[Congressional Record (Bound Edition), Volume 150 (2004), Part 2]
[Senate]
[Pages 1672-1674]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE ECONOMY

  Mr. ALLARD. Madam President, I wish to talk about the economy. We can 
sure tell this is an election year. The false rhetoric that is going on 
about the economy is amazing. The fact is, the economy is recovering 
and our tax cuts have made a significant difference in the fact our 
economy is recovering.
  I heard the previous speaker on the floor talk about the jobs we are 
losing, but this President and this Republican Congress inherited an 
economy that was going in the dumps when he went into office.
  It was headed downhill. The stock market had been down for 9 months 
and the recession was just beginning when he was taking his oath of 
office, so one cannot blame this President for what has happened in the 
economy. We need to look back at what happened during the Clinton 
administration. We had one of the highest tax increases in the history 
of this country. Everybody who follows the economy knows it takes a 
while for tax policy to take effect. What has happened under the Bush 
Presidency, with a Republican Congress, is we put some tax cuts in 
place to get the economy recovered. It has worked. Now it did not start 
working immediately, but after a year or two we began to see the 
results. We are seeing the results today.
  The Members of the Senate who come to this floor and say we ought to 
raise taxes, that will do nothing more than destroy the economic 
recovery process we see taking place right now.
  I have a report from the Joint Economic Committee. The chairman of 
that committee happens to be Senator Bennett. It is made up equally of 
Members of each party from the Senate. There are five Republicans and 
five Democrats on the Joint Economic Committee. They have published a 
rather promising report. It is time we take a look at what they say 
about the economy. There should not be any doubt that the economy is 
recovering and a lot of it has been done due to the tax cuts. We should 
not allow a tax increase to occur that would destroy this economic 
growth.
  They report the economy is strong and there is sustainable growth 
going on. The recovery continues at a strong pace. Payrolls increased 
by over 112,000 jobs in January as activity in the manufacturing and 
services industries accelerated. Last year closed with the economy 
growing at a 4 percent annual rate and productivity growing at a 2.7 
percent annual rate, well above the long-run averages. Despite all of 
this, inflation remains benign. It is not growing, allowing the Federal 
Reserve to maintain short-term interest rates at historical lows. 
Recent tax relief continues to benefit consumers and businesses. 
Forecasters see continued robust growth, low inflation, and accelerated 
job gains throughout this year. That is pretty good news.
  The payroll employment increase of 112,000 jobs in January was the 
largest monthly gain since the year 2000. The unemployment rate fell to 
5.6 percent. I remember when I took economics in college in the 1960s. 
Five percent was considered full employment. We were spoiled a little 
bit and it was definitely an aberration, as a lot of economists 
described it, when we got down to 4 percent, but 5 percent is still 
considered a full employment figure. The unemployment rate fell to 5.6 
percent in January, well below its recent peak of 6.3 percent last 
June. Five straight months of job gains have now added 366,000 jobs to 
U.S. payrolls.
  5.6 percent is good news. The economy grew at a robust 4 percent 
annual rate in the fourth quarter of 2003. Forecasters see continued 
growth of around 4 percent throughout this year. Productivity--this is 
output per hour of labor--grew at a 2.7 percent pace in the fourth 
quarter, above historical averages. I continue to believe the workers 
in this country are the best educated, the best motivated, and nowhere 
in the world is their productivity exceeded. They are the ultimate. I 
think we should be proud of that and recognize it is all that 
individual effort that makes a difference and what keeps this economic 
engine growing.
  The Federal Reserve has kept short-term interest rates unchanged at 1 
percent, which is good for individuals who want to buy homes, for 
example. The administration worked with me to pass legislation called 
the American Dream Down Payment Act to get people into homes. I see now 
they are reporting that home ownership is at an historic high. It has 
never been higher in the history of this country than what we are 
seeing today as far as homeownership. That legislation, working with 
the administration, is the type of effort that is making the 
difference.
  The household survey, used to calculate the unemployment rate, showed 
employment gains of almost 500,000 in January. The gap between the 
household and the payroll measures of employment continues to widen, 
confirming initial labor market improvements and continuing jobless 
claims for unemployment insurance benefits are trending downward.
  I like to rely on the household survey because I think the household 
survey tells us something the payroll survey does not. What it tells me 
is a lot of our Americans are saying, look, now is the time for me to 
start my own business. When they start their own business they start 
out small so that means they start out of their home, they contract to 
do their labor. Then as demand grows for their service they begin to

