[Congressional Record Volume 155, Number 10 (Friday, January 16, 2009)]
[Senate]
[Pages S650-S652]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  ECONOMIC REPORT OF THE PRESIDENT DATED JANUARY 2009 WITH THE ANNUAL 
       REPORT OF THE COUNCIL OF ECONOMIC ADVISERS FOR 2009--PM-7

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred to the Joint Economic Committee:

To the Congress of the United States:
  The American economy has consistently proven its strength and 
resilience in the face of shocks such as natural disasters, high energy 
prices, and the terrorist attacks of September 11. The economy 
experienced 6 years of uninterrupted expansion, which included a record 
stretch of 52 consecutive months of job creation. The past year saw 
this growth cease as several forces that developed over many years in 
the credit and housing markets converged. The combination of these 
factors, coupled with a sustained period of rising energy prices, was 
sufficient to threaten the entire financial system and generated a 
shock so large that its effects have been felt throughout the global 
economy.
  Under ordinary circumstances, it would be preferable to allow the 
free market to take its course and correct over time. But the 
Government has a responsibility to safeguard the broader health and 
stability of our economy. Under the extraordinary circumstances created 
by the financial crisis, the potential damage to American households 
and businesses was so severe that a systemic, aggressive, and 
unprecedented Government response was the only responsible policy 
option.

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  The actions taken by my Administration in response to the financial 
crisis have laid the groundwork for a return to economic growth and job 
creation, and they are beginning to show some early results. A measure 
of stability has returned to the financial system. There will, of 
course, continue to be challenges. Temporary Government programs must 
remain temporary and be unwound in an orderly manner as soon as 
conditions warrant. Financial regulations must be modernized to reflect 
the realities of the 21st century, and these efforts should ensure that 
the objective of protecting consumers and investors does not come at 
the expense of the flexibility required for innovations to come to the 
market. We must also continue to trust Americans with the 
responsibility of homeownership and empower them to weather turbulent 
times in the market by helping creditworthy homeowners avoid 
foreclosure.

