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Washington, DC – Senator Bob Bennett (R-Utah), chairman of the Joint Economic Committee, said today dynamic analyses by the Congressional Budget Office (CBO) confirm pro-growth tax relief – such as ending the double taxation of dividends – will help the economy.

“CBO analyzed the entire budget, rather than only the economic growth package,” said Bennett. “A fair reading of CBO’s report shows spending and some tax reductions can negate the economic benefits of pro-growth tax relief.”

Bennett based his remarks on a new examination of the CBO report released today by the Joint Economic Committee (JEC). Among other things, JEC’s examination of the CBO report reveals:

• In the short-run, the president’s budget would increase real gross domestic product by 1.3 percent in 2004.

• In the long-run, negative effects of spending and some tax reductions would offset the positive effects of pro-growth tax relief like ending the double taxation of dividends.

• If Congress significantly cut back the president’s economic growth package, the remaining spending increases in the budget might actually hurt the economy in the long-run.

“The last thing we should do is reduce the pro-growth tax relief in the president’s budget and increase the spending, yet many in Congress propose doing exactly that,” Bennett explained.

The Congressional Budget Office released the dynamic analyses last week as part of a final version of their report, “An Analysis of the President’s Budgetary Proposals for Fiscal Year 2004.”

The Joint Economic Committee is a unique joint Senate-House committee created to study the economy and advise Congress on economic policy. To view JEC’s 3-page examination of the CBO report, visit the committee’s website at https://www.jec.senate.gov.
Washington, DC – A hearing of the Joint Economic Committee, chaired by Senator Bob Bennett (R-Utah), unearthed a number of creative ideas for financing roads and reducing congestion that Congress could use this year when drafting a new surface transportation program.

“Amidst the routine debate over the program’s budget and spending formulas, some voices can be heard suggesting innovative and creative ideas,” Bennett said.

For example, a wide spectrum of witnesses endorsed an idea of allowing drivers to pay for the use of high-occupancy vehicle (HOV) lanes.

“Shift the operating principle of HOV lanes to HOT lanes – that’s high-occupancy toll lanes,” explained Robert Poole, director of transportation studies at the Reason Foundation. “Convert them to high-speed premium lanes which drivers can use by paying a market price and which truly high-occupant vehicles – buses and vanpools – can use for free.”

Micheal Replogle, transportation director for Environmental Defense, said: “HOT lane critics often unfairly bash them as ‘Lexus Lanes,’ serving only the rich. Several real-world HOT lanes look more like ‘Lumina Lanes,’ used by people of widely varying incomes who occasionally need to bypass traffic delays that disrupt their social, family, or work life.”

Bennett cited a report estimating time spent in traffic jams and wasted fuel cost the U.S. economy $67.5 billion in 2000. “This cost is what I call ‘the ghost tax of congestion,’ always following us around where ever we go,” Bennett remarked.

“Transportation makes up roughly ten percent of our nation’s economy, but the importance of the transportation sector far exceeds its share of output,” Bennett explained. “In a world of ‘just-in-time’ delivery and customized production, companies cannot afford to wait for their parts to arrive or for their finished products to be delivered.”

Congress is scheduled soon to re-authorize the Transportation Equity Act for the 21st Century (TEA-21). The Joint Economic Committee (JEC) is a unique joint Senate-House committee created to study and advise Congress on economic policy. For copies of today’s testimony or for other information, visit the JEC online at https://www.jec.senate.gov.
Washington, DC – Senator Bob Bennett (R-Utah), chairman of the Joint Economic Committee, made the following comments at the committee’s employment hearing today.

Regarding the February 2003 employment report:

“The economy has been growing, but too slowly to help many of our nation’s workers.”

“Today’s numbers reinforce the need for a bold economic growth package.”

“Congress should enact a plan that helps create jobs for those who are out of work today and strengthens the economy for years to come. A quick, temporary fix is not in order. We would fail our responsibilities if we adopt a limited package only to find ourselves in the same situation a year or two down the road.”

Regarding the president’s proposal for new personal re-employment accounts:

“Obviously the best remedy for the unemployed is a job. Most of us would much rather earn a paycheck than be given an unemployment check.”

