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Jan 30 2004

Economic Recovery Remains Strong

Rebecca Wilder (202) 224-0379
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.

Dec 17 2003

Bennett Expresses Concern Over High Natural Gas Prices

Rebecca Wilder (202) 224-0379
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

Rebecca Wilder (202) 224-0379
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.”

Nov 07 2003

Bennett Urges Overhaul of the Tax Code

Rebecca Wilder (202) 224-0379
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.”

Nov 07 2003

Bennett: U.S. Returning to Period of Strong Growth

Rebecca Wilder (202) 224-0379
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"

Rebecca Wilder (202) 224-0379
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.

Oct 01 2003

Chairman Bennett Explores Ways to Reshape the Future of America's Health

Rebecca Wilder (202) 224-0379
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.”

Sep 30 2003

Bennett Says Economic Growth Bill is Needed

White House Economists Testify on Bush Agenda

Rebecca Wilder (202) 224-0379
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.

Sep 30 2003

CBO Report Confirms Benefit of Pro-Growth Tax Relief

Rebecca Wilder (202) 224-0379
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.

Sep 30 2003

Committee Issues Report on Oil Prices

Rebecca Wilder (202) 224-0379
Washington, DC – The Joint Economic Committee, chaired by Senator Bob Bennett (R-Utah), today issued “10 Facts About Oil Prices,” a report which puts into perspective the current volatility of the U.S. oil markets.

“We’ve experienced the first recession of the information age, not the last recession of the industrial age,” Bennett said. “While no one can dispute that high oil prices have been bad news for consumers and raise significant concerns for our economy, oil does not play the role it once did in terms of economic impact.”

Among other issues, the report reviews the following points:

• Oil prices are currently about $30 per barrel. However, for a past comparison, oil prices in the late 1970s reached $60 per barrel (adjusted for inflation).

• While “spot” oil prices increased yesterday for oil delivered now, “futures” decreased by nearly $1 per barrel of oil. The latter suggests the market believes oil prices will fall to more reasonable levels in the near future.

• Of the last nine recessions, oil price spikes have preceded or accompanied eight of the recessions. However, other negative factors collaborated with the price spikes.

• The U.S. economy has become more fuel efficient. For example, consumers spend less money on fuel as a percentage of wage and salary income.

• A large factor in how oil markets would respond to any major Iraqi oil disruption is the ability and willingness of Saudi Arabia to increase its production.

The Joint Economic Committee is a unique joint Senate-House committee created to study the economy and advise Congress on economic policy. For copies of today’s report or for other information, visit the JEC online at https://www.jec.senate.gov.