[Economic Report of the President (2002)] [Administration of George W. Bush] [Online through the Government Printing Office, www.gpo.gov] 107th Congress, 2d Session............................H. Doc. 107-158 Economic Report of the President Transmitted to the Congress February 2002 together with THE ANNUAL REPORT of the COUNCIL OF ECONOMIC ADVISERS UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 2002 --------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail Stop: SSOP, Washington, DC 20402-0001 ISBN 0-16-051016-3 CONTENTS Page ECONOMIC REPORT OF THE PRESIDENT ............................. 1 ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS*............ 5 OVERVIEW ..................................................... 15 CHAPTER 1. RESTORING PROSPERITY .............................. 23 CHAPTER 2. STRENGTHENING RETIREMENT SECURITY ................. 65 CHAPTER 3. REALIZING GAINS FROM COMPETITION .................. 99 CHAPTER 4. PROMOTING HEALTH CARE QUALITY AND ACCESS .......... 145 CHAPTER 5. REDESIGNING FEDERALISM FOR THE 21ST CENTURY ....... 187 CHAPTER 6. BUILDING INSTITUTIONS FOR A BETTER ................ 215 ENVIRONMENT CHAPTER 7. SUPPORTING GLOBAL ECONOMIC INTEGRATION ............ 251 APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 2001 ............ 301 APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION ........................... 313 * For a detailed table of contents of the Council's Report, see page 9 ECONOMIC REPORT OF THE PRESIDENT ECONOMIC REPORT OF THE PRESIDENT To the Congress of the United States: Since the summer of 2000, economic growth has been unacceptably slow. This past year the inherited trend of deteriorating growth was fed by events, the most momentous of which was the terrorist attacks of September 11, 2001. The painful upshot has been the first recession in a decade. This is cause for compassion--and for action. Our first priority was to help those Americans who were hurt most by the recession and the attacks on September 11. In the immediate aftermath of the attacks, my Administration sought to stabilize our air transportation system to keep Americans flying. Working with the Congress, we provided assistance and aid to the affected areas in New York and Virginia. We sought to provide a stronger safety net for displaced workers, and we will continue these efforts. Our economic recovery plan must be based on creating jobs in the private sector. My Administration has urged the Congress to accelerate tax relief for working Americans to speed economic growth and create jobs. We are engaged in a war against terrorism that places new demands on our economy, and we must seek out every opportunity to build an economic foundation that will support this challenge. I am confident that Americans have proved they will rise to meet this challenge. We must have an agenda not only for physical security, but also for economic security. Our strategy builds upon the character of Americans: removing economic barriers to their success, combining our workers and their skills with new technologies, and creating an environment where entrepreneurs and businesses large and small can grow and create jobs. Our vision must extend beyond America, engaging other countries in the virtuous cycle of free trade, raising the potential for global growth, and securing the gains from worldwide markets in goods and capital. We must ensure that this effort builds economic bonds that encompass every American. America faces a unique moment in history: our Nation is at war, our homeland was attacked, and our economy is in recession. In meeting these great challenges, we must draw strength from the enduring power of free markets and a free people. We must also look forward and work toward a stronger economy that will buttress the United States against an uncertain world and lift the fortunes of others worldwide. THE WHITE HOUSE FEBRUARY 2002 THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS LETTER OF TRANSMITTAL Council of Economic Advisers, Washington, D.C., February 5, 2002 Mr. President: The Council of Economic Advisers herewith submits its 2002 Annual Report in accordance with the provisions of the Employment Act of 1946 as amended by the Full Employment and Balanced Growth Act of 1978. Sincerely, Robert Glenn Hubbard Chairman Randall S. Kroszner Member Mark B. McClellan Member