Economic Report of the President

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world—uses mining vehicles to move more than 350 million tons of materialper year. Before the free trade agreement with Chile went into effect in January,Caterpillar's mining trucks were subject to tariffs of $60,000 or more. Thesemining trucks now enter Chile duty-free, and have become Illinois’ biggestexport. In 2004, Caterpillar tripled its sales to Chile and added nearly 2,700people to its U.S. payrolls.The increase in market access for U.S. exports gained through trade diplomacyis especially noteworthy because the United States enters these negotiationswith trade barriers that are very low. Central American nations, for example,already had extensive access to the U.S. market through the Caribbean BasinInitiative. Under the terms of the CAFTA, those countries are now makingreciprocal commitments to allow in U.S. goods and services.Bilateral FTAs can also strengthen opportunities for progress in regionaland WTO negotiations. In his first term, the President made multilateraltrade negotiations a priority. In the second term, concluding multilateraltrade negotiations held under the auspices of the WTO will be a top priorityfor the Administration. Under the President’s leadership, the United Statessuccessfully led the effort to ensure that 2004 was not a “lost year” for theDoha Development Agenda negotiations. Early in 2004, the United Statesmounted an intensive effort to get the Doha negotiations on a practical tracktoward success. U.S. negotiators pressed trading partners to narrow differences,establish key frameworks for detailed negotiations, and push forwardto reach an agreement that would foster increased economic growth, development,and opportunity. The diplomatic effort focused on the key marketaccess areas of agriculture, industrial goods, and services; the effort in 2004developed frameworks that will be built upon in moving forward with thewider WTO agenda. At the end of July 2004, negotiations were successfullyput back on track. WTO ministers are scheduled to meet in Hong Kong,China, at the end of 2005, to chart the final course for the negotiations.To ensure continued U.S. global leadership on trade, two legislative stepsare necessary. First, Congress needs to reaffirm the United States’ commitmentto the WTO in its regular review. Second, Trade Promotion Authority(TPA) must be renewed. TPA leaves the power to regulate internationalcommerce in the hands of the Congress. Under TPA, Congress agrees toaccept or reject an accord negotiated by the President without modification.If TPA is not renewed, it will likely be difficult—if not impossible—toachieve the kind of comprehensive benefits the Administration has alreadynegotiated in its free trade agreements to date. At stake are the substantialgains that would come from a successful conclusion to the Doha talks. Thesegains would accrue both to the United States and to all participants in theglobal trading system.Chapter 8 | 187
ConclusionThe United States is the world’s leader in many ways and remains theleading advocate for pro-growth policies around the world. Connecting theworld’s economies through trade provides economic benefits at home whileoffering opportunities to other nations that are embracing economic reforms.Peace and prosperity go hand in hand, each reinforcing the other. ThePresident's policies are designed to foster rising living standards at home,while encouraging other nations to follow our lead.188 | Economic Report of the President
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Economic Reportof the PresidentTran
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C O N T E N T SECONOMIC REPORT OF T
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ECONOMIC REPORT OF THE PRESIDENTTo
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the playing field is level for our
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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Monetary Policy ...................
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Encouraging FDI ...................
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3-4. The Equivalence of Sales Taxes
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Real GDP expanded by 3.7 percent du
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Options for Tax ReformChapter 3, Op
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and better Nation for it. A compreh
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Innovation and the Information Econ
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ecause they do not expect family me
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The Administration has pushed aggre
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C H A P T E R 1The Year in Review a
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Consumer SpendingConsumer spending
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easons for this correlation are dis
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2003, a number of countries that to
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ProductivityRecent productivity gro
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The projected path of inflation as
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strengthen. The forecast is based o
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The growth rate of the economy over
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In sum, potential real GDP is proje
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C H A P T E R 2Expansions Past and
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The behavior of real GDP is similar
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of faltering may be attributable to
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most recent expansions have shown r
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middle of 2003. The more moderate r
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1.2 percent. Employment continued t
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SummaryModerate recessions are foll
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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
Page 133 and 134: C H A P T E R 6Innovation and theIn
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Page 137 and 138: Changed circumstances, such as new
Page 139 and 140: Illegal Acts on the InternetThe Int
Page 141 and 142: or develop new markets, which can l
Page 143 and 144: inflation factor for the price cap
Page 145 and 146: U.S. households connecting to local
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Page 153 and 154: C H A P T E R 7The Global HIV/AIDS
Page 155 and 156: Chart 7-1 Estimated HIV Infection L
Page 157 and 158: There is no cure for HIV/AIDS, thou
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Page 165 and 166: Box 7-1 — continuedfocused on the
Page 167 and 168: Box 7-2 — continuedenhancing coor
Page 169 and 170: ConclusionThe United States and cou
Page 171 and 172: Good Two. In Ricardo’s simple mod
Page 173 and 174: The Impact of Trade on Labor Market
Page 175 and 176: The U.S. Advantage in Services Trad
Page 177 and 178: U.S. firms is associated with a cor
Page 179 and 180: anked the second-best country out o
Page 181 and 182: the Chinese government agreed to el
Page 183: Trade LiberalizationTariffs and oth
Page 187 and 188: LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 189 and 190: Report to the President on theActiv
Page 191 and 192: The Council continued its efforts t
Page 193 and 194: The Staff of the Council of Economi
Page 195 and 196: John List and Ted Gayer provided co
Page 197: Appendix BSTATISTICAL TABLES RELATI
Page 200 and 201: PageB-32. Gross saving and investme
Page 202 and 203: PageB-94. Relation of profits after
Page 204 and 205: NATIONAL INCOME OR EXPENDITURETABLE
Page 206 and 207: TABLE B-2.—Real gross domestic pr
Page 208 and 209: TABLE B-3.—Quantity and price ind
Page 210 and 211: TABLE B-5.—Contributions to perce
Page 212 and 213: TABLE B-6.—Chain-type quantity in
Page 214 and 215: TABLE B-7.—Chain-type price index
Page 216 and 217: TABLE B-8.—Gross domestic product
Page 218 and 219: TABLE B-10.—Gross value added by
Page 220 and 221: TABLE B-12.—Gross domestic produc
Page 222 and 223: TABLE B-13.—Real gross domestic p
Page 224 and 225: TABLE B-14.—Gross value added of
Page 226 and 227: TABLE B-16.—Personal consumption
Page 228 and 229: TABLE B-18.—Private fixed investm
Page 230 and 231: TABLE B-20.—Government consumptio
Page 232 and 233: 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
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TABLE B-110.—Foreign exchange rat
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TABLE B-112.—Growth rates in real
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