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higher taxes when lenders forgive a portion of their home mortgage debt.We have also brought together the HOPE NOW alliance, which is helpingmany struggling homeowners avoid foreclosure by facilitating the refinancingand modification of mortgages. The Congress can do more to help Americanfamilies keep their homes by passing legislation to reform Freddie Mac andFannie Mae, modernize the Federal Housing Administration, and allowState housing agencies to issue tax-free bonds to help homeowners refinancetheir mortgages.Third, we must continue opening new markets for trade and investment.We have an unprecedented opportunity to reduce barriers to global tradeand investment through a successful Doha round. The Congress shouldalso approve our pending free trade agreements. I thank the Congress forits approval of a good agreement with Peru, and ask for the approval ofagreements with Colombia, Panama, and South Korea. These agreementswill benefit our economy by providing greater access for our exports andsupporting good jobs for American workers, and they will promote America’sstrategic interests. I have asked the Congress to reauthorize and reform tradeadjustment assistance so that we can help those workers who are displaced bytrade to learn new skills and find new jobs.Fourth, we must make health care more affordable and accessible for allAmericans. I have proposed changes in the tax code that would end the biasagainst those who do not receive health insurance through their employer andwould make it easier for many uninsured Americans to obtain insurance. Thisreform would put private health care coverage within reach for millions. MyBudget also improves access to health care by increasing the power of smallemployers, civic groups, and community organizations to negotiate lowerpricedhealth premiums. These policies would encourage competition amonghealth plans across State lines, help reduce frivolous lawsuits that increasepatients’ 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 oiland help cut the growth of greenhouse gas emissions. I am pleased that theCongress responded, and I was able to sign into law a bill that will increase fueleconomy and the use of alternative fuels, as well as set new efficiency mandateson appliances, light bulbs, and Federal Government operations. In my State ofthe Union Message, I proposed that we take the next steps to accelerate technologicalbreakthroughs by funding new technologies to generate coal power thatcaptures carbon emissions, advance emissions-free nuclear power; and investin advanced battery technology and renewable energy. I am also committing4 | Economic Report of the <strong>President</strong>
$2 billion to a new international clean technology fund that will helpdeveloping nations make greater use of clean energy sources. Additionally,my Budget proposes to protect the economy against oil supply disruptions bydoubling the capacity of the Strategic Petroleum Reserve.Finally, a strong and vibrant education system is vital to maintaining ourNation’s competitive edge and extending economic opportunity to everycitizen. Six years ago, we came together to pass the No Child Left BehindAct, and no one can deny its results. Now we must work together to increaseaccountability, add flexibility for States and districts, reduce the number ofhigh school dropouts, and provide extra help for struggling schools.Many of these issues are discussed in the 2008 Annual Report of theCouncil of Economic Advisers. The Council has prepared this Report to helppolicymakers understand the economic conditions and issues that underliemy Administration’s policy decisions. By relying on the foundation andresilience of our economy, trusting the decisions of individuals and marketsand pursuing pro-growth policies, we should have confidence in our prospectsfor continued prosperity and economic growth.THE WHITE HOUSEFEBRUARY 2008Economic Report of the <strong>President</strong> | 5
Page 1 and 2: EconomicReportof thePresidentTransm
Page 4 and 5: C O N T E N T SPageECONOMIC REPORT
Page 7: ECONOMIC REPORT OF THE PRESIDENTTo
Page 13: LETTER OF TRANSMITTALCouncil of Eco
Page 16 and 17: chapter 3. the causes and consequen
Page 18 and 19: appendixesA. Report to the Presiden
Page 20 and 21: 2-5. Mortgage Lending Today........
Page 22 and 23: Chapter 1: The Year in Reviewand th
Page 24 and 25: Chapter 3: The Causes and Consequen
Page 26 and 27: • Tax reductions in 2001 and 2003
Page 28 and 29: • More effective statistical use
Page 30 and 31: • Real GDP posted solid 2.5 perce
Page 32 and 33: elative to non-energy prices, while
Page 34 and 35: nonconforming mortgages in 2007. In
Page 36 and 37: In addition to incomes and mortgage
Page 38 and 39: Business InventoriesInventory inves
Page 40 and 41: Indeed, the growth in foreign econo
Page 42 and 43: During the 12 months of 2007, the u
Page 44 and 45: output measures announced in the an
Page 46 and 47: and government purchases. In contra
Page 48 and 49: Table 1-1.—Administration Economi
Page 50 and 51: Box 1-3 — continuedParticipation
Page 52 and 53: finalized), below its 1963-2006 ave
Page 55 and 56: C H A P T E R 2Credit and Housing M
Page 57 and 58: lends a debtor money today, which t
Page 59 and 60:
Box 2-1 — continuedPrime loan: Lo
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Box 2-2 — continuedNRSROs. Critic
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Box 2-3 — continuedMortgage defau
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Box 2-3 — continuedmortgage defau
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Corporate bond yields also rose rel
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conduits in that SIVs have less acc
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International ImplicationsA notable
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come together to create a coordinat
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home is forgiven, that portion is t
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alternatives offered in the convent
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to such a change in wealth, which a
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lending. FHA Modernization will enc
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Economists often call attention to
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Box 3-1: Trade in ServicesDiscussio
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Box 3-2: The Current Account Defici
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Growth in Domestic ProductionA seco
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Exports and Foreign Direct Investme
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in CFIUS’s role in protecting nat
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these goods than if they were produ
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y import competition are electrical
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C H A P T E R 4The Importance of He
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Box 4-1: Health Effects on Job Prod
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health care spending growth. Rising
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While the study focused on spending
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Box 4-2 — continuedand without pr
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effective price of zero. Even if a
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deduction for health insurance to a
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To reduce the extent to which high-
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Administration supports broad adopt
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C H A P T E R 5Tax PolicySocieties
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in 2000. Tax revenues increased str
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Alternative Minimum TaxPrior to 196
Page 125 and 126:
The Impact of Recent Tax Reductions
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35 percent marginal tax rate on the
Page 129 and 130:
C corporations fall under the corpo
Page 131 and 132:
Significance of Tax Cuts to Individ
Page 133 and 134:
Box 5-1: Marriage Penalty BasicsIt
