Economic Report of the President

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Addressing Air Pollution Through Tradable Permits.................... 122Addressing Overfishing Through Property Rights ....................... 123School Voucher Programs............................................................ 125The Application of Property Rights to Current Policy Issues............ 127Personal Retirement Accounts ..................................................... 127Health Savings Accounts ............................................................. 129Millennium Challenge Accounts ................................................. 130Conclusion....................................................................................... 133chapter 6. innovation and the information economy ................. 135Growth of the Information Economy............................................... 136Growth in Computer and Internet Use....................................... 136Illegal Acts on the Internet .......................................................... 141Competition Versus Economic Regulation ....................................... 142Telephone Service: A Natural Monopoly?......................................... 146Long-Distance Services................................................................ 146Mobile Wireless Telephone Services ............................................ 147Talking on the Internet: Voice over Internet Protocol.................. 149Realizing the Promise of Broadband................................................. 150Universal, Affordable Access to Broadband ................................. 150Conclusion....................................................................................... 153chapter 7. the global hiv/aids epidemic ........................................ 155A Global Crisis................................................................................. 156Disease Characteristics and Treatments............................................. 157The Economic Impact of HIV/AIDS............................................... 159Direct Economic Impacts on Households ................................... 159Indirect Economic Impacts on Households................................. 161Macroeconomic Impacts ............................................................. 162Getting Prevention, Treatment, and Care to the Field ...................... 162A Role for Differential Pricing .................................................... 164Humanitarian Aid ....................................................................... 165Development of New Treatments and Vaccines................................ 167Incentives for Innovation ............................................................ 167Conclusion....................................................................................... 171chapter 8. modern international trade ........................................ 173Free Trade: Beyond the Basics .......................................................... 173Globalization and the Terms of Trade.......................................... 174The Impact of Trade on Labor Markets....................................... 176The U.S. Advantage in Services Trade ......................................... 178Foreign Direct Investment: An Increasingly Important Part of Trade 179The Global Supply Chain and FDI............................................. 180How Inward FDI Strengthens Domestic Firms ........................... 181Contents | 13
Encouraging FDI ........................................................................ 181Achievements in Trade Negotiations................................................. 182Trade with China ........................................................................ 182Intellectual Property Rights......................................................... 184Trade Liberalization..................................................................... 186Conclusion....................................................................................... 188appendixesA. Report to the President on the Activities of the Council ofEconomic Advisers During 2004................................................. 189B. Statistical Tables Relating to Income, Employment,and Production ........................................................................... 201list of tables1-1. Administration Forecast ............................................................ 431-2. Accounting for Growth in Real GDP, 1953-2010..................... 453-1. Sources of Federal Revenues, Fiscal Year 2005........................... 723-2. Comparison of Tax Revenues: United States, G-7, andOECD, 2002............................................................................ 724-1. Foreign-Born Share of Employment Growth by OccupationalCategory, 1996 to 2002 ............................................................ 954-2. Median Weekly Earnings by Educational Attainment, 2003 ..... 100list of charts1-1. Real and Nominal Price of West Texas IntermediateCrude Oil ................................................................................. 331-2. Investment Growth and the Acceleration of NonfarmBusiness Output........................................................................ 351-3. Saving, Investment, and the Current Account Balance.............. 371-4. Labor Productivity, Nonfarm Business Sector ........................... 391-5. Inflation and Inflation Expectations.......................................... 411-6. Okun’s Law Estimation of Potential GDP Growth ................... 442-1. Real Gross Domestic Product.................................................... 502-2. Real Personal Consumption Expenditures................................. 512-3. Real Nonresidential Investment ................................................ 522-4. Real Residential Investment ...................................................... 532-5. Real Exports of Goods and Services .......................................... 542-6. Nonfarm Payroll Employment .................................................. 552-7. Nonfarm Business Productivity................................................. 562-8. Recessions and Expansions: Real GDP...................................... 572-9. Recessions and Expansons: Nonfarm Payroll Employment ....... 5914 | Economic Report of the President
Page 1 and 2: Economic Reportof the PresidentTran
Page 3 and 4: C O N T E N T SECONOMIC REPORT OF T
Page 5 and 6: ECONOMIC REPORT OF THE PRESIDENTTo
Page 7 and 8: the playing field is level for our
Page 9 and 10: LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 11: Monetary Policy ...................