“The basic structure of our unemployment insurance program has not appreciably changed for many years, and economists tell us that there is much room for improvement. The administration has made an innovative attempt along these lines with its proposal to create personal re-employment accounts. They would focus on the most important need – supporting efforts to find a new job.”

The Joint Economic Committee is a unique joint Senate-House committee created to study and advise Congress on economic policy. For copies of today’s testimony or for other information, visit the JEC online at https://www.jec.senate.gov.
Washington, DC—Senator Bennett, Chairman of the Joint Economic Committee, held a hearing today on how technology and innovation affect health care costs. In other sectors, new technologies usually lead to greater efficiency and lower costs in goods and services, yet it is unclear whether the same is true for health care. Bennett welcomed witnesses from the Administration and leading medical research institutions to explore the various ways that technology influences health care costs. Panelists included Dr. Mark McClellan, Commissioner of the Food and Drug Administration, and Dr. Carolyn Clancy, Director of the Agency for Healthcare Research and Quality (AHRQ).

“We have a health care financing problem that goes well beyond the budget challenges posed by Medicare,” said Chairman Bennett. “For many years, the nation’s health care spending has grown at a significantly faster rate than the economy, and projections indicate that this will continue. Advances in medical technology are contributing to this rise in health care costs, but the problem is compounded by the way we pay for technology.”

During the hearing, Bennett pointed to the need to examine whether new technologies are used in an efficient and effective manner, and if there are areas where they are being overused or underused. For example, if a new advanced imaging device becomes available, will every hospital in a city decide to purchase it, or can the hospitals share the expensive equipment? At the same time, some new technologies may be underused such as those related to preventative medicine.

“Advances in the medical field are leading to the enjoyment of longer, more fulfilling lives for millions of Americans,” said Chairman Bennett. “We need to make sure that medical technology remains accessible to those who need it by keeping costs at a reasonable level.”

Among the issues that surfaced during the hearing was that the gap between best practices and practices actually in use is substantial. The panel found that it would be beneficial to investigate the actual use and efficacy of different treatments once they have been approved and how much time it takes for medical knowledge to be disseminated throughout the medical community. A study published by the Agency for Healthcare Research and Quality (AHRQ) pointed out that it can take 17 years from discovery of a new medical product or procedure until it is widely used in
practice.

In addition, the panel concluded that incentives – financial and otherwise – do indeed matter in health care. Consumers, providers, and payers all react to incentives, so policymakers should take care to understand how those incentives operate and, where possible, to harness those incentives for the social good. Medical payment systems should encourage good health outcomes and quality treatment, not billable procedures.

Sep 30 2003

Bennett Says Economic Growth Bill is Needed

White House Economists Testify on Bush Agenda

Washington, DC – Senator Bob Bennett (R-Utah) argued at a hearing of the Joint Economic Committee today that Congress needs to pass an economic growth bill.

“Some have questioned whether an economic growth package is needed now,” Bennett said. “But inaction will not bring us a robust economy.”

Dr. R. Glenn Hubbard, chairman of the Council of Economic Advisers, testified at the hearing on the recently released Economic Report of the President.

“We view this much the way one views insurance,” Hubbard said. He explained the administration sees many “downside risks” in current economic data and in looking at how the economy has sometimes recovered from past recessions.

Bennett also reiterated proposals for temporary one-year tax cuts could sacrifice long-term growth for short-term stimulus. “The administration has resisted efforts to pile-on its economic growth package with dubious spending programs or temporary tax cuts which would only produce a short-run impetus to the economy. It should be commended.”

The wide-ranging hearing today reflected the numerous initiatives and reforms undertaken by the Bush administration. In addition to Hubbard, the following economists testified at the hearing: Dr. Randall Kroszner of the Council of Economic Advisers, Dr. Henry J. Aaron of the Brookings Institution, Dr. Eric M. Engen of the American Enterprise Institute and Dr. Daniel Mitchell of the Heritage Foundation.

“‘Bite-sized’ is not the adjective that comes to mind when looking at these proposals,” Bennett remarked about the administration’s agenda. “‘Bold’ or ‘far-reaching’ are more appropriate.”

Bennett is the chairman of the Joint Economic Committee, a unique joint Senate-House committee created in 1946 to study and advise Congress on economic policy.
Washington, DC—The Joint Economic Committee (JEC) released a report today that puts current deficits into historical perspective and discusses how spending restraint and a growing economy are critical to reducing future deficits.