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The Structure of Business TaxesDesp
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investments are made. A more modest
Page 139 and 140:
able to defer $35 of tax liability
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C H A P T E R 6The Nation’s Infra
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A monopolistic bridge owner may cho
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etween places to accommodating grow
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the same time. At hours when many d
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BridgesOn August 1, 2007, the I-35W
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where shippers have an alternative
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Freight shipments into and out of t
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Box 6-2: Delays at New York City Ai
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uilt, the marginal cost of transmis
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access was in mobile wireless conne
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Infrastructure PolicyThough the U.S
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could shorten the wait by adding an
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In 2005, the Federal Aviation Admin
Page 167 and 168:
C H A P T E R 7Searching for Altern
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The first U.S. oil well was drilled
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Most of the oil consumed in the Uni
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Also, depending on the fuel and tec
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Table 7-1. —Estimated Average Lev
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Nevada. The facility is expected to
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Wind PowerWind power supplies about
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amounts of electricity, it could be
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years, as corn-based ethanol produc
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the power, range, and convenient fu
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other petroleum products is project
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To help meet the growing demand for
Page 191 and 192:
C H A P T E R 8Improving Economic S
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The second largest Federal statisti
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As shown in Chart 8-3, spending on
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Monetary and fiscal policymakers al
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service-sector output much more fre
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Box 8-1: How to Reverse a Decline i
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Information Protection and Statisti
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forward instead of the growth rate
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Appendix AREPORT TO THE PRESIDENT O
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Council Members and Their Dates of
Page 213 and 214:
Report to the President on theActiv
Page 215 and 216:
The Council also prepared in-depth
Page 217 and 218:
The Staff of the Council of Economi
Page 219:
Jane Tufts, Bruce Kaplan, and Anna
Page 223 and 224:
C O N T E N T SNational Income or E
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Prices—ContinuedPageB-63. Changes
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General NotesDetail in these tables
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Table B-1.—Gross domestic product
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Table B-2.—Real gross domestic pr
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Table B-4.—Percent changes in rea
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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-9.—Real gross domestic pr
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Table B-11.—Real gross value adde
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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-15.—Gross value added and
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Table B-17.—Real personal consump
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Table B-19.—Real private fixed in
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Table B-21.—Real government consu
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QuarterTable B-23.—Real private i
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Table B-25.—Real exports and impo
Page 261 and 262:
Table B-27.—Relation of national
Page 263 and 264:
Table B-28.—National income by ty
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Table B-29.—Sources of personal i
Page 267 and 268:
Table B-31.—Total and per capita
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Table B-32.—Gross saving and inve
Page 271 and 272:
Population, Employment, Wages, and
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Table B-35.—Civilian population a
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Table B-37.—Civilian employment b
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Table B-39.—Civilian labor force
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Table B-41.—Civilian employment/p
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Table B-43.—Civilian unemployment
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Table B-45.—Unemployment insuranc
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Table B-46.—Employees on nonagric
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Table B-48.—Employment cost index
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Table B-50.—Changes in productivi
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Table B-52.—Industrial production
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Table B-54.—Capacity utilization
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Table B-56.—New private housing u
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Table B-58.—Manufacturers’ ship
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PricesTable B-60.—Consumer price
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Table B-61.—Consumer price indexe
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Table B-63.—Changes in special co
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Year or monthTable B-65.—Producer
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Table B-66.—Producer price indexe
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Table B-67.—Producer price indexe
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Year and monthMoney Stock, Credit,
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Table B-70.—Components of money s
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Table B-72.—Bank credit at all co
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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-76.—Mortgage debt outstan
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Government FinanceTable B-78.—Fed
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Table B-80.—Federal receipts and
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Table B-82.—Federal and State and
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Table B-84.—Federal Government cu
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Table B-86.—State and local gover
Page 333 and 334:
Table B-88.—Maturity distribution
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Corporate Profits and FinanceTable
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Table B-92.—Corporate profits of
Page 339 and 340:
Table B-94.—Relation of profits a
Page 341 and 342:
Year or monthTable B-96.—Common s
Page 343 and 344:
Table B-98.—Farm business balance
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YearTotalTable B-100.—Farm input
Page 347 and 348:
Table B-102.—U.S. exports and imp
Page 349 and 350:
Table B-103.—U.S. international t
Page 351 and 352:
Table B-105.—U.S. international t
Page 353 and 354:
Table B-107.—International invest
Page 355 and 356:
Table B-109.—Civilian unemploymen
Page 357 and 358:
Table B-111.—International reserv
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