[Congressional Record Volume 152, Number 84 (Monday, June 26, 2006)]
[House]
[Pages H4534-H4537]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          JOBS AND THE ECONOMY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 2005, the gentleman from New Jersey (Mr. Saxton) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SAXTON. Mr. Speaker, I rise at this time to say a few words about 
the U.S. economy, which has been actually quite good. It is quite 
amazing for us here in the House with all of the responsibilities that 
we have and with all of the responsibilities outside of the beltway 
that the American people have to just take a minute or a few minutes, I 
guess, to review the current economic situation.
  Mr. Speaker, as the chairman of the Joint Economic Committee, some of 
the observations are quite apparent to me, and I just wanted to share 
these observations with my colleagues and with others who may be 
present.
  According, Mr. Speaker, to most neutral observers, including the 
Federal Reserve and a consensus of private economists, the economy is 
doing quite well and is quite healthy. Indeed, if anything, there seems 
to be a little concern in some quarters that the economy may have been 
growing too fast, a concern with which I do not agree.
  The economy actually grew 4 percent in 2004 and advanced at a rate of 
about 3.5 percent in 2005. The growth rate for the first quarter of 
2006 is expected to be very robust, consistent with the trend of strong 
growth since 2003.
  In the first quarter of 2006, the economy expanded at a blistering 
rate of 5.3 percent. Now, these are all figures and statistics that we 
can vividly see because, in effect, we have already been through them. 
Looking ahead is a somewhat more difficult exercise, and an exercise 
that I often refer to others with whom I communicate from time to time.

[[Page H4535]]

  I have here in my hand a copy of the ``Blue Chip Economic Indicators 
Top Analysts Forecast of U.S. Economic Outlook for the Year Ahead.''
  This blue chip economic indicator document was actually issued just a 
few days ago on June 10. And for those who may not be familiar with 
this report, it is essentially a compilation of the beliefs based on 
what they see, of a variety of organizations and individuals from 
organizations which will be quite familiar if you hear who they are. 
There are actually 50-plus organizations that take part in this 
process, organizations like Bear Stearns, Lehman Brothers, Goldman 
Sachs, the National Association of Home Builders, Merrill-Lynch 
Economics, General Motors Corporation, Standard and Poor's. And those, 
of course, are just a few of the more than 50 organizations that take 
part in this economic forecast.
  You might suspect that since I have got it here with me it is good 
news, and it is good news for the economy going forward. It projects 
that in the second quarter of this year, the quarter that will end just 
a few days from now on June 30, the economic growth rate, the GDP, will 
continue to grow at almost 3 percent; and in the third quarter of this 
year at 2.9 percent; in the fourth quarter of this year at 2.8 percent; 
jumping back up in two quarters of next year to 3.1 and 3 percent 
respectively.
  And so these are good numbers; and so going forward, based on the 
economic basis that we have been able to set in our country, we expect 
things to continue to do quite well. The improvement in economic growth 
in recent years is reflected by some very good economic figures. For 
example, since August 2003, business payrolls have increased by over 
5.3 million jobs. The unemployment rate stands at a low 4.6 percent. 
Consumer spending continues to grow, and the number of American 
families who own their own homes is at an all-time high.
  The household net worth for families in the United States is also at 
a record high. Productivity growth continues at a healthy pace. Long-
term inflation pressures appear to be contained at about 2.7 percent or 
so. Long-term interest rates, including mortgage rates are still 
relatively low. I can relate to this very well. I was in the real 
estate business for 20 years before I came here. I can remember in the 
1960s selling houses with 6 percent, with mortgages that carried an 
interest rate of 6 percent. It was pretty much a standard rate.
  Then as the years went by and inflationary pressures took hold, 
inflation drove interest rates to 6 percent, 6\1/2\ percent, 8 percent, 
10 percent. Mr. Speaker, I can even remember interest rates on home 
mortgages being 19 percent, and of course that shut the market down.
  Recently, interest rates for home mortgages have been at about 5 
percent. But today, even today, when we think about interest rates 
being higher than they were a year or a year and a half ago, they are 
still at about the 1960s level of 6 percent or a little bit higher.
  So low interest rates are still an incentive to economic growth. In 
addition, the resilience and flexibility of the economy have overcome a 
number of serious shocks: the war, the attacks on 9/11, and of course 
most recently the hurricanes of last year, all disruptive influences 
which have not been as disruptive as one may have thought.

