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Washington, DC—Senator Robert F. Bennett, Chairman of the Joint Economic Committee, held a hearing today to find ways that federal policy can encourage Americans to save. Bennett invited witness widely recognized as experts on saving; Richard Thaler, University of Chicago professor of economics; Robert Pozen, Non-Executive Chairman of MFS Investment Management, and professor at Harvard Law; Ric Edelman, founder of Edelman Financial Services in Fairfax, and host of financial programs on radio and television; and Peter R. Orszag,
Senior Fellow at The Brookings Institution.

“The U.S. tax system is excessively complex to the point where it discourages personal saving,” said Bennett. “The income tax system and the treatment of dividends, capital gains, and interest income lets the government tax the returns from saving two or even three times before it reaches
a worker’s pocket. The tax advantages we do provide, such as for IRAs, are complicated, and unreasonably restrictive.”

Two years ago, American households saved only 1.5% of their income, an all-time low. Just over a decade ago, households saved eight percent of their income, and in the 1970s and early 1980s the saving rate was regularly over ten percent. Personal saving is low not only by historical standards but by international standards; nearly every other westernized economy saves more than the U.S., as do many developing countries.

“As Americans live longer and entitlement programs balloon, it is not realistic to expect the federal government to pick up the entire tab,” said Bennett. “What’s more, saving finances the investment necessary to spur further economic growth. The American economy is driven by
ingenuity and entrepreneurship, but even the most ambitious genius with a business plan can do little without ready access to capital.”

The panel concluded that policymakers should adopt simple, common-sense changes to the current tax code making it easier and more attractive for individuals to save. It was also agreed that financial education should become a core component in schools and in the workplace in order to improve the financial well-being of all Americans.
Washington, D.C.—Senator Bob Bennett (R-Utah), chairman of the Joint Economic Committee, announced today that he will hold a hearing on “Helping Americans Save” at 10:00 a.m., March 10, 2004. The hearing will highlight the need to increase the amount that American households are saving and policies that can encourage people to save.

Senator Bennett has invited witnesses with a variety of expertise in the area of personal finance. Richard Thaler, a University of Chicago professor of economics, has been at the forefront of developing innovative ways to increase saving through employer-sponsored retirement plans. Robert Pozen, Massachusetts Secretary of Economic Affairs, professor at the Harvard Law School, and former vice-chairman of Fidelity Investments, has a unique perspective on how institutions can affect saving, and what types of reforms would complement the work of financial institutions. Ric Edelman, founder of Edelman Financial Services in Fairfax, VA, is the author of three New York Times #1 bestsellers, is an award-winning host of radio and television shows, and taught personal finance at Georgetown University for nine years.

WHAT: JEC hearing on “Helping Americans Save”

WHEN: 10:00 a.m., Wednesday, March 10, 2004

WHERE: Room 628, Dirksen Senate Office Building

Richard Thaler
Robert P. Gwinn Professor of Behavioral Economics and Finance
Graduate School of Business
University of Chicago
Research Associate, National Bureau of Economic Research

Robert Pozen
Secretary of Economic Affairs, State of Massachusetts
John M. Olin Visiting Professor of Law from Practice
Harvard Law School

Ric Edelman
Financial Management Advisor
Television and Radio Host
Washington, D.C.

Additional witness TBA
Washington, D.C.—Senator Robert F. Bennett, chairman of the Joint Economic Committee (JEC), announced today that he will hold a hearing on “The Employment Situation” at 9:30 a.m., March 5, 2004. The Commissioner of the Bureau of Labor Statistics will be on hand to discuss the February employment data which will be released that morning.

WHAT: JEC hearing on “The Employment Situation”

WHEN: 9:30 a.m., Friday, March 5, 2004

WHERE: Room 562, Dirksen Senate Office Building

WITNESS: Kathleen P. Utgoff, Ph.D., Commissioner
Bureau of Labor Statistics
U.S. Department of Labor
Washington, DC—Senator Robert F. Bennett, Chairman of the Joint Economic Committee (JEC), held a hearing today on the recent performance and continued potential of a consumer driven approach to health care. During the hearing, Bennett urged the Department of Health and Human Services to expand access to its Medicare claims database so that health plan sponsors could develop cost and quality comparisons and help their consumers make better informed
decisions. Data would be held back only to the extent necessary to protect the privacy of individual Medicare beneficiaries.

“One of our problems with the current health care system is that the people who are making the health care decisions are not the ones consuming the services” said Bennett. “A consumer driven approach to health care restores to consumers direct control over their health care dollars. It
provides them with better value, greater choice, improved health, and recognition of the true cost of the services they demand.”