[[Page 1673]]

expand out from there. The household survey reflects that.
  We have seen tremendous growth in the household survey. The payroll 
wage survey misses that particular parameter. That has been good news 
for some time, and the Joint Economic Committee has shown evidence this 
continues to grow. This is the small business sector of this country. 
It is the small business sector where one sees economic growth happen 
because this is where new ideas develop. This is where small companies 
have an opportunity to grow into larger companies like we have seen 
many of our high-tech companies do.
  Last night I had dinner with a number of executives from high-tech 
companies, and they are bullish on our economy. They think things are 
doing pretty well. They told us, well, maybe there have been a few jobs 
that have gone overseas, but nearly all of our jobs are growing in 
America. This is where our job growth is happening.
  Again, this is a political year and a lot of this false negative 
rhetoric is not telling the full story, and that is what I want to get 
across this morning. The economy is recovering and that is due to our 
tax cuts. Gross domestic product and productivity have grown at a very 
strong and sustainable rate. Real gross domestic product, often 
referred to as the GDP, grew at a solid 4 percent annual rate in the 
fourth quarter, following the third quarter's remarkable 8.2 percent 
rate. Amazing, the third quarter of last year had a 8.2 percent growth 
rate.
  In the second half of 2003, the economy grew at the fastest 6-month 
pace in almost 20 years. Over 2003, as a whole, gross domestic product 
grew at a robust average of 4.3 percent. By way of comparison, the 
economy grew at an average of 3.7 percent during the expansion of the 
1990s. Even when we had unprecedented economic growth in the 1990s, it 
was only 3.7 percent. We saw a much higher growth rate last year. 
Productivity also advanced, growing at a 2.7 percent annual rate in the 
fourth quarter, and in excess of 4 percent for the second consecutive 
year, well above historical averages.
  Forecasters believe the gross domestic growth will be sustained at 
around 4 percent throughout this year. That is all good news. Our tax 
cuts are working.
  Let's look at business activity. Business activity continues to 
strengthen. Increases in average weekly hours of work and moderation of 
job losses in manufacturing indicate rising activity. Confirming this 
trend, the Institute for Supply Management manufacturing index has 
risen since May to its highest value since 1983. The ISM services index 
has also been rising and, in January, was the highest in its history. 
Index value over 50 means the relevant sector is expanding. Current 
values of well above 60 indicate vigorous expansion in manufacturing 
and service.
  The economy is recovering and our cutting taxes is making the 
difference. Consumer confidence and spending grew. The University of 
Michigan's consumer sentiment index rose in January to its highest 
value since 2000. The Confidence Board's index rose to the highest in 
18 months.
  After tax income also continues to grow, boosted by tax cuts. Most 
Americans, after filing their taxes, are going to get more money back 
from the Government than they have in previous years. Improved 
sentiment and incomes have boosted consumer spending, which grew at a 
2.6-percent annual pace in the fourth quarter after hearty spending in 
the third quarter. After tax incomes will improve further as taxpayers 
receive higher refunds.
  What does it look like as far as the Fed? They are holding monetary 
policy steady. It is unchanged. This means they kept short-term 
interest rates at the five-decade low of 1 percent but changed their 
policy statement to set up flexibility to raise rates if they see signs 
of inflation. So they are prepared to act if we start to move into an 
inflationary cycle. Many measures of inflation are at their lowest 
since the 1960s, a key reason the Fed has accommodated strong growth 
without raising rates.
  I continue to point to the housing market where we had huge amounts 
of growth in home ownership because interest rates are low. All of a 
sudden, individuals who could not make a downpayment on a home found 
that, by gosh, with the interest rates down, it is easier for them to 
come up with the payment. It means their monthly payment will be less 
because interest rates are lower. Home ownership is good for the 
economy. It creates jobs.
  The housing market remains robust. Remarkably strong home sales have 
boosted the home ownership rate to a new high, and that new high is 
68.5 percent. Many signs point to more strength in housing in the near 
term. Mortgage applications have increased again on a renewed dip in 
mortgage rates.
  Housing starts rose in December to the highest rate in about 20 years 
and permits for home construction were up for the fourth quarter. This 
is all good news. The economy is recovering. It has been due to those 
tax cuts that we implemented earlier in the President's term.
  Ministers from major industrial countries met last weekend to discuss 
currency issues, including the dollar's recent decline and China's 
dollar peg. The dollar fell 10 percent against Japan's yen and 17 
percent against the euro last year, making U.S. exports less costly in 
world markets and imports more costly. Ministers again called for 
flexible, ``orderly'' exchange rates.
  This is all good news. I recall at the first of last year and in 2002 
manufacturers were coming to me and complaining about their inability 
to compete in the international markets because the value of the dollar 
was so much higher than what it had been historically. Those of you who 
are listening understand, when the value of the dollar is low, it means 
the cost of your goods and services are much higher and it is harder 
for you to be competitive against the yen or euro, for example. Now 
that is changing. The value of the dollar has dropped down so this 
means our manufactured goods are going to be able to compete overseas 
against those products that are already provided.
  I feel good about what we can look forward to. I am disappointed that 
we have to resort to all this negative rhetoric because we are in a 
campaign. I have shared with my colleagues here, and the American 
people, some real facts about what is happening in the economy. I don't 
think anybody, when they look at these facts, can disagree that our 
economy is in a state of recovery. Obviously, you can take the facts 
and pull them over two decades and you can distort them and try to make 
the President look bad as far as the economy is concerned.
  But the fact is, President Bush has had a strong growth policy for 
the economy, and it is working. It included cutting taxes and holding 
the growth in interest rates down, working with the Fed. Economic 
indicators have shown positive growth and the economy is going to 
continue to do that.
  I cannot understand why the opposition party has decided they are 
going to make the economy their issue. It is a losing issue because the 
economy is recovering. The American people are beginning to realize 
that. My State, for example, is a diverse State. We don't like to put 
all our eggs in one basket, so we have manufacturing, we have tourism, 
in the State of Colorado we have agriculture, we have natural 
resources, high technology, telecommunications and research and 
development. We realize things need to be done to encourage that, 
something we need to encourage throughout the country, to make sure we 
stay competitive. And that is educations. The company executives I met 
with last night said, yes, education is important. We need to be sure 
that we have our workforce, our citizens, well educated.
  The President has pushed to improve education. No Child Left Behind 
is certainly a sincere effort to try to improve our educational system. 
I happen to think it is going to work.
  We are improving our educational system. The economic figures are 
looking good. We should all be positive about the outlook, as far as 
America is concerned.
  I am proud to be American. I am proud of my small business roots. I 
had

