Economic Report of the President

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etire. We will not change Social Security for those now retired or nearingretirement. We need to permanently fix the Social Security system for ourchildren and grandchildren. I will work with the Congress to fix SocialSecurity for generations to come.The current tax code is a drag on the economy. It discourages saving andinvestment, and it requires individuals and businesses to spend billions ofdollars and millions of hours each year to comply with the complicatedsystem. I will lead a bipartisan effort to reform our tax code to make itsimpler, fairer, and more pro-growth.We are working to make health care more affordable and accessible forAmerican families. The Medicare modernization bill I signed gives seniorsmore choices and helps them get the benefits of modern medicine andprescription drug coverage. We have created health savings accounts, whichgive workers and families more control over their health care decisions. We willopen or expand more community health centers for those in need. To helpcontrol health costs and make health care more accessible, we must let smallbusinesses pool risks across states so they can get the same discounts for healthinsurance that big companies get. We will increase the use of health informationtechnology that will make health care more efficient, cut down onmistakes, and control costs.Our litigation system encourages junk lawsuits and harms our economy,and the system must be reformed. I support medical liability reform to controlthe cost of health care, keep good medical professionals from being driven outof practice, and ensure that patient care—not avoidance of lawsuits—is thecentral concern in all medical decisions. I support class action reform toeliminate the waste, inefficiency, and unfairness of the class-action system.And I support reforms to the asbestos litigation system in order to protectvictims with asbestos-related injuries and prevent frivolous lawsuits that harmour economy and cost jobs.I will continue to push for energy legislation to help keep our economystrong. We must modernize our electricity system to make it more reliable.To make our energy supply more secure, we must explore for more energyin environmentally friendly ways in our own country, developalternative sources of energy, and encourage conservation.I will work to further simplify and streamline federal regulations that hindergrowth and encumber our job creators. Our economy needs to allow entrepreneursto spend more time doing business and less time with their lawyersand accountants.I believe that Americans benefit from open markets and free and fair trade,and I am working to open up markets around the world and make sure that4 | Economic Report of the President
the playing field is level for our workers, farmers, manufacturers, and other jobcreators. In the past four years, we concluded free-trade agreements withSingapore, Chile, Australia, Morocco, Bahrain, Jordan, and six countries inCentral America and the Caribbean. My Administration will continue to workto expand trade on a multilateral, regional, and bilateral basis, and to enforceour trade laws to help ensure a level playing field.I have a plan to prepare our young people for the jobs of the 21st century.We have brought greater accountability to our public schools and are workingto improve our high schools. We have made Pell grants available to onemillion more students, and we will work to make college more affordable byincreasing the size of Pell grants for low-income students. We are reformingour workforce training programs to help Americans obtain the skills neededfor the jobs that our economy is creating.I have an ambitious agenda for the next four years. During my first term,working with the Congress, I put policies in place to ensure a rapid recovery andto support strong growth. In my second term, together we will cut the budgetdeficit in half, fix Social Security, reform the tax code, reduce the burden of junklawsuits, ensure a reliable and affordable energy supply, continue to promote freeand fair trade, help make health care affordable and accessible for Americanfamilies, and expand the quality and availability of educational opportunities.These policies will produce an economic environment that continues to unleashthe creativity and energy of the American people.THE WHITE HOUSEFEBRUARY 2005Economic Report of the President | 5
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: ECONOMIC REPORT OF THE PRESIDENTTo
Page 9 and 10: LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 11 and 12: Monetary Policy ...................
Page 13 and 14: Encouraging FDI ...................
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
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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
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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
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
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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
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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
Page 234 and 235:
TABLE B-24.—Foreign transactions
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TABLE B-26.—Relation of gross dom
Page 238 and 239:
TABLE B-28.—National income by ty
Page 240 and 241:
TABLE B-29.—Sources of personal i
Page 242 and 243:
TABLE B-30.—Disposition of person
Page 244 and 245:
Year or quarterTABLE B-32.—Gross
Page 246 and 247:
TABLE B-33.—Median money income (
Page 248 and 249:
TABLE B-35.—Civilian population a
Page 250 and 251:
TABLE B-36.—Civilian employment a
Page 252 and 253:
TABLE B-38.—Unemployment by demog
Page 254 and 255:
TABLE B-40.—Civilian labor force
Page 256 and 257:
TABLE B-42.—Civilian unemployment
Page 258 and 259:
TABLE B-44.—Unemployment by durat
Page 260 and 261:
TABLE B-46.—Employees on nonagric
Page 262 and 263:
TABLE B-47.—Hours and earnings in
Page 264 and 265:
Year orquarterTABLE B-49.—Product
Page 266 and 267:
PRODUCTION AND BUSINESS ACTIVITYTAB
Page 268 and 269:
Year ormonthTABLE B-53.—Industria
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Year or monthTABLE B-55.—New cons
Page 272 and 273:
TABLE B-57.—Manufacturing and tra
Page 274 and 275:
TABLE B-59.—Manufacturers’ new
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Year ormonthTABLE B-61.—Consumer
Page 278 and 279:
TABLE B-62.—Consumer price indexe
Page 280 and 281:
TABLE B-64.—Changes in consumer p
Page 282 and 283:
TABLE B-65.—Producer price indexe
Page 284 and 285:
TABLE B-67.—Producer price indexe
Page 286 and 287:
TABLE B-68.—Changes in producer p
Page 288 and 289:
TABLE B-70.—Components of money s
Page 290 and 291:
TABLE B-71.—Aggregate reserves of
Page 292 and 293:
TABLE B-73.—Bond yields and inter
Page 294 and 295:
TABLE B-74.—Credit market borrowi
Page 296 and 297:
TABLE B-75.—Mortgage debt outstan
Page 298 and 299:
TABLE B-77.—Consumer credit outst
Page 300 and 301:
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
Page 308 and 309:
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
Page 320 and 321:
TABLE B-99.—Farm output and produ
Page 322 and 323:
Year ormonthTABLE B-101.—Agricult
Page 324 and 325:
INTERNATIONAL STATISTICSTABLE B-103
Page 326 and 327:
TABLE B-104.—U.S. international t
Page 328 and 329:
TABLE B-106.—U.S. international t
Page 330 and 331:
TABLE B-108.—Industrial productio
Page 332 and 333:
TABLE B-110.—Foreign exchange rat
Page 334:
TABLE B-112.—Growth rates in real
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