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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.”
Washington, DC—Senator Bob Bennett (R-UT), Chairman of the Joint Economic Committee (JEC), held a hearing today on “Rethinking the Tax Code.”

“The present tax system is unduly cumbersome, inefficient, and incomprehensible,” said Chairman Bennett. “Over the years, through revision after revision, the tax code has become a confusing, burdensome web that hampers economic growth, places undue burdens on American enterprise, and needlessly complicates the lives of the American people.”

In May of this year, seventy members of the Senate agreed that there are serious problems in our current tax code and passed legislation calling for the Joint Economic Committee to review ways to overhaul the antiquated system. Today’s hearing was in response to that vote. It is part of a series of hearings, studies, and related events the JEC is undertaking to find the path to real tax reform.

The hearing was based on the premise that the tax system should be simple, fair, and efficient, and that the tax system should be solely a means for the government to raise revenue and not to promote or discourage specific behaviors. The tax system should also be enduring, because individuals and businesses cannot make intelligent plans if the tax system constantly changes.

Among the ideas discussed at the hearing was the implementation of a flat tax. Under a flat tax, all individuals who earn over a certain minimum amount would pay the same tax rate, and could use some deductions. This proposal would allow for greater simplicity and the ability of taxpayers to file their taxes on a form no larger than a postcard.

Another idea was to improve tax-preferred savings accounts such as IRAs and 401(k)s. Relieving restrictions on these accounts, for example, would give people greater incentives to save, leading to greater economic growth.

“Today’s exercise was to imagine we are working with a clean sheet of paper,” said Bennett. “If we are to institute a fair, simple, and efficient tax system we’ve got to scrap our current code. And from there, we can create from scratch a system that is simple, that is fair, and once we have
accomplished that, a system that will endure for years to come.”
Washington, DC—Senator Bob Bennett, Chairman of the Joint Economic Committee (JEC), held a hearing today on the October employment situation as reported by the Bureau of Labor Statistics (BLS). Senator Bennett welcomed BLS Commissioner Kathleen Utgoff to explain last month’s employment numbers.

“Like virtually every other economic statistic reported in the past month, the employment numbers released today are definitely good news for the American worker,” said Chairman Bennett. “No matter how you cut it, the economy is adding new jobs at a rapid pace and will likely continue to do so for the foreseeable future.”

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.

The official payroll statistics indicate that the U.S. economy created 126,000 new jobs in the month of October, the third month in a row that payroll employment rose. The revised numbers now indicate that 125,000 jobs were added in September. The unemployment rate declined to six percent.

The household survey reported that employment increased by an impressive 441,000 in September. According to the household survey, our economy has now essentially replaced all of the jobs lost during the 2001 recession and the number of jobs is now at an all-time high.

Today’s employment report from the BLS shows a broadening of the disparity between the payroll and household employment surveys. While the payroll survey reports a decline of roughly 750,000 payroll jobs since the end of the recession in November 2001, the household survey still reports nearly one and a half million newly employed workers since then. Bennett questioned Commissioner Utgoff about the ongoing divergence in the two employments surveys, and urged that the Bureau look further into this disparity and its methodology for gathering data for these surveys.

“I believe that today’s employment numbers, along with the steep drop in new jobless claims and the large increases in productivity and output, indicate quite clearly that the U.S. economy is returning to a period of strong growth,” said Bennett.

Oct 14 2003

Bennett Seeks Tax Simplification

Emphasizes Effects of Tax Policy on Personal Saving and Economic Growth in Report "A History of Federal Taxes"

Washington, DC—The Joint Economic Committee (JEC) today released “Constant Change: A History of Federal Taxes,” the first in a series of reports on tax policy that will highlight the complexity of today’s tax code and the urgent need for its simplification. Today’s report identifies several specific eras in tax policy, and how we arrived at our current complicated tax system.

“The current tax code is extraordinarily complex and frequently at cross-purposes with itself,” said JEC Chairman Bob Bennett. “This report provides a historical perspective on the tax system in order to better understand it and identify ways to simplify it.”

The history of the income tax reveals several clear patterns in tax legislation. In recent decades, the Reagan tax cut of 1981 promoted two trends – lowering marginal tax rates and reducing the double taxation of saving – that have remained important tax policy. The Tax Reform Act of 1986 affirmed the importance of lower tax rates, but temporarily reversed the effort to alleviate the tax burden on saving. Since 1986, the tax treatment of saving has improved, but complexity and tax rates have generally increased along with the targeted use of the tax code as an instrument of social policy.