Page 15 and 16: 3-4. The Equivalence of Sales Taxes
Page 17 and 18: Real GDP expanded by 3.7 percent du
Page 19 and 20: Options for Tax ReformChapter 3, Op
Page 21 and 22: and better Nation for it. A compreh
Page 23 and 24: Innovation and the Information Econ
Page 25 and 26: ecause they do not expect family me
Page 27 and 28: The Administration has pushed aggre
Page 29 and 30: C H A P T E R 1The Year in Review a
Page 31 and 32: Consumer SpendingConsumer spending
Page 33 and 34: easons for this correlation are dis
Page 35 and 36: 2003, a number of countries that to
Page 37 and 38: ProductivityRecent productivity gro
Page 39 and 40: The projected path of inflation as
Page 41 and 42: strengthen. The forecast is based o
Page 43 and 44: The growth rate of the economy over
Page 45 and 46: In sum, potential real GDP is proje
Page 47 and 48: C H A P T E R 2Expansions Past and
Page 49 and 50: The behavior of real GDP is similar
Page 51 and 52: of faltering may be attributable to
Page 53 and 54: most recent expansions have shown r
Page 55 and 56: middle of 2003. The more moderate r
Page 57 and 58: 1.2 percent. Employment continued t
Page 59 and 60: SummaryModerate recessions are foll
Page 61 and 62: permanent cuts should permanently r
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and the Jobs and Growth Tax Relief
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Federal government revenues had bee
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Fiscal policy played an especially
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C H A P T E R 3Options for Tax Refo
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High Compliance CostsThe complexity
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a reasonable estimate is that a 10
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Excess BurdenBecause taxes distort
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Box 3-3 — continuedThe bottom 40
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more uniform or pure version of the
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of being collected all at once at t
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would have to differ from state tax
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owner claimed it was for business,
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The current set of saving incentive
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the current system. In addition, so
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C H A P T E R 4ImmigrationIn recent
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TABLE 4-1.— Foreign-Born Share of
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immigrants (also called illegal or
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largest group of immigrants was bor
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employment costs, including wage fl
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Chapter 4 | 103
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wages fall in response to immigrati
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immigrants from Latin America do re
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addition, as migrants leave the cou
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include siblings and adult children
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despite the tremendous growth in th
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The TWP would allow new foreign wor
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C H A P T E R 5Expanding Individual
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This phenomenon, known as the “tr
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producing more of that good. Simila
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In 2002, the President proposed “
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provide evidence of increased profi
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schools are four times as efficient
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low administrative costs, estimated
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Box 5-2: The Benefits of Land Title
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development plan designed by others
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C H A P T E R 6Innovation and theIn
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E-mail is the most common online ac
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Changed circumstances, such as new
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Illegal Acts on the InternetThe Int
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or develop new markets, which can l
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inflation factor for the price cap
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U.S. households connecting to local
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garbling their transmissions. To li
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from 51.3 percent in December 1999
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for their property rights. The Admi
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C H A P T E R 7The Global HIV/AIDS
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Chart 7-1 Estimated HIV Infection L
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There is no cure for HIV/AIDS, thou
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AIDS is more damaging to a househol
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and risk reduction have helped redu
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only one price, the drug companies
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Box 7-1 — continuedfocused on the
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Box 7-2 — continuedenhancing coor
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ConclusionThe United States and cou
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Good Two. In Ricardo’s simple mod
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The Impact of Trade on Labor Market
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The U.S. Advantage in Services Trad
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U.S. firms is associated with a cor
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anked the second-best country out o
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the Chinese government agreed to el
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Trade LiberalizationTariffs and oth
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ConclusionThe United States is the
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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Report to the President on theActiv
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The Council continued its efforts t
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The Staff of the Council of Economi
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John List and Ted Gayer provided co
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Appendix BSTATISTICAL TABLES RELATI
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PageB-32. Gross saving and investme
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PageB-94. Relation of profits after
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NATIONAL INCOME OR EXPENDITURETABLE
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TABLE B-2.—Real gross domestic pr
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TABLE B-3.—Quantity and price ind
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TABLE B-5.—Contributions to perce
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TABLE B-6.—Chain-type quantity in
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TABLE B-7.—Chain-type price index
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TABLE B-8.—Gross domestic product
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TABLE B-10.—Gross value added by
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TABLE B-12.—Gross domestic produc
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TABLE B-13.—Real gross domestic p
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TABLE B-14.—Gross value added of
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TABLE B-16.—Personal consumption
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TABLE B-18.—Private fixed investm
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TABLE B-20.—Government consumptio
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TABLE B-22.—Private inventories a
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TABLE B-24.—Foreign transactions
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TABLE B-26.—Relation of gross dom
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TABLE B-28.—National income by ty
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TABLE B-29.—Sources of personal i
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TABLE B-30.—Disposition of person
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Year or quarterTABLE B-32.—Gross
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TABLE B-33.—Median money income (
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TABLE B-35.—Civilian population a
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TABLE B-36.—Civilian employment a
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TABLE B-38.—Unemployment by demog
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TABLE B-40.—Civilian labor force
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TABLE B-42.—Civilian unemployment
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TABLE B-44.—Unemployment by durat
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TABLE B-46.—Employees on nonagric
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TABLE B-47.—Hours and earnings in
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Year orquarterTABLE B-49.—Product
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PRODUCTION AND BUSINESS ACTIVITYTAB
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Year ormonthTABLE B-53.—Industria
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Year or monthTABLE B-55.—New cons
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TABLE B-57.—Manufacturing and tra
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TABLE B-59.—Manufacturers’ new
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Year ormonthTABLE B-61.—Consumer
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TABLE B-62.—Consumer price indexe
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TABLE B-64.—Changes in consumer p
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TABLE B-65.—Producer price indexe
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TABLE B-67.—Producer price indexe
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TABLE B-68.—Changes in producer p
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TABLE B-70.—Components of money s
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TABLE B-71.—Aggregate reserves of
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TABLE B-73.—Bond yields and inter
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TABLE B-74.—Credit market borrowi
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TABLE B-75.—Mortgage debt outstan
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TABLE B-77.—Consumer credit outst
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TABLE B-79.—Federal receipts, out
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TABLE B-81.—Federal receipts, out
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TABLE B-83.—Federal and State and
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TABLE B-85.—State and local gover
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End of yearor monthTABLE B-87.—U.
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End of monthTABLE B-89.—Estimated
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TABLE B-91.—Corporate profits by
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TABLE B-93.—Sales, profits, and s
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YearComposite(Dec. 31,2002=5,000) 3
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YearAGRICULTURETABLE B-97.—Farm i
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TABLE B-99.—Farm output and produ
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Year ormonthTABLE B-101.—Agricult
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INTERNATIONAL STATISTICSTABLE B-103
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TABLE B-104.—U.S. international t
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TABLE B-106.—U.S. international t
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TABLE B-108.—Industrial productio
Page 332 and 333:
TABLE B-110.—Foreign exchange rat
Page 334:
TABLE B-112.—Growth rates in real
show all

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