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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 – 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.

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 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.
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.

Sep 05 2003

Chairman Bennett: "Economy is Turning the Corner"

Bennett Explores the Current Employment Situation at JEC Hearing

Washington, DC—Senator Bob Bennett (R-UT), chairman of the Joint Economic Committee (JEC), held a hearing today to discuss the August employment numbers with Commissioner of the Bureau of Labor Statistics (BLS) Kathleen Utgoff. Bennett discussed the state of the current economy and asked the commissioner about a seemingly significant discrepancy in the employment numbers.

“Though not widely known, employment figures come from two different surveys,” said Chairman Bennett. “The BLS surveys individual households to determine the unemployment rate, while it asks businesses about the number of people on their payrolls to determine how many jobs have been gained or lost. Congress relies on these statistics to make policy decisions, and we need to be sure we are acting on the most accurate and complete statistics available.”

According to the household survey, the number of employed people has increased by 1.4 million since the end of the recession. The payroll survey, in contrast, indicates that roughly 1.1 million jobs have been lost over that period. Some of the disparity may reflect methodological differences between the two surveys, or it may be telling us of fundamental changes in our economy. A significant difference between the two surveys is that the household survey accounts for those who are self employed and for small emerging businesses that may be overlooked by the payroll survey.

Chairman Bennett also pointed to many measures that suggest that the economy is turning the corner. Economic growth in the second quarter exceeded three percent, and many forecasters anticipate further acceleration this quarter. The unemployment rate declined slightly from 6.2 percent to 6.1 percent in August, down from its peak of 6.4 percent in June, and well below the peaks of the 1980s and early 1990s.

“I am optimistic about recent developments in our economy, and believe the economic growth that is occurring will soon translate into resumed job growth,” said Chairman Bennett.

Senator Bennett’s complete statement and charts referred to in the hearing can be viewed at https://www.jec.senate.gov.

Aug 01 2003

Economy Continues to Show Signs of Growth

JEC Report Highlights Trends of Economic Growth

Washington, DC—The Joint Economic Committee (JEC) today released “10 Facts About the Economy,” a report that highlights a number of positive trends that have developed throughout the last few years. Despite challenges in some sectors of the economy, the fundamentals of the U.S. economy remain strong, including America’s world-class productivity levels and growth, and long-sought price stability.

“We are in the midst of the first recovery of a new economy,” said JEC Chairman Bob Bennett. “With the rise of information technology we are experiencing dynamics never before encountered. Real-time inventory capability has streamlined business practices and an increase in productivity due to technological advances affects the job market in new ways. Despite the pace of the current economic recovery, I am confident the second half of this year will see
stronger economic growth.”

The report points out that despite a series of unforeseeable shocks, the economy continues to grow. Since the end of the recession in November of 2001, incomes and spending have grown, and home sales have hit record highs. In addition, it was announced today that the unemployment rate saw a modest decrease, keeping the rate well below the peaks of the previous recessions in the 1980s and early 1990s.

The report follows economic indicators released this week from the Bureau of Economic Analysis (BEA) showing a surprising 2.4 percent increase in Gross Domestic Product (GDP) in the second quarter of this year. This increase exceeded expectations for two primary reasons. First, business investment rebounded more quickly than many economists had predicted, with business spending on equipment and software increasing at a 7.5 percent annualized rate, and investment in offices, factories, and other structures increasing at a 4.8 percent rate. This is a positive signal for a long-awaited resurgence of business investment activity. Second, government spending increased significantly, reflecting a sharp increase in defense spending.

The report can be found on the JEC website at https://www.jec.senate.gov, or contact Rebecca Wilder at (202) 224-0379.