                              {time}  1915

  Equipment and software investment has been strong. It is clear that 
the Federal Reserve remains poised to keep inflation under control. All 
good news. The only soft spot that we see in the economy is in the 
housing sector. It seems to be slowing somewhat, although it appears 
that a soft landing is most likely. So in the recent policy report to 
Congress, like the Blue Chip Indicators, the Federal Reserve noted that 
the U.S. economy delivered a solid performance in 2005.
  Furthermore, the Fed observed that the U.S. economy should continue 
to perform well in 2006 and 2007. In summary, overall economic 
conditions appear to remain positive. The U.S. economy has displayed 
remarkable flexibility and resilience in dealing with many shocks. The 
administration forecast for economic growth in 2006 is comparable with 
those of the blue chip consensus and the Federal Reserve. With growth 
expected to be about 3.5 percent in 2006, the current economic 
situation is solid and the outlook remains favorable.
  Mr. Speaker, in December of 2005, this is another way to look at the 
economy, the Joint Economic Committee issued a report, under my 
direction, entitled ``U.S. Economy Outperformed the Canadian, European 
and Japanese Economies Since 2001.'' When we look at our U.S. economy 
and have comparisons within the economy, that is one way to look at 
economic growth. But another way is to compare it with what is going on 
in the rest of the world. The economic data showed that since 2001, the 
United States has outperformed every other large developed economy in 
the world. This report examines the performance of a peer group of 
large developed economies from 2001 to the present time. The peer group 
included Canada, Japan, the United States, and 25 member states of the 
European Union.
  Recently, we updated this report to bring it current. The United 
States and Canada in the most recent version of this report tied for 
first place in economic growth among the major developed economies with 
an average gross domestic product growth of 2.6 percent a year from 
2005 to the current period. That compares with just 1.6 percent 
economic growth in the European Union and 1.5 percent in Japan. The 
period includes the economic slowdown after the collapse of the stock 
market bubble in 2000 and the terrorist attack of 2001.
  However, after Congress cut taxes on capital gains and dividends and 
provided business with incentives in May of 2003, the United States 
enjoyed the highest rate of economic growth among the major developed 
countries.
  This is a point that I would just like to stop and pause for a moment 
to talk a little bit more about. We knew that economic growth while we 
were growing beginning in the fourth quarter of 2001, when we began to 
grow, job growth was very slow. The President said, and the Congress 
agreed, that if we gave business some incentives to invest, that 
investment in fact would take place and that we would grow. That 
actually happened.
  As we see on this chart, we had this valley of very slow growth and 
very little invested in the economy during 2001 and 2002. But after the 
tax cuts that took place in the first quarter of 2003, business 
investment occurred rapidly and it helped to spur economic growth 
throughout the economy. For example, the United States created more 
jobs than any other major economy from 2001 to 2006: 6 million jobs as 
of today created in the United States, 5.7 million jobs in the European 
Union, 1.5 million jobs in Canada, and a loss of almost 1 million jobs 
in Japan.
  The unemployment rate. In March of 2006, the United States had an 
unemployment rate of 4.6 percent. That is the second lowest among the 
major developed economies. Only Japan was better with 4.1. Canada was 
actually 6.4. Here is the unemployment rate in the United States; 4.6 
percent in the yellow bar, actually 6.3 percent in Canada, and 8.4 
percent unemployment rate in the European Union.
  In industrial production, another example, from January 2001 to 
February 2005, the United States ranks first in the growth of 
industrial production among major developed economies. Industrial 
production grew by 7.4 percent in the United States, 4.1 percent in 
Canada, 2.8 percent in the European Union, and 1.4 percent in Japan.
  The rate of inflation is more good news. It has remained contained 
throughout the countries that were studied. As I noted a little while 
ago in the United States, interest rates are comparatively low with 
other countries.
  And so as we look at the economy generally, we believe that we have 
done some things right. I mentioned tax policy a minute ago. Let me 
mention one other item which I think is extremely important. While we 
give credit to our friends at the Federal Reserve, interest rates are a 
direct reflection, or follow along as a reflection, I guess is a better 
way of putting it, of the rate of inflation. And so we have to give 
credit to our friends at the Federal Reserve who have done a great job 
in controlling inflation.
  Another prominent feature of the recent U.S. economy is in fact a 
lower

