[Economic Report of the President (2008)]
[Administration of George W. Bush]
[Online through the Government Printing Office, www.gpo.gov]



110th Congress, 2d Session..............................H. Doc. 110-83
 
Economic Report of the President



Transmitted to the Congress
February 2008

together with
THE ANNUAL REPORT
of the
COUNCIL OF ECONOMIC ADVISERS


UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 2008


For sale by the Superintendent of Documents, U.S. Government Printing Office
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ISBN 978-0-16-079822-1

CONTENTS

Page

ECONOMIC REPORT OF THE PRESIDENT.................................   1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS* ..............   7
CHAPTER 1. THE YEAR IN REVIEW AND THE YEARS AHEAD................  25
CHAPTER 2. CREDIT AND HOUSING MARKETS ............................ 51
CHAPTER 3. THE CAUSES AND CONSEQUENCES OF EXPORT
GROWTH............................................................ 79
CHAPTER 4. THE IMPORTANCE OF HEALTH AND HEALTH
CARE ............................................................. 97
CHAPTER 5. TAX POLICY............................................ 115
CHAPTER 6. THE NATION'S INFRASTRUCTURE........................... 137
CHAPTER 7. SEARCHING FOR ALTERNATIVE ENERGY
SOLUTIONS........................................................ 163
CHAPTER 8. IMPROVING ECONOMIC STATISTICS ........................ 187
APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE COUNCIL OF ECONOMIC ADVISERS DURING 2007.................. 203
APPENDIX B. STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION....................................................... 217

* For a detailed table of contents of the Council's Report, see page 11





ECONOMIC REPORT
OF THE PRESIDENT






ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:

Over the past 6 years of economic expansion, the American economy
has proven its strength and resilience. Job creation grew uninterrupted
for a record period of time, inflation remains moderate, unemployment
is low, and productivity continues to grow. The economy is built upon
a strong foundation, with deep and sophisticated capital markets,
flexible labor markets, low taxes, and open trade and investment
policies.

Americans should be confident about the long-term strength of our
economy, but our economy is undergoing a period of uncertainty, and
there are heightened risks to our near-term economic growth. To insure
against these risks, I called upon the Congress to enact a growth
package that is simple, temporary, and effective in keeping our
economy growing and our people working.

There is more we should do to strengthen our economy. First, we must
keep taxes low. Unless the Congress acts, most of the tax relief that
we have delivered over the past 7 years will be taken away and 116
million American taxpayers will see their taxes rise by an average
of $1,800. The tax relief of the past few years has been a key factor
in promoting economic growth and job creation and it should be made
permanent. We must also work together to tackle unfunded obligations
in entitlement programs such as Social Security, Medicare, and
Medicaid. I have laid out a detailed plan in my Budget to restrain
spending, cut earmarks, and balance the budget by 2012 without raising
taxes.

Second, we must trust Americans with the responsibility of
homeownership and empower them to weather turbulent times in the
market. My Administration has acted aggressively to help credit-worthy
homeowners avoid foreclosure. We launched a new initiative called
FHASecure to help families refinance their homes. I signed legislation
to protect families from higher taxes when lenders forgive a portion
of their home mortgage debt.
We have also brought together the HOPE NOW alliance, which is helping
many struggling homeowners avoid foreclosure by facilitating the
refinancing and modification of mortgages. The Congress can do more
to help American families keep their homes by passing legislation to
reform Freddie Mac and Fannie Mae, modernize the Federal Housing
Administration, and allow State housing agencies to issue tax-free
bonds to help homeowners refinance their mortgages.

Third, we must continue opening new markets for trade and investment.
We have an unprecedented opportunity to reduce barriers to global
trade and investment through a successful Doha round. The Congress
should also approve our pending free trade agreements. I thank the
Congress for its approval of a good agreement with Peru, and ask for
the approval of agreements with Colombia, Panama, and South Korea.
These agreements will benefit our economy by providing greater access
for our exports and supporting good jobs for American workers, and
they will promote America's strategic interests. I have asked the
Congress to reauthorize and reform trade adjustment assistance
so that we can help those workers who are displaced by trade to learn
new skills and find new jobs.

Fourth, we must make health care more affordable and accessible for
all Americans. I have proposed changes in the tax code that would
end the bias against those who do not receive health insurance through
their employer and would make it easier for many uninsured Americans
to obtain insurance. This reform would put private health care coverage
within reach for millions. My Budget also improves access to health
care by increasing the power of small employers, civic groups, and
community organizations to negotiate lower-priced health premiums.
These policies would encourage competition among health plans across
State lines, help reduce frivolous lawsuits that increase patients'
costs, and promote the use of health savings accounts.

Fifth, we must increase our energy security and confront climate
change. Last year, I proposed an ambitious plan to reduce U.S.
dependence on oil and help cut the growth of greenhouse gas emissions.
I am pleased that the Congress responded, and I was able to sign
into law a bill that will increase fuel economy and the use of
alternative fuels, as well as set new efficiency mandates on
appliances, light bulbs, and Federal Government operations. In my
State of the Union Message, I proposed that we take the next steps
to accelerate technological breakthroughs by funding new technologies
to generate coal power that captures carbon emissions, advance
emissions-free nuclear power; and invest in advanced battery
technology and renewable energy. I am also committing $2 billion to
a new international clean technology fund that will help developing
nations make greater use of clean energy sources. Additionally,
my Budget proposes to protect the economy against oil supply
disruptions by doubling the capacity of the Strategic Petroleum
Reserve.

Finally, a strong and vibrant education system is vital to
maintaining our Nation's competitive edge and extending economic
opportunity to every citizen. Six years ago, we came together to
pass the No Child Left Behind Act, and no one can deny its results.
Now we must work together to increase accountability, add
flexibility for States and districts, reduce the number of high
school dropouts, and provide extra help for struggling schools.

Many of these issues are discussed in the 2008 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. By relying on
the foundation and resilience of our economy, trusting the decisions
of individuals and markets and pursuing pro-growth policies, we
should have confidence in our prospects for continued prosperity and
economic growth.


THE WHITE HOUSE
FEBRUARY 2008


THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS


LETTER OF TRANSMITTAL
Council of Economic Advisers
Washington, D.C., February 12, 2008

Mr. President:

The Council of Economic Advisers herewith submits its 2008 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,

Edward P. Lazear
Chairman