“The United States faces a significant challenge to keep health care affordable,” Bennett added. “For many years, our health care spending has grown at a significantly faster rate than the economy, and many projections indicate that this will continue. By restoring control of health
care decisions to individuals, we can reverse a long-term trend that has combined more third-party payment of health care bills with substantial hikes in health care spending. Consumer driven health care plans offer a broad range of options that encourage individuals to take a
greater role as informed health care consumers.”

In conjunction with the hearing, the JEC released a report, Medical Spending Growth & the Level of Insurance Coverage, that highlights the relationship between third party payment and rising health spending. Over the last 40 years, the out-of-pocket share an individual pays has
gone down while the total real cost of health care per person has increased almost seven-fold.

The report explains that for decades many Americans have had the perception that their health care is paid for with someone else’s money. This third-party could be an employer, a private insurer, or the government. In fact, most working Americans and their families receive health care through an employer because of the tax advantages of employer-provided health insurance.

One option cited in the study to restore consumers’ control over their spending decisions is the Health Savings Account (HSA), a provision included in last December’s Medicare Act. HSAs include a high-deductible insurance plan to cover large, unplanned expenses and a tax-preferred
personal savings account for routine care.

“Giving individuals and families greater control over their health care decisions should strengthen the patient/physician relationship, improve accountability, and ensure consumers receive the greatest value for their health care dollar.”

Testimony from the hearing and the full report on medical expenditures can be found online at
Washington, DC—Joint Economic Committee Chairman Robert F. Bennett will host a hearing to explore the development of consumer driven health care. Consumer driven health care allows consumers greater flexibility in choosing and paying for health care based on their own needs and preferences. The hearing will take a look at some of the lessons learned by employers who have provided this benefit to their employees and ways to improve upon it.

What: JEC Hearing “The Performance and Potential of Consumer Driven Health Care”

When: Wednesday, February 25, at 10:00 a.m.

Where: Dirksen Senate Office Building, Room 628

Witnesses: Mr. Arnold Milstein, MD, MPH
Medical Director, Pacific Business Group on Health
Worldwide Partner, Mercer Human Resource Consulting
San Francisco, CA

Mr. John Bertko, FSA
Vice President and Chief Actuary
Humana Inc.
Louisville, KY

Mr. Howard Leach
Human Resources Manager
Logan Aluminum, Inc.
Russellville, KY

Ms. Gail Shearer, Director,
Health Policy Analysis
Consumers Union
Washington, DC
Washington, DC—Senator Robert F. Bennett, Chairman of the Joint Economic Committee held a hearing today on the Economic Report of the President. Chairman Bennett invited Dr. Greg Mankiw, Chairman of the president’s Council of Economic Advisers, and Drs. Harvey Rosen and Kristin Forbes, members of the Council, to present the report and testify on its contents.

“Despite a ‘perfect storm’ of blows to the economy, recent economic indicators tell us what many have already been feeling, that the economy is now experiencing a strong recovery,” said Bennett. “Over the next year, we can look forward to a robust economy and the job creation that will follow. We must begin to focus on how to maintain a strong economy for the next 10 years and beyond.”

In particular, Bennett addressed long-term entitlement spending and how it is critical the Congress and administration be fiscally responsible in areas other than discretionary spending – particularly with respect to Medicare and Social Security, which will continue to grow as a share of total government spending indefinitely.

Bennett remarked that continued increases in the deficit could pose significant economic problems if they persist and urged greater attention to federal spending, stating that recent growth rates are clearly unsustainable.

“We need to slow the growth of discretionary spending, but it is less than half of the equation,” said Bennett. “The bigger problem we face in the long run is rapidly escalating entitlement spending. Long-run fiscal discipline demands that we consider serious reforms before this massive spending growth comes to pass.”

Bennett reiterated that one of the greatest concerns for the economy is the enormous burden that will be placed on it once the baby boomers begin to retire toward the end of the decade. “As these men and women retire, the nation faces a serious challenge with fewer workers available to support each retiree. We will see increasing pressure on Social Security and Medicare,” he added. In order to manage this change, Bennett urges Congress and the Bush administration to undertake serious reforms of these programs.

Bennett also discussed the beneficial effect that tax cuts have had on the economy. He stated that by failing to maintain them in law, Congress would be short-circuiting the powerful incentives that encourage work, saving, and investment and spur economic growth.
Washington, DC—Robert Bennett (R-UT), Chairman of the Joint Economic Committee, has invited members of the President’s Council of Economic Advisors to testify on The Economic Report of the President, which will be released early next week. The hearing will be held on Tuesday, February 10, 2004 at 2:30 p.m. in 628 Dirksen.