Future reports in the JEC Tax Policy series will further explore how Congress can approach tax code changes from a consistent framework that incorporates lessons learned from history.
Washington, DC—Senator Bob Bennett, Chairman of the Joint Economic Committee (JEC), hosted a roundtable discussion today to explore ways to improve the health of Americans, and thereby reduce future health care costs. The roundtable featured U.S. Surgeon General, Richard Carmona. The panel also included Jim Oatman of FortisHealth, who brought to light innovations that health insurers are developing to encourage wellness, and Dr. Diane Rowland, a national expert on issues involving Medicaid and the uninsured.

“The current debate on health care is dominated by a discussion of benefits, deductibles, insurance coverage, and payment levels. The attention of policymakers has been drawn away from the most important health care issue – the actual health of the American people,” said Chairman Bennett.

America has the preeminent health care system in the world. America also has the most expensive health care system in the world. Despite our preeminence and our spending, there are some disturbing trends emerging with serious implications for the health of the American people in the future. The roundtable participants agreed that many of the nation’s chronic health problems caused by smoking, obesity, and other lifestyle issues are completely preventable, and that the American health care system needs to allow responsible for their own health and prudent consumers of their own health care.

Some ideas that came to the fore in the hearing include creating financial incentives to encourage individuals to follow healthy eating plans and engage in physical activity, creating medical databases to more accurately track an individual’s health status to provide better care, and improved screening programs to catch medical conditions early.

“Our economy is the wonder of the world,” said Bennett. “Despite a series of economic shocks,
we have bounced back and our economic future looks good…until we start looking at rapidly
rising health care costs. In the next 10 years or so, baby boomers will be retiring and the strain
on our Medicare system will be staggering if we don’t strive to do something about it. Through
the free exchange of ideas such as we’ve had today, we can encourage new programs and needed
legislation that can truly benefit the American people and strengthen our economy.”
WASHINGTON, DC – The U.S. Senate today overwhelmingly passed legislation sponsored by Sen. Bob Bennett calling on the Senate Finance Committee and the Joint Economic Committee (JEC) to hold hearings and consider legislation providing for overhaul of the Internal Revenue Code and implementation of a federal flat tax.

“Since my ‘92 campaign, when I called for a simplified tax code and a 1040 form the size of a postcard, I’ve been working to convince my colleagues that this is something we should consider,” said Bennett, who chairs the JEC. “An overwhelming majority of the Senate today said we should study this proposal and has named my committee as a key point for this debate. I’m gratified that my calls for this reform are gaining support and will be considered in the Senate.”

The Bennett Amendment, also sponsored by Sen. Arlen Specter (R-PA) and Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, passed by an overwhelming 70-30 vote. It calls for the Senate Finance Committee and the JEC to undertake a comprehensive analysis of tax simplification proposals, including flat tax proposals, and to conduct appropriate hearings and consider appropriate legislation.

When discussing tax simplification options, Bennett noted some estimates that show the flat tax will expand the economy by $2 trillion over seven years. He also noted that the current Internal Revenue Code is over 17,000 pages and 6,900,000 words.

“Americans spend more than $194 billion and five billion hours each year complying with a tax code that has grown out of control. We must provide for a more productive use of our time and money,” Bennett said.

“It’s time to demystify the tax system, and consideration of a flat tax is a good place to start,” he said. “It is simple and fair and could be a strong addition to the other economic boosts in the Jobs and Growth Package we’re voting on today. JEC is uniquely qualified to do this analysis. “

The Bennett Amendment passed as part of the Jobs and Economic Growth Reconciliation Bill which is expected to pass the Senate today. It will then go to a conference with the House.

Sep 30 2003

Bennett Seeks Answers from Chairman Greenspan on Current Economic Condition

Questions Fed Chairman on post-war economy, specter of deflation

Washington, DC– Senator Bob Bennett (R-Utah), Chairman of the Joint Economic Committee (JEC), welcomed Federal Reserve Chairman Alan Greenspan to testify today at a hearing on the future of the U.S. economy. Today’s hearing brought the first testimony from Chairman Greenspan since the most recent meeting of the Federal Open Market Committee of the Federal Reserve and his first appearance before the committee under Bennett’s chairmanship.