“The current deficits reflect a near ‘perfect storm’ that has rocked government finances in recent years,” said JEC Chairman Bob Bennett. “Revenues plummeted due to a weak economy and a sharp drop in the stock market. At the same time spending has increased because of terrorism, new homeland security requirements, and two wars. Our economy is large enough to recover from these events, but only if we can practice fiscal restraint.”

Recent projections by the Office of Management and Budget (OMB) show a potential budget deficit of $455 billion this year. Although the current deficit is large in nominal dollars, today’s JEC report points out that in order to have an accurate picture, deficits should be measured relative to the size of the economy. It is important to account for the economy’s capacity to absorb the deficits and the government’s ability to finance them. Both of these factors depend on
the size of the economy. When measured as a percentage of the gross domestic product (GDP), today’s deficits are still below the peaks of the 1980s and 1990s.

“Continued increases in the deficit could pose significant economic problems if they persist,” said Bennett. “It is important to have an understanding of how these deficits arose and to put them in proper perspective. In doing so, we can more effectively implement policies to rebound from current deficits. The reason for the deficits prescribes their solution.”

Fifty-three percent – the largest chunk – of the budget deterioration in fiscal year 2003 has been due to overall economic weakness, declines in the tax base, and other technical estimate changes. Spending increases account for 24 percent of the deterioration. Tax relief and economic growth legislation of the last two years have contributed only 23 percent of declines in projected surpluses. In fact, the economy has fared much better than it would have because of these progrowth actions.

“The economy is beginning to show signs of renewed growth,” said Bennett. “Congress has enacted timely pro-growth legislation. Now is the time for a renewed commitment to spending restraint.”

Sep 30 2003

Prescription Drugs Are Only One Reason Why Medicare Needs Reform

Improved Efficiency, More Choice Necessary to Protect Medicare for Future Generations

Washington, DC— According to a report released today by the Joint Economic Committee, Medicare faces enormous fiscal challenges as the “Baby Boom” generation retires and as the program expands to cover prescription drugs. Congress is now focused on the need to extend prescription drug coverage to Medicare beneficiaries. That need is certainly important, but it is not the only reason that Medicare needs reform.

“Medicare is an incredibly inflexible program that is unable to adapt to rapid advances in modern health care,” said Chairman Bennett. “As we debate how to provide a prescription drug benefit to the program, we must keep an eye on the end goal -- to make Medicare more efficient, more flexible, and more responsive to the needs of all Americans.”

The Joint Economic Committee report highlights three key areas that must be addressed to ensure that Medicare will be able to serve an aging population and future generations: improving the long-term financial viability of the program, making Medicare more responsive to health care advances, and introducing choice and competition.

Medicare lags far behind other insurers in providing prescription drug coverage, disease management programs, and a host of other advances. Reforming Medicare to create a more selfadjusting, innovative structure could improve both the efficiency and quality of the medical care provided. That can be accomplished partly by allowing beneficiaries greater choice and introduce greater competition between plans. Giving Medicare beneficiaries greater choice has
at least two key advantages: It allows the beneficiaries to be the primary customer, rather than the government or a former employer. It also creates powerful incentives for all Medicare plans, public or private, to provide the highest quality health care and the most competitive price.

Sep 30 2003

Bennett Hosts Leading Economic Experts at Hearing on How to Transform Iraq

Private Property Rights and Entrepreneurship Critical to Long-term Economic Prosperity

Washington, D.C. – Senator Bob Bennett (R-Utah), chairman of the Joint Economic Committee (JEC), held a hearing today to discuss key economic principles for “Transforming Iraq’s Economy.” The hearing served to push the focus of the debate away from the short-term management of Baghdad and towards the implementation of policies that can ensure a long-run and prosperous free-market economy in Iraq and for the Iraqi people.

“The desire to replace a brutal tyranny and harsh dictatorship with a functioning, stable government that is ready to join the world and participate as a true partner in the world economic structure has enormous implications for the United States and our economy – even bigger for the world at large,” said Bennett. “A peaceful, stable, economically viable Iraq will transform the Middle East, if we are successful. If not, we will pay a price that is almost incalculable at this point.”

