[Congressional Record (Bound Edition), Volume 149 (2003), Part 19]
[Senate]
[Pages 26713-26714]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            ECONOMIC GROWTH

  Mr. BENNETT. Madam President, one of the facts that those of us who 
live in the Washington area have grown accustomed to is that the world 
looks different through the eyes of the reporters for the Washington 
Post and the reporters for the Washington Times. My wife and I 
sometimes play the little game of opening both papers simultaneously 
and looking at the two headlines side by side. Usually, the Washington 
Times says things that sound good from the Republican point of view and 
the Washington Post says things that sound good from the Democratic 
point of view.
  The interesting thing this morning is that both papers covered the 
same story, and both papers said basically the same thing.
  I went into the cloakroom, and I gathered some other papers to see if 
the headlines were the same there as well. I have them here. Let's 
start with the Washington Times and the Washington Post.
  The Washington Times says:

       Growth Erupts in Summer Order. Consumers, Businesses, Go on 
     a Spending Spree.

  Out of the Washington Post--they treat that not quite as 
enthusiastically, but they say:

       U.S. Economic Growth Surges. Output Rises at the Highest 
     Rate Since 1984, but Jobs Still Decline.

  So the Washington Post puts in a little bash there for the President 
that the Washington Times does not.
  If we go to the Wall Street Journal, which some think of as a 
mouthpiece for the Republican National Committee, their headline is:

       Higher Gear, Economy Turned in its Best Quarter in Nearly 
     Two Decades. GDP Surged 7.2 Percent in Quarter on Broad Based 
     Gains. Bush Team Trumpet Data.

  To balance that from the Wall Street Journal, let's go to the 
newspaper some consider the house organ of the Democratic National 
Committee, the New York Times, and their headline is:

       Economy Records Speediest Growth Since the Mid-80's. Is 
     Good News Here for Good? Bush Hopes So. Third Quarter Data 
     Surge in Spending Helped by Rebates May Not Persist.

  Then I picked up USA Today, the screaming headline:

       7.2 Percent GDP Growth, Fastest in 19 Years. Economists 
     Credit Tax Relief and Shoppers.

  For one day at least, everybody agrees that the No. 1 story is the 
tremendous performance turned in by the American economy in the third 
quarter, and the headlines trumpet the numbers, 7.2 percent GDP growth.
  I would like to go behind the numbers. I would like to add a few 
numbers and do what I can to try to put this performance in 
perspective.
  No. 1, we have to recognize what even the New York Times has 
recognized, which is this is an extraordinary accomplishment, and this 
is a sign of very good times.
  I notice a quote from Howard Dean, who is running for President on 
the Democratic side, that indicates he is a little disappointed in 
this; he is a little unhappy that Americans are earning more money, 
that disposable income is up, that the economy is booming. Perhaps he 
was hoping he could ride into the White House on a wave of consumer 
dissatisfaction. If that is his hope, at least the third-quarter 
numbers say he has to find something else for which to hope.
  But it is true that the numbers we have here are not sustainable long 
term, and that is not necessarily bad because what we are looking for 
is not a single quarter of extraordinary growth. What we are looking 
for is a sustained period of recovery. The signs are there that we are, 
indeed, in such a period. It is not just the 7.2 percent growth in GDP 
we need to pay attention to; it is some other numbers. Let me address 
some of those numbers.
  They are in the newspaper stories, some of them buried a little 
further than I would do it if I were writing the story, but the first 
number that is of significance is the growth in business investment. 
Yes, as the headlines indicate, the tax relief and the shoppers are 
responsible for this, but the tax relief is, indeed, something of a 
one-time phenomenon. The mailing out of the checks for the child tax 
credit put more money in the hands of parents just before back-to-
school shopping, and that showed up in the shopping figures.
  Furthermore, the combination of the lowering of withholding rates 
along with the child tax credits causes people to go out and make some 
very significant purchases. New cars went up as a significant part of 
this performance in the third quarter, and you don't buy a new car 
every quarter. Undoubtedly, you will see some tapering off of some of 
these major purchases. So we can say that the fourth quarter will not 
be at the 7.2 percent level as far as GDP is concerned.
  One of the newspapers says it will fall all the way down to 4 
percent. Madam President, 4 percent on an annual basis is very robust 
and wonderful growth for an economy as mature as ours. If we could 
maintain a 4 percent average for the next 2 or 3 years, we would all be 
very happy about that. So those who are saying the 7.2 won't last and 
we will fall all the way down to 4 percent should remember there was a 
time not far distant in our history when we would have been very happy 
with 3.5 percent. I will take 4 percent any day as a steady, stable 
growth in the economy.
  Let's go back to the business investment number, the number that did 
not get as much attention as the 7.2 percent GDP number. Business 
investment grew at 11.1 percent, up from 7.3 percent the previous 
quarter. The thing to remember is that 7.3 percent is, in and of 
itself, considered a very strong indication of further growth, and this 
is the number that holds the promise of future jobs because if business 
is investing, business eventually is going to have to start hiring.
  Let me put the 7.3 percent number in some perspective. As I say, in 
historic terms, 7.3 percent would be a good number, but we have seen 
business investment go down, not a positive number of any kind, a 
negative number for 9 out of the last 11 quarters. To have it come out 
of negative territory, be so strongly positive as to be at 7.4 percent, 
and then see the next quarter come in at 11.1, this is as strong a 
signal as we are going to get that the economy, which has been in 
recovery but struggling ever since the recession ended, is now in a 
period of takeoff for sustained growth for the coming year.
  One of the other numbers the economists always look at is the 
question of inventories: How many goods do you have on the shelf, Mr. 
or Mrs. business person? How many goods do you have that are waiting to 
be sold? If the shelves are full, you are probably not going to be 
buying any more until they

