides a high level of confidence in the accuracy of the final vote tally; upgrading election-related computer systems to address cyber vulnerabilities identified through DHS or similar scans or assessments of existing election systems; facilitating cybersecurity training for the state chief election official's office and local election officials; implementing established cybersecurity best practices for election systems; and funding other activities that will improve the security of elections for federal office.

The 50 states, DC, American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands were eligible for both FY2018 and FY2020 payments. The Commonwealth of the Northern Mariana Islands (CNMI) was eligible for FY2020 funding. Each recipient was guaranteed a minimum payment amount each year it was eligibleâ$3 million for each of the 50 states and DC and $600,000 per eligible territoryâwith the remainder of the appropriated funding distributed according to a formula based on voting-age population. Recipients are required to provide a 5% match for the FY2018 funds within two years of receiving a federal payment and a 20% match for the FY2020 funding.

The EAC, which was charged with administering the payments, reported that all of the FY2018 funds were requested by July 16, 2018, and disbursed to the states by September 20, 2018. Each state has five years to spend the funds, according to the EAC, and must report on its spending each fiscal year. The EAC posts links to the states' reportsâand spending plansâon its website and issues its own overview reports of state spending.

Funding for Federal Agencies After the 2016 Election Cycle

As noted in the " Selected Federal Agencies " section of this report, multiple federal agencies are involved in helping secure election systems. Congress has designated some of the funding it has appropriated to such agencies specifically for election system security. For example, following the designation of election systems as critical infrastructure in January 2017, the report language for DHS appropriations measures has specified funding for the department's election security initiative. The explanatory statement for the FY2018 spending bill also directed the FBI to use some of its funding to help counter threats to democratic institutions and processes.

Agencies may also spend some of the funding they receive for more general purposes on activities related to election system security. The U.S. Department of Defense's (DOD's) Defense Advanced Research Projects Agency (DARPA) has provided funding under its System Security Integrated Through Hardware and Firmware (SSITH) program to advance development of a secure, open-source voting system, for example, and the EAC applies some of its operational funding to the federal voting system testing and certification program described in the " Federal Election Security Guidance " section of this report.

State and Local Role in Election Security

Some threats to U.S. electionsâincluding both intentional interference efforts and the unintended threats posed by errors and natural disastersâinvolve the state and local systems used to administer elections. Other election security threats involve efforts to spread disinformation about elections or the integrity of the electoral process.

States and localities may play a role in countering both types of threat. First, states and localities take the lead on defending their election systems. As noted previously, states and localities have primary responsibility for administering elections in the United States. The federal government has provided some funding and technical support to help them secure the systems they use to run elections, but states and localities have primary responsibility for ensuring that their systems are physically and technologically secure.

That includes primary responsibility for funding election system security measures. Securing election systems may involve capital expenditures, such as replacing voting machines, that exceed funding provided by Congress. It may also involve ongoing costsâfrom identifying and addressing emerging security threats to renewing software licenses, paying election security staff, and conducting post-election auditsâthat extend beyond the period for which federal funding is available. Such expenses are covered, if they are covered, by states and localities.

State and local responsibility for election system security also includes primary responsibility for making and implementing most decisions about how to secure election systems. Federal law sets some general standards for the administration of elections, such as the voter registration list digitization requirement noted in the " Federal Election Security Guidance " section of this report.

States and localities decideâwithin the broad parameters set by such general standardsâwhich election equipment and procedures to use and how to mitigate risks to them. They choose, for example,

whether to use electronic devices to capture or count votes; whether, when, and how to conduct post-election audits; whether and how to set security standards for election equipment vendors; whether to have in-house security staff in local jurisdictions or rely on state or vendor IT support; which cybersecurity tools and procedures to use; whether and how to train election officials and poll workers on election security; how to secure election materials between elections and ensure a secure physical chain of custody on Election Day; and what cyber and physical security standards to set for election equipment.

Second, states and localities can help combat disinformation or misinformation about elections or the integrity of the electoral process. They can, for example,

use official websites and social media accounts to share accurate information about elections or counter false information; and help educate the public about the steps they take to safeguard the electoral process.

States also can work through their professional associationsâusing initiatives such as a public education campaign launched by the National Association of Secretaries of State (NASS) in November 2019âto help direct voters to trustworthy sources of election information.