Bennett welcomed witnesses to the hearing who each have a unique perspective on building struggling economies and encouraging entrepreneurship. Documented property rights, a growing entrepreneurial class, a stable financial system and trade with other countries is the foundation to achieving these goals. Currently, Iraq does not have the legal framework to recognize private property rights and therefore its citizens do not have the ability to build personal capital and can not adequately participate in a market economy.

According to Hernando de Soto, President of Peru’s Institute for Liberty and Democracy, “Creating a property system is more than just building a system to record ownership; it is the cornerstone of the rule of law and the market economy. A property system has to be designed so that it can integrate all of a nation’s assets and provides the framework of rules that allow people to exchange goods and services in the expanded market.”

Bennett pointed out that most discussion on rebuilding Iraq’s economy is focused on oil wealth and that any future discussion should recognize that there are many other opportunities. For instance, Iraq has a great deal of water and fertile land that has a promising potential for agricultural use. He added that the United States’ efforts to assist the development of an economically stable Iraq is “timely, dangerous, expensive, but overwhelmingly worth all the challenges.”
Washington, DC—A Joint Economic Committee report released today explored ideas to fund future transportation improvements. According to the report, toll lanes can be a vital component to ensuring safe, less congested roads. With the number of drivers increasing and traffic congestion worsening every year, states are facing a growing challenge to finance new roads and relieve gridlock on existing roads.

“Most large cities desperately need new and improved highways to deal with the dramatic increases in traffic that have occurred in recent years,” said Chairman Bennett. “By giving states the flexibility to explore innovative practices, we give drivers the opportunity to enjoy better roads and make better choices in their daily commutes.”

One alternative states might explore is the implementation of modernized toll lanes, through which federal, state, and local governments can offset a significant increase in surface transportation expenditures. Rather than the traditional toll booth, these toll lanes could utilize technologies such as transponders that electronically charge a fee and do not impede the flow of traffic. Additionally, the toll charge could be varied based on the current congestion level on the
road, thereby encouraging drivers to use mass transit during peak travel times.

The report noted successful toll lane projects that have already been put into place. Domestically, perhaps the most successful pilot project is the High Occupancy Toll (HOT) lanes project on Interstate 15 in San Diego. The project has led to several dramatic improvements in road performance, and an increase in the number of people carpooling. Overseas, London has introduced a congestion pricing scheme that charges vehicles entering the central city. The
average driving speed in London’s central city has increased 37 percent and the total number of cars entering Central London has decreased by 20 percent.

Currently, there is a bill in Congress that addresses this issue. The Freeing Alternatives for Speedy Transportation (FAST) Act (H.R. 1767) would remove the current prohibition on tolls for federal highways, as well as ensure that states would not be penalized for coming up with innovative ways to fund transportation construction.

The report is available online at https://www.jec.senate.gov, or call Rebecca Wilder at (202) 224-0379.
Washington, DC—The Joint Economic Committee (JEC) today released “A Tale of Two Employment Surveys,” a report that delves into the growing disparity between two sets of employment data produced by the Bureau of Labor Statistics (BLS). The BLS uses two distinct surveys to measure the number of jobs in America, a payroll survey that measures the number of people employers have on their payrolls and a household survey that measures the number of
individuals who report being employed.

“Measuring the economy is difficult in any circumstance, but nowhere is it more important than when assessing the labor market as the nation recovers from a recession,” said JEC Chairman Bennett.

The payroll survey released earlier this month indicates that the number of jobs has declined by 1.1 million since the end of the recession in November 2001, while the household survey indicates that the number of employed people has increased by 1.4 million. This jobs gap of 2.5 million is unprecedented. The JEC made calculations to control for an unusually large statistical adjustment the BLS made to its household estimate in January 2003. Making this correction, the JEC found that the household series still shows a gain of 1.1 million employed workers since the
end of the recession and a jobs gap of 2.2 million.

The BLS states that the payroll survey provides a more comprehensive estimate of the number of people on the payrolls of established organizations. However, only the household survey measures those self-employed and those working in agriculture.

“The disparity between the two surveys may be due to inaccuracies in the surveys, changes in the workforce, or both; only time will tell. For these reasons, focusing only on the payroll survey is misleading. Analysts should consider both the household and payroll surveys in trying to understand the employment situation,” said Bennett.

The complete report can be viewed at https://www.jec.senate.gov.