In his remarks, Bennett sought clarification of recent Fed statements on the economy. Specifically, Bennett pressed Greenspan to clarify recent comments on the probability of deflation and what the consequences would be.

“The United States’ economy is fundamentally different and far more resilient that economies currently facing deflation, such as Japan,” said Bennett. “We don’t face the same risks; but we shouldn’t take any chances.”

Chairman Greenspan concurred and pointed out that “the risk of the U.S. entering into deflation is minor, but the consequences would be substantial.” He highlighted how the cultural differences in Japan’s economy have influenced the current economic situation, but cautioned the U.S. must identify what tools are necessary to fend off deflation and to attack any underlying forces that lead to deflation.

Bennett later asked Greenspan about his view of the effectiveness of jobs and growth legislation currently under consideration in Congress and what economic policy should be enacted to spur long-term economic growth. According to the Fed Chairman, “The taxation of capital is misguided. Removing the taxation of capital will enhance the revenue base.”

“We are near an agreement on a bold jobs and growth package. We need to act quickly to give it final approval and send it to the president for signature,” said Bennett. “But beyond tax cuts, it is time to begin work on what tools we must use to grow our economy and prepare for the future.”

The Joint Economic Committee is a unique joint Senate-House committee created in 1946 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 – The Joint Economic Committee, chaired by Senator Bob Bennett (R-Utah), released a new report today, “Medicare Beneficiaries’ Links to Drug Coverage.”

“Make no mistake, too many seniors are without adequate prescription drug coverage, or worse, any coverage at all. Congress needs to act,” Bennett said. “However, as we work to create a new Medicare drug benefit, we must pay attention to the coverage that already exists.”

The Joint Economic Committee’s report shows 78 percent of Medicare beneficiaries already have some drug coverage. Unfortunately, reliable data on the generosity of the drug benefit packages are scarce. The report is based on new data from the Centers for Medicare and Medicaid Services (CMS).

“We must be careful not to disrupt the coverage people already have,” Bennett remarked. “Congress should work with CMS and other agencies to gather better information on the value and quality of existing prescription drug coverage. We should learn from the experiences of the various organizations that already deliver drug benefits, such as employers and state governments.”

The report was issued today at a hearing of the Joint Economic Committee on “Medicare’s Financial Crisis,” which discussed how Medicare’s promised benefits already exceed the program’s financial resources by more than $13 trillion.

“We don’t practice medicine the way we did in the 1960s; we shouldn’t deliver and finance medicine the same way either. Any successful reform must begin with respect for the power of the market,” Bennett said.

“We need to be careful how we design prescription drug coverage in Medicare,” Bennett explained. “The combination of today’s hearing and the committee’s new report makes it clear that we can’t afford to ignore the experience or funding supplied by existing providers of prescription drug coverage. We need to avoid significant reductions to their ability and incentive to continue drug coverage.”

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 report or for other information, visit the committee online at jec.senate.gov.
Washington, DC – Senator Bob Bennett (R-Utah), chairman of the Joint Economic Committee (JEC), released a report today showing dividend tax relief helps everybody, not just taxpayers who currently receive taxable dividends.

“Ending the double taxation of dividends will help anybody who benefits from faster economic growth and higher stock prices. Simply looking at those who receive taxable dividends doesn’t reveal the whole picture,” Bennett said.

The report argues “static” analyses are flawed because they only account for how tax payments are currently distributed across income levels. “The taxpayer actually writing the check to the I.R.S. doesn’t always bear the economic burden of the tax,” Bennett explained.

For example, Congress currently exempts from income taxes the interest of many bonds issued by state and local governments. Since mostly high-income people buy the bonds, a static analysis would show the tax relief going to them. However, the JEC report shows the real winners are state and local governments that can finance their building projects cheaper because the bond market responds to the tax relief with lower interest rates for their bonds.

Ending the double taxation of dividends will work much the same way. Among other things, it will reduce the cost of capital, making it cheaper and easier for companies to raise money for new investments and new employees.

"Few people complain about tax-exempt bonds as only helping the rich," Bennett remarked. "Ending the double taxation of dividends takes advantage of the same economic phenomenon to benefit investors and the entire economy."

JEC is a unique joint Senate-House committee created by the Employment Act of 1946 to study and advise Congress on economic policy.

To view the executive summary and the full report, visit https://www.jec.senate.gov.