[[Page H4536]]

and more stable rate of inflation than we have experienced in quite 
some time. The persistently low rate of inflation depicted on this 
chart there has helped to calm financial markets and reduce risk. This 
persistently lower rate of inflation has in turn fostered lower 
expectations of future inflation and consequently helped to lower the 
lid and keep interest rates low.
  As we look here, we see that back in the eighties we had relatively 
high inflation, and as we went through the nineties, we can see that 
inflation actually dropped below 2 percent and has persistently stayed 
below 2 percent. The Fed has in essence adopted an implicit inflation 
targeting approach which has been very good for economic growth.
  I would like to just conclude my portion of these remarks by saying 
that the blue chip indicators look good going forward and we have done 
some things right both here in the House and at the Federal Reserve. 
One of the things that I like to say about economic growth is that no 
matter what we do here, economic growth can't take place without the 
continued enthusiastic participation of the American worker. We try to 
provide those opportunities as best we can through our tax and spending 
policies, through the Federal Reserve's policy, through business 
incentives that we time and again put in place to encourage things to 
happen. But in the final analysis, it is the American working man and 
woman out there in the private sector that make economic growth 
possible.
  I would like to yield at this point to my friend from Georgia (Mr. 
Gingrey) who would like to add some thoughts perhaps to what I have 
said.
  Mr. GINGREY. I appreciate the gentleman from New Jersey yielding, and 
I thank him, Mr. Speaker, for bringing these statistics to the floor of 
the House this evening. Clearly, these numbers show that this economy 
is doing well under this Republican leadership and this Republican 
President. The blue chip report that the gentleman talked about on 
fiscal year 2007, and he mentioned those 50-something prestigious 
financial organizations, says that the economy will continue to do well 
the rest of this fiscal year and into 2007. Mr. Speaker, it is because 
of the policies of this administration and this Republican-led 
Congress. Those policies I am speaking of, of course, are that you grow 
the revenue when you cut taxes.
  This is not a novel idea that we just invented over the last 2 or 3 
years. This happened under a Democratic President in 1960, John F. 
Kennedy. It happened again in the early eighties under President 
Reagan. You cut taxes; you grow the revenue. All of these statistics 
that the gentleman from New Jersey (Mr. Saxton) has pointed out in 
regard to low inflation, low unemployment, robust gross domestic 
product over something like 12 straight quarters now. Five million jobs 
since 2001.
  I know when I first got to the Congress in the 108th in 2003, all I 
heard, Mr. Speaker, from the other side was how many jobs had been lost 
since George W. Bush was first elected. They pounded on that. I have 
not heard too much from the other side recently, because clearly this 
economy is robust, these jobs are growing, and they will continue to 
grow.
  We have this arcane scoring system, Mr. Speaker and my colleagues, 
and I know everybody agrees, and this is really not in dispute, that 
when you cut taxes, they calculate a number of how much it is going to 
cost. I think with the Bush tax cuts, it was estimated that it was 
going to cost $1.3 trillion in reduced revenue; $1.3 trillion less 
coming into the Treasury because of a reduction of every marginal rate 
so that everybody in this country, every American taxpayer, would get a 
reduction in their Federal taxes and get a check in their pocket. To 
double the child tax credit, to eliminate the marriage penalty, to 
lower the capital gains and dividend rates to 15 percent for almost 
everybody and, indeed, for some as low as 5 percent, and to give our 
small business men and women, Mr. Speaker, we are talking about the 
mom-and-pops of this great country who probably create 65, 70 percent 
of all these jobs that we are talking about, to let them more rapidly 
depreciate their capital improvements so they can, with bricks and 
mortar, new machines, new equipment, whether it is in my profession, 
the health care industry, or any other, to put people back to work, so 
that more people, albeit at a lower rate, are paying taxes.
  What happens is instead of costing $1.3 trillion over 10 years, in 
about 2\1/2\ years our revenue increased, and I know the gentleman from 
New Jersey will confirm this and agree with me, by something like $250 
billion, increased revenue, because of the boldness, the courage, and 
the good common sense to look at historical perspective and understand 
that when you cut taxes, you pull a country out of recession and you 
don't cause decreased revenue coming to the Treasury, you end up with 
more.
  This is a great opportunity that the gentleman brings to us tonight 
to make sure the American people and all our colleagues on both sides 
of the aisle understand. Every Member is entitled to their own opinion, 
but they are not entitled to their own facts. I commend the gentleman 
from New Jersey for bringing us the true facts this afternoon and this 
evening on this floor of the House.
  Mr. SAXTON. I thank the gentleman for emphasizing the importance of 
tax policy relative to economic growth.
  One of the things that I would like to point out, and I know the 
gentleman knows this as well, the President today has been criticized 
by some for his tax policy, I think, unfairly. One of the charges that 
is often made is that these are, quote, tax cuts for the rich. I have 
some other statistics here that I would just like to share with my 
colleagues and that is simply this: if you believe that tax policy can 
be used to promote economic growth, as the gentleman and I do and as 
many others in this House do, then we are going to have to cut taxes 
relative to the people who pay taxes, because people who don't pay 
taxes can't get a tax cut because they don't pay taxes, unless we give 
them money back.
  And so the facts are that the top 1 percent of the wage earners in 
this country pay 34 percent of the taxes. That is the individual income 
taxes. The top 5 percent of the people, wage earners, pay 54 percent of 
the taxes to the Federal Government. The top 10 percent pay 65 percent 
of the taxes. The top 25 percent pay 84 percent of the taxes. And the 
top 50 percent of the wage earners in this country pay 96.5 percent. So 
the bottom 50 percent of the wage earners in America, in the United 
States, pay about 3.5 percent of the taxes.