These efforts might occur as part of or in parallel with responses to disinformation or misinformation by the federal government or private entities like social media companies. States might partner with social media companies to remove posts containing election disinformation, for example, or adopt disclosure requirements that supplement or override the companies' policies on digital political advertising.

Selected Recent Policy Issues for Congress

Table 4 below briefly summarizes selected policy issues and options that have shaped recent policy debates in Congress. In addition, the Appendix at the end of this report briefly summarizes legislation primarily devoted to campaign and election security that has advanced beyond introduction during the 116 th Congress. The table reflects recent policy debates, but is not intended to be exhaustive. Some observers might consider other issues not reflected here to be relevant for campaign and election security.

Campaign and election security are developing fields that cross policy and disciplinary boundaries. This complexity is reflected in the various statutes, agencies, and congressional committees that share responsibility for policymaking and administrative matters relevant for security U.S. campaigns and elections. Questions such as those that follow reflect themes discussed throughout this report. These and other questions could help congressional readers decide whether they want to maintain the status quo, appropriate funds, or pursue oversight or legislation.

Federal R ole. A key question for Congress is whether, where, and how it chooses to be involved in campaign and election security. Most broadly, this potentially includes how to define this rapidly developing policy area, and in so doing, considering which issues are most appropriately addressed at the federal level versus at the state or local levels. This report has emphasized the federal role because those topics are most relevant for Congress. As the report also explains, states, localities, and territories are responsible for making many of their own election security decisionsâjust as political campaigns, parties, and PACs are responsible for their own security. Therefore, there are important debates about what campaign and election security includes that the federal government can influence, but that are primarily addressed below the federal level, in the private sector, or both. Examples include, but are not limited to, how election security might affect voter access, and vice versa; whether states require voter identification at the polls and whether or to what extent alleged vote fraud exists; how much and on what jurisdictions choose to spend available funds; and whether states, localities, or political campaigns and parties have sufficient resources to secure their elections or organizations. Communication. Does Congress want to encourage or require additional information sharing about campaign and election security matters between the federal government and nonfederal elections agencies? Similarly, do state, territorial, and local elections officials feel that they have or need clear points of contact within federal agencies, and do they know which agencies to contact in various circumstances? If it determines that the status quo is inadequate, does Congress want to encourage or require different reporting protocols, agency outreach, etc.? Coordination. Various agencies have reported to Congress that they have improved coordination among themselves, particularly through working groups or task forces. Less clear, at least from publicly available information, is specifically how such coordination works and whether current coordinating mechanisms are sufficient or whether agencies need additional resources or mechanisms to improve coordination. If it determines that the status quo is inadequate, does Congress want to exercise oversight in this area, provide additional information-sharing authorities, funding, etc., or does it consider current coordination authorities and mechanisms sufficient? Sectors. Much of the federal government's attention to campaign and election security appears to emphasize outreach to election administrators in states, territories, and localities. With respect to the private sector (such as political campaigns and equipment manufacturers), is federal agency support sufficient? To what extent are information-sharing practices among federal agencies and the private sector (or voters) similar to or different from those that shape communication between federal agencies and state, territorial, or local governments? If it determines that the status quo is inadequate, does Congress want to encourage or require additional federal agency support for nongovernmental entities in campaign and election security, or reporting requirements for those entities to the federal government? Voters. Some federal public education campaigns, such as those to counter disinformation in elections, are aimed at individual voters. Overall, however, much of the federal role in campaign and election security emphasizes communication among government agencies or, in some cases, the private sector. If it determines that the status quo is inadequate, does Congress want to task federal agenciesâand if so, which onesâwith additional responsibility for educating voters about campaign and election security; to provide funding for nongovernmental organizations to do so, etc.?

The scope of potential campaign and election security threats, and the federal government's role in responding to those threats, has changed substantially in less than five years. The foreign interference revealed during the 2016 cycleâand widely reported to be an ongoing threatâhas renewed congressional attention to campaign and election security and raised new questions. Whatever Congress determines about whether these or other questions are relevant for its consideration of campaign and election security policy, the issue is likely to remain prominent for the foreseeable future.

Appendix. Legislation Related to Campaign and Election Security That Has Advanced Beyond Introduction, 116th Congress