[Economic Report of the President (2003)]
[Administration of George W. Bush]
[Online through the Government Printing Office, www.gpo.gov]

108th Congress, 1st Session ........................... H. Doc. 108-2


 
Economic Report of the President








Transmitted to the Congress
February 2003


together with
THE ANNUAL REPORT
of the
COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE

WASHINGTON : 2003
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CONTENTS

Page

ECONOMIC REPORT OF THE PRESIDENT .......................    1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS* .....    5

OVERVIEW ...............................................   15

CHAPTER 1. MACROECONOMIC PERFORMANCE IN 2002 ...........   27

CHAPTER 2. CORPORATE GOVERNANCE AND ITS REFORM .........   73

CHAPTER 3. POLICIES FOR DYNAMIC LABOR MARKETS ..........  109

CHAPTER 4. REGULATION IN A DYNAMIC ECONOMY .............  135

CHAPTER 5. TAX POLICY FOR A GROWING ECONOMY ............  175

CHAPTER 6. A PRO-GROWTH AGENDA FOR THE GLOBAL ECONOMY ..  213

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE COUNCIL OF ECONOMIC ADVISERS DURING 2002 .....  257

APPENDIX B. STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION .........................  269

* For a detailed table of contents of the Council's Report, see page 9


ECONOMIC REPORT
OF THE PRESIDENT


To the Congress of the United States:

The economy is recovering from the effects of the slowdown that
began in the middle of 2000 and led to the subsequent recession.
The American economy has been hit hard by the events of the past
three years, most tragically by the effects of the terrorist
attacks of September 11, 2001. Our economy and investor confidence
were hurt when we learned that some corporate leaders were not
playing by the rules. The combined impact of these events, along
with the three-year decline in stock values that impacted business
investment, slowed growth in 2002. Despite these challenges,
the economy's underlying fundamentals remain solid--including
low inflation, low interest rates, and strong productivity gains.
Yet the pace of the expansion has not been satisfactory; there
are still too many Americans looking for jobs. We will not be
satisfied until every part of our economy is vigorous and every
person who wants a job can find one.
We are taking action to restore the robust growth that creates
jobs. In January, I proposed a growth and jobs plan to add needed
momentum to our economic recovery. We will accelerate the tax
relief already approved by Congress and give it to Americans
now, when it is most needed. Lowering tax rates and moving more
Americans into the lowest tax bracket will help our economy grow
and create jobs. Faster marriage tax relief and a faster increase
in the child tax credit will especially help middle-class families,
and should take effect now. We will take steps to encourage small
business investment, helping them to expand and create jobs. We
will end the unfair double taxation of corporate income received
by individuals. By putting more money back in the hands of
shareholders, strengthening investor confidence in the market,
and encouraging more investment, we will have more growth and
job creation. These steps will allow Americans to keep more of
their own money to spend, save, or invest. They will boost the
economy, ensure that the recovery continues, and provide long-term
economic benefits through higher productivity and higher incomes.
As our economy recovers, we also have an obligation to help
Americans who have lost their jobs. That is why we extended
unemployment payments for workers who lost their jobs and
improved incentives for investment to create new jobs. I also
proposed a bold new program of reemployment accounts to help
workers searching for jobs.
Our commitment to a strong economy does not stop with these
important steps. We will continue to strengthen investor
confidence in the integrity of our markets. We will develop
better ways to train workers for new jobs. We will make the
Nation's regulations and tax code less onerous and more reflective
of the demands of a dynamic economy, and expand opportunities
for open trade and stronger growth in all nations, especially
for emerging and developing economies.
Our Nation's economic progress comes from the innovation and hard
work of Americans in a free market that creates opportunities no
other system can offer. Government does not create wealth, but
instead creates the economic environment in which risk takers
and entrepreneurs create jobs. With the right policies focused
on growth and jobs, strong economic fundamentals--and hard work--I
am confident we will extend economic opportunity and prosperity to
every corner of America.



THE WHITE HOUSE
FEBRUARY 2003






THE ANNUAL REPORT OF THE
COUNCIL OF ECONOMIC ADVISERS





LETTER OF TRANSMITTAL

Council of Economic Advisers,
Washington, D.C., January 29, 2003.

Mr. President:

The Council of Economic Advisers herewith submits its 2003 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