The Joint Economic Committee (JEC) and Council of Economic Advisors (CEA) were each created by the Employment Act of 1946. The Act explicitly mandated that the Council of Economic Advisors is to issue an Economic Report every year and officially present it to the Congress, and the Joint Economic Committee in return is to issue a response to the report.

What: Hearing on “The Economic Report of the President”

When: Tuesday, February 10, 2:30 p.m.

Where: 628 Dirksen Senate Office Building


N. Gregory Mankiw, Chairman
Council of Economic Advisers

Harvey S. Rosen, Member
Council of Economic Advisers

Kristin J. Forbes, Member
Council of Economic Advisers
Washington, DC—Senator Robert F. Bennett, Chairman of the Joint Economic Committee (JEC), responded to today’s report by the Bureau of Economic Analysis (BEA) that the gross domestic product (GDP) grew by 4.0% in the 4th quarter of 2003.

“The economy continues down the road of solid recovery with robust growth and very low inflation,” said Bennett. “As expected, economic growth moderated in the 4th quarter from the remarkable 8.2% we saw in the 3rd quarter, but today’s report shows that the 2nd half of 2003 experienced the fastest growth we’ve seen since the early 1980s. That kind of growth will translate into greater business investment and job creation as we move through the next year.”

The Joint Economic Committee released additional analysis of the GDP report today, which can be viewed online here.

Among the highlights:

• Very strong growth in the second half of 2003. Today’s report remains above the average annualized quarterly growth rates of the 1990s. GDP in the 4th quarter was up 4.3% over the corresponding level in 2002. 2003 ended with very rapid average annual growth of 6.1% in the second half.

• Three consecutive quarters of growth in business investment and profits. Business investment increased at a 6.9% annual rate in the 4th quarter. Profits continued to rise as well.

• Inventory investment boosted GDP growth. After inventory depletion in the 3rd quarter, businesses boosted production to restock shelves.

• The housing market also helped boost growth. Residential investment grew at a 10% annual rate.

• Inflation was slower than in any quarter since 1964.
Washington, DC - Senator Robert F. Bennett, Chairman of the Joint Economic Committee, today expressed serious concerns about elevated natural gas prices and their potential impact on the U.S. economy.

“Earlier this year, Federal Reserve Chairman Alan Greenspan told our Committee that high natural gas prices and inadequate supply could pose a significant challenge for our economy,” said Chairman Bennett. “The recent price spike is an important reminder of his warning.”

In recent weeks, the price of natural gas has risen sharply. Spot prices closed yesterday at almost $7.00 per million British Thermal Units (mmBtu), based on the Henry Hub Louisiana Benchmark. Prices averaged less than $4.50 per mmBtu in November.

Bennett highlighted the need for policymakers to monitor the natural gas market. “If prices remain elevated and the market continues to exhibit such volatility, the Joint Economic Committee will examine the natural gas market when Congress reconvenes next year,” said Chairman Bennett. “We are increasingly reliant on natural gas to generate electricity, heat our homes, and supply our manufacturers. An adequate supply can help prevent the kinds of price spikes seen in recent weeks.”

Dec 17 2003

The Health Benefit Tax Exclusion Distorts the Health Insurance Market

Has Promoted Employer-Provided Insurance, but Hindered Market-Based Cost Controls and Individual Choice

Washington, DC -The Joint Economic Committee (JEC) today released a study on how federal tax policy has influenced the way the U.S. health insurance market has developed over the past sixty years since the Internal Revenue Service (IRS) issued a special ruling that the portion of employees’ health insurance paid by employers is treated as a tax-free benefit.

“The tax exclusion has created a distortion in the health insurance market, favoring employerbased health insurance with comprehensive coverage as opposed to individually purchased plans emphasizing protection against major risks,” said Chairman Bennett. “When employers struggle to make one-size-fits-all health insurance decisions for their employees, mismatches often occur between individual needs and options available at the group level.”

Because employers, not the employee, are making health plan choices, employer-based health insurance arrangements tend to focus more on shorter-term cost considerations and less on longer-term quality and continuity of care concerns. Although the tax exclusion does not prevent employees and other health care consumers from purchasing health insurance through other means, such purchases are more expensive because they cannot take advantage of the tax-free
discount available for equivalent insurance coverage purchased by an employer.

“Comprehensive group health insurance coverage hides the true cost of health care decisions and fosters the illusion that 'someone else' is paying for the care,” said Bennett.

“We can't preserve the status quo for another 60 years. We must give greater consideration to alternatives to employer-paid group health plans and expand the use of Consumer-Driven Health Care options such as Health Savings Accounts,” said Chairman Bennett. “This change is sorely needed to reacquaint individuals with the cost and quality of the health care choices they can manage on their own.”