                              {time}  1930

  So if we are going to have tax cuts and if the people who pay taxes 
are the ones whose taxes you cut, which you kind of have to do by 
definition, then it will fall that the top 50 percent of the wage 
earners get most of the tax breaks because they are paying 96.5 percent 
of all the taxes that are paid on the personal side in this country.
  So because of what has gone on in Republican and Democrat 
administrations, and the gentleman mentioned John Kennedy's inaugural 
address in 1962. I can remember his words, almost, not quite, but he 
said something like this. He said, we cannot for long expect to remain 
the leaders of the world if we fail to set the economic pace at home; 
and he stood right up there on that lectern and outlined a set of tax 
cuts to make the economy grow. And John Kennedy's tax cuts went into 
effect, and the economy did grow.
  So this is not new to many here, but it is a revelation sometimes to 
people who haven't heard this before.
  So our economy is growing. It has been growing since 2001. Since 
2003, when we put in place our tax cuts, we began to see investment 
take hold and the economy grow and jobs being created, almost 6 million 
new jobs created since this economic recovery began; a low rate of 
unemployment, 4.6 percent, and things looking pretty good for the 
future, according to the blue chip indicators, which we referred to 
earlier.
  So, Mr. Speaker, I went on to share with my fellow Members these 
observations based on the facts that the gentleman from Georgia and I 
have cited here; and I want to thank the gentleman from Georgia for 
coming here and taking part in this Special Order.
  I think we can look forward, Mr. Speaker, to some good economic 
growth going forward, hopefully during 2006 as well as 2007 and beyond, 
as we continue to do what we can here to make that happen.

[[Page H4537]]

  Again, I thank the gentleman for taking part.

                          ____________________