[[Page 26714]]

start to come down, until your inventories start to fall. Usually when 
you have a period of growth like we have experienced in the third 
quarter, your inventories go up because people are stocking their 
shelves as the sales are strong.
  Inventories went down in the third quarter. The sales were so strong 
that they not only took everything we could produce but they reduced 
inventories that were already low even further, which means that for 
the fourth quarter and into the next year--first, second, and third 
quarters--businesses have a major challenge to restock those depleted 
inventories, which is another sign that there will be growth, another 
sign that there will be jobs, another sign that this recovery is well 
underway and has firm traction.
  Take the three numbers and put them together: 7.2 percent increase in 
GDP, substantially more than anybody anticipated; 11.1 percent increase 
in business investment, substantially more than anybody had 
anticipated; and a reduction in inventory of .67 percent from the 
previous level, and you have the profile of a recovery that is very 
robust.
  What caused this recovery? Certainly, one can say it was due. 
Certainly one can say this was part of the business cycle reasserting 
itself. We had the excesses of the 1990s that felt so wonderful while 
we were in them but that were so excessive that the reaction to them 
felt painful when it came.
  It now appears we have worked through most of those excesses. We have 
paid the price for the bubble of the late 1990s and we are beginning to 
get back on solid footing. However, one must credit President Bush's 
initiative in pushing tax cuts at the right time and at the right level 
to accelerate this growth.
  Virtually every one of these papers I have gone through at one place 
or another in the story will admit, triumphantly in the case of the 
Washington Times, grudgingly in the case of the New York Times, that 
the Bush tax cut made a significant contribution to this growth.
  I have already recited how it works with respect to consumer 
spending, but the consumer spending could be a one-time phenomenon and 
not hold if it is indeed tied to the receipt of checks such as the 
child credit. However, if the consumer spending has been accelerated by 
virtue of the reduction in withholding rates, something President Bush 
insisted on over and over again and that had the greatest resistance in 
this Chamber, we can say that portion of the tax cuts will, in fact, 
have a permanent impact on the growth; that that is a gift that will, 
in fact, keep on giving and we will see continued consumer spending as 
people have more money left in their paychecks.
  What is the outlook in terms of the other political number we hear 
over and over again in this Chamber, which is the deficit? One of the 
greatest arguments that was made as we were debating the Bush tax cut 
was it would make the deficit swell and soar beyond all comprehension 
and ultimately leave us bankrupt as a nation.
  There is another interesting number, one that has not received this 
kind of headline throughout the country but that is very important. At 
one point, as the economists were making their projections with respect 
to the deficit, they said the deficit for this fiscal year, the year 
that ended September 30, 2003, would be as high as $455 billion. That 
was a number that came out of the Office of Management and Budget at 
one point, as they made their guess as to what the economy would be 
doing and how much money would be available.
  We have heard that $455 billion figure repeatedly, particularly from 
those who were opposed to the President's tax cut and who have been 
opposed to the supplemental appropriation for Iraq. They are saying we 
have a $455 billion deficit and we are going to try to add $87 billion 
on top of it; that is irresponsible; we cannot possibly do that.
  Well, an interesting thing happened on the way to the closing of the 
books. With a stronger economy and with spending coming in at lower 
levels, we began to see higher revenues and, therefore, lower 
estimates. As the year got nearer to its close, some economists were 
saying the deficit might even be as low as $400 billion instead of the 
$455 billion; we might even be below the magic $400 billion number. I 
do not know what is magic about the $400 billion number, but it sounds 
good to pick that number.
  Then we began to hear from the Congressional Budget Office: yes, the 
deficit will clearly be below $400 billion. How much? It could be as 
much as $20 billion below $400 billion. It could be as low as $380 
billion.
  The numbers are now in. The books have been tentatively closed, and 
it is $374 billion. It is $26 billion below the $400 billion mark and 
it is $81 billion below the $455 billion that was being talked about 
just a few months ago.
  It is purely a coincidence--there is no connection whatsoever--but it 
is interesting that the actual number below the highest amount that was 
forecast is almost identical to the $87 billion of the Iraq 
supplemental. In other words, if we take the actual number of $374 
billion and add the $87 billion, we come to the theoretical number 
close to the $455 billion we were talking about.
  All of us would love to sponsor legislation that could cut $80 
billion a year out of the deficit. We would stand before our 
constituents and take enormous credit. We would say, are we not 
wonderful? We have eliminated $80 billion of the deficit.
  The economy did it for us. I think we have to credit the combination 
of the Bush tax cuts with the growth of the economy in the business 
cycle, with making us a little bit humble, of telling the politicians 
we do not control the events nearly as much as we pretend to in our 
speeches.
  The most important thing to remember is it is the economy itself that 
creates all Federal revenue. Money does not come from the budget. Money 
comes from the economy. Our job is to do whatever we can to get out of 
the way of intelligent market forces and allow the economy to grow as 
strongly as it can on its own. I think that is what Alan Greenspan has 
done at the Federal Reserve. I think that is what President Bush has 
led us to do in the Congress with the tax cuts, and I think the 
unanimous statements out of all of the papers today indicate it is 
working.
  I send my congratulations to Chairman Greenspan, my congratulations 
to President Bush, and my best wishes for all of us that this will, in 
fact, continue.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Chafee). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BIDEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BIDEN. Mr. President, I send a resolution to the desk and ask it 
be appropriately referred.
  The PRESIDING OFFICER. The resolution will be received and 
appropriately referred.
  (The remarks of Mr. Biden pertaining to the submission of S. Res. 256 
are printed in today's Record under ``Submitted Resolutions.'')
  Mr. BIDEN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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