  As the country navigates through this trying period, we must never 
lose sight of the enormous benefits delivered by the free enterprise 
system. Americans have good reasons to be confident about the long-term 
health of our economy. Despite the current difficulties, there are a 
number of positive economic factors. Inflationary pressures have 
moderated as record high prices for oil and gasoline have retreated. 
Productivity growth, which helps to increase our standard of living and 
improve our international competitiveness, remains solid. The American 
economy continues to be the largest and most dynamic in the world, and 
its solid foundation of flexible labor markets, low tax rates, and open 
trade and investment policies all contribute to its ability to recover 
fairly quickly from shocks. Over the past 8 years, my Administration 
has worked to strengthen this foundation by adopting pro-growth, 
market-oriented policies, and our policies will position the economy 
for a strong rebound and continued long-run growth.
  Sound economic policy begins with keeping taxes low. The tax relief 
enacted by my Administration was the largest in a generation. Tax rates 
have been lowered for every American who pays income taxes. More than 
13 million Americans had their Federal income tax liability completely 
eliminated, and individuals and businesses have kept $1.7 trillion of 
their own hard-earned money. Raising taxes at any time reduces our 
international competitiveness and further distorts the decisions of 
individuals and businesses; doing so in the current environment would 
have serious consequences for the economy. This tax relief has been a 
key factor in promoting the economic growth and job creation of recent 
years, and it should be made permanent. Unless the Congress acts, most 
of the tax relief that we have delivered over the past 8 years will be 
taken away, and 116 million American taxpayers will see their taxes 
rise.
  The Government also has a responsibility to spend the taxpayers' 
money wisely. Over the course of my Administration, the rate of growth 
in nonsecurity discretionary spending has steadily decreased from more 
than 16 percent in 2001 to below the rate of inflation today. While the 
financial crisis has required significant taxpayer investments that 
will increase the budget deficit, we expect that most or all of those 
investments will be paid back to taxpayers over time. The greatest 
challenge to the fiscal health of the country remains the unsustainable 
growth in entitlement programs such as Social Security, Medicare, and 
Medicaid. I have laid out responsible, innovative solutions to address 
these challenges, which will otherwise only grow more difficult to 
solve over time. The Congress has an obligation to confront these 
issues.
   Government does have a role to play in health care, but a robust 
private market is critical to ensuring that health care is affordable 
and accessible for all Americans. My Administration has sought to 
balance public and private roles in health care with market-oriented 
policies that increase the efficiency of health care delivery, 
encourage competition, and leave decisions in the hands of individuals 
and their doctors. For example, enactment of the Medicare prescription 
drug benefit program has provided more than 40 million Americans with 
better access to prescription drug coverage, expanded competition in 
Medicare, trusted consumers to make their own health care decisions, 
and the costs have been much lower than originally estimated. The 
introduction of Health Savings Accounts has also provided consumers 
with greater access to affordable health care plans. There is much more 
that can be done to improve health care, such as adopting medical 
liability reform, eliminating the bias in the tax code against those 
who do not receive health insurance through their employers, and 
increasing the power of small employers, civic groups, and community 
organizations to negotiate lower-priced health premiums. These policies 
would help reduce frivolous lawsuits that increase patients' costs, 
promote the use of health savings accounts, and encourage competition 
among health plans across State lines.
   To be competitive in the global marketplace, the United States must 
remain open to international trade and investment and reject the false 
promise offered by protectionist policies. American workers and 
businesses can compete with anyone in the world, as evidenced by the 
remarkable performance of American exports in recent years. When I took 
office, the United States had free trade agreements (FTAs) in force 
with only three countries. Today, we have FTAs in force with 16 
countries. I thank the Congress for its approval of these agreements 
and strongly encourage prompt approval of the agreements with Colombia, 
Panama, and South Korea that will benefit our country. These agreements 
will provide greater access for our exports, support good jobs for 
American workers, and promote America's strategic interests. We also 
have an unprecedented opportunity to reduce barriers to global trade 
and investment through a successful conclusion to the World Trade 
Organization Doha Round negotiations. In addition, the Congress should 
reauthorize and reform trade adjustment assistance so that we can help 
those workers whose jobs are displaced to learn new skills and find new 
jobs.
   The rapid increase in energy prices in the past year exposed just 
how dependent our economy is on oil. We must continue taking steps to 
increase our energy security. The Energy Policy Act of 2005 and the 
Energy Independence and Security Act of 2007 were major steps toward 
this goal, but in the short term, our country will continue to rely on 
fossil fuels for most of its energy supply. I am pleased that the 
Congress recognized this reality and agreed to remove restrictions that 
will allow responsible oil and gas exploration on the Outer Continental 
Shelf and expanded access to oil shale to help meet America's energy 
needs. In the long run, our energy security will require advances in 
clean and renewable energy technologies. My Administration has worked 
to reduce gasoline consumption and promote alternative fuels to 
transform the way Americans power their cars and trucks. We have also 
worked to develop cleaner energy sources to power Americans' homes and 
places of work, such as clean coal, nuclear, solar, and wind power. At 
home, we are on the path to slow, stop, and eventually reverse the 
growth of greenhouse gas emissions, but substantial reductions in 
global greenhouse gas emissions are only possible with the concerted 
action of all countries. The Major Economies Process launched by my 
Administration in 2007 has brought all major economies together to 
discuss a common approach to a global climate agreement that includes 
the meaningful participation of all major economies.
   The creativity, ingenuity, and resourcefulness of the American 
people is our country's greatest strength, and a vibrant education 
system is key to maintaining our Nation's competitive edge and 
extending economic opportunity to every citizen. Workers who invest in 
their education and training enjoy higher incomes and greater job 
security. The No Child Left Behind Act has succeeded in bringing 
greater accountability to schools, and the results are clear; as one 
example, African American and Hispanic students are posting all-time 
high scores in a number of categories. The Congress should reauthorize 
this vital law, and our Nation must continue to demand results and 
accountability from our educational system. To be competitive in the 
global economy, American workers

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also need to continually update their skills. To that end, my 
Administration has invested nearly $1 billion in new job training 
initiatives to ensure our workforce has the skills required of 21st 
century jobs. We have also nearly doubled support for Pell Grants to 
help millions of low-income Americans afford college tuition. The 
technological innovation that drives our global economic leadership 
depends on continued scientific discoveries and advancements, and I am 
pleased that the Congress authorized the doubling of basic research in 
key physical science and engineering agencies as I proposed in my 
American Competitiveness Initiative (ACI). I urge the Congress to 
appropriate these ACI funds promptly to help sustain our economy's 
long-term competitive position.
  Many of these issues are discussed in the 2009 Annual Report of the 
Council of Economic Advisers. The Council has prepared this Report to 
help policymakers understand the economic conditions and issues that 
underlie my Administration's policy decisions. Free market policies 
have lifted millions of people out of poverty and given them the 
opportunity to build a more hopeful life. By continuing to trust the 
decisions of individuals and markets and pursuing pro-growth policies, 
Americans can be confident that the economy will emerge stronger than 
ever from its current challenges, with greater opportunity for 
prosperity and economic growth.
George W. Bush.  The White House.

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