[[Page 1674]]

an opportunity to start a business from scratch as a veterinarian and I 
worked hard to see that grow. It gave me an opportunity to contribute 
to my community as a small businessman, and to provide an opportunity 
for my children to get an education. They got their education. Now they 
are raising their families. I want to see my grandchildren have the 
same future that I have enjoyed, and my children have enjoyed.
  I think what the President is doing to hold down taxes creates lots 
of opportunity for young people to get their own business started. That 
is the strength of America, our small business sector. That is where 
innovation starts and that is where growth begins.
  Madam President, I am curious to know how much time we have left on 
this side.
  The PRESIDING OFFICER. The Senator has 11 minutes 56 seconds.
  Mr. ALLARD. I want to talk a little bit more about the housing issue. 
As our economy was going through an unprecedented decline, we saw 
housing stay up. That was the one part of our economy that actually 
sustained us.
  It was a pleasure for me to be able to work with the President on the 
American Dream Downpayment Act, to allow for young people in all areas 
of the country to begin to be able to make that downpayment on that 
first home.
  In studying what was happening in the last several years, even though 
we had dropped interest rates and it was easier to qualify for loans, 
there were a lot of people who should have but did not own their own 
homes. Historically the barrier was that downpayment. So the American 
Dream Downpayment Act provides a way for families who run up to this 
barrier, where they look at their rental rates they are paying that are 
exactly the same as what their mortgage payment would be, this provides 
them an opportunity to get past this downpayment barrier in order to 
own a home.
  It is working. It is going to work. As it moves forward--it is just 
getting started--it is going to do even more to create home ownership.
  I am proud of this President. I am proud of his economic policies. I 
am proud to be able to work with him in a partnership in cutting taxes 
and encouraging the economy to grow.
  As a small businessman, I know how that works. If anything affects a 
job, or growth, it is when taxes get too high and rules and regulations 
take over your business. As a small businessman, I have had to suffer 
through down economies. I have had to lay people off because our small 
business was not doing very well because of a down economy. It is not 
fun.
  But we always recovered and after we recovered we were more 
productive and we were more efficient and we generally provided a 
better service. I think that has happened in this country. I think a 
lot of companies have taken the downturn and streamlined their 
operations, improved their services.
  The bottom line is that we are going to have more jobs in this 
country. Our economy is going to continue to grow. The bottom line is 
the consumers in this country are going to be better served.
  This President has done the right thing for America. It is 
unfortunate that, in an election year such as this, the political 
rhetoric gets so negative because it really does not reflect what has 
been going on. To repeat, unemployment rates have dropped to 5.6 
percent. The gross domestic product is growing at phenomenal rates. Job 
growth is happening. It is occurring today.
  Other countries have looked at what we have done in America to create 
jobs, and they are updating.
  Competition is going to be tough in the international market, and we 
need to be prepared to compete. Trade restrictions is not the way to do 
it. We historically have been able to compete throughout the 
international community without trade restrictions. In fact, the trade 
agreements we pass actually make it possible for the United States to 
cut down the trade tariffs that are applied against American products.
  One of the things that gets thrown out here is the trade deficit. The 
trade deficit has been the worst in this country during the Depression 
and during the recession we had at the end of the Carter years in the 
1970s. When our economy goes down, trade deficits get better. When our 
economy goes up, trade deficits change because consumers are buying 
more goods. When you have them buying more goods, it creates more jobs. 
I don't see where the trade issue is one that really reflects what is 
happening in the economy.
  I shared these issues with you this morning because that is really 
what is happening in the economy. Employment is rising, unemployment 
rates continue to fall, gross domestic product and productivity 
continue to grow strong and at a sustainable rate, business activity 
continues to strengthen, consumer confidence and spending grows, the 
Fed is holding interests rates at a steady 1 percent, and the housing 
market looks really good. It has been good for a while and continues to 
look good. When you compare the dollar to the yen or to the euro, its 
value is going down, which is good for exports. It is good for 
business. It means we will be able to move our products overseas. I 
think it looks good.
  I am proud of this President. He has the right solution, and it is 
working.
  I yield the floor.

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