October 27, 2005
Good afternoon, everyone. It's great to be here. I'm delighted to be able to take your questions on the American economy. Let's get started.
Daniel, from Levittown writes:
Dear Mr. SnowI read on your web-site that "The American economy is the
envy of the world." My wife and I are both teachers and we are expecting
our first child in May. My concern is that I have read many reports that
a recesion in right around the corner and that school districts will be
forced to lay of teachers. Is the Bush ecomomic plan have any provisions
that will keep this from happening. Thank you for our service to our
Hello, Daniel, and thank you for writing in with your story and this very important question. There is flatly no reason to be worried about a national economic recession in the near future, and I hope I can put your worries to rest.
Making sure that the American economy remains the largest, strongest and most resilient in the world has always been a priority of President Bush. His sound fiscal policies enabled us to recover from economic challenges and today we are on a solid path of economic growth. In order to maintain this economic strength the President is working to keep taxes low and spending restrained. He is also addressing long-term economic challenges like our dependence on foreign oil and the need to prepare future generations of American workers for 21st Century jobs. Hes also confronting the problems facing our entitlement programs and making sure that American businesses have the option of doing business with the potential customers that live outside of the U.S. thats 95 percent of the worlds customers, by the way, since the U.S. only represents about 5 percent of the worlds population.
You have every reason to be confident in the Presidents ability to keep our economy strong. I encourage you to read a speech he gave yesterday on this subject at www.whitehouse.gov/news/releases/2005/10/20051026-2.html
I wish you the best of luck with the new baby.
Hector, from Chicago writes:
Is there a way to lower natural gas and oil prices? How do we do it? Can
we maybe provide more incenitives for oil producers so they give us
cheaper gas? Is there a way to decrese the ballooning deficit in the
next few years?
Hello, Hector, thanks for these good questions. The energy bill that the President signed this summer made an unprecedented commitment to energy conservation, improved production and efficiency as well as the development of alternative and renewable energy sources such as ethanol and biodiesel fuel. All of these things, over the long term, should help us reduce our dependency on expensive foreign oil. The energy bill was an important first step toward a more affordable and reliable supply of energy for American consumers.
And, yes, there is a way to decrease our budget deficit in fact, were already doing it. A strong economy, combined with spending discipline, is reducing the federal deficit. It was $108 billion lower than expected last year, and were on track to cut it in half by the year 2009.
David, from Rockledge Fl writes:
What short and long term effects could implementing a Flat Tax have on
the overall Economy.
Your question is very timely, David! There is a lot of interest in simplifying our tax code, and the President appointed a panel earlier this year to delve into this issue. Theyll be releasing their report, including proposals for new tax code designs, next week. Please take a look at their web site for more information on their important work: www.taxreformpanel.gov
Jon, from NY, NY writes:
Why am I still left thinking there never was a social security crisis?
Well, Jon, thats because the crisis is in the future the President brought Social Security to the forefront of the Washington, DC policy agenda because there is a very serious looming crisis for the system. Todays seniors have nothing to worry about the system is solvent today and will be for several more years. The problem youve heard so much about will begin as cash flows for the program turn negative in 2017, and the trust fund itself will be exhausted in 2041. Without reform, younger generations of workers face staggering tax increases, massive new borrowing or severe cuts in benefits to be able to pay for their parents and grandparents Social Security. I encourage you to read more about the Presidents reform initiative at www.strengtheningsocialsecurity.gov
Brady, from tennessee writes:
Dear Sir, why do you continue to allow the dollar to be devalued? If the
dollar is high than gasoline and other products are cheaper..I know the
obvious answer is the trade deficit will be lower because our products
overseas are cheaper. It does not matter. we will always have a trade
deficit big or small..I suggest increasing the value of the dollar to
make gas cheaper here.
Brady, we believe that a strong dollar is in America's national interest. This is a policy that we have had for some time and continue to support. Currency values should be set in open, competitive markets, reflecting underlying economic fundamentals. The international economy works best when the major economies are committed to free trade, the free flow of capital, and flexible currencies.
Tom, from Dallas writes:
What does the Administration plan to do about the trade deficit? Do you
believe the terms of trade must improve. Would solving the energy
problem and improving domestic auto prodution help. What are some of the
other solutions to conundrum?
Hi, Tom, thanks for writing in today. We are working steadily with our trading partners on this issue. The most important factor leading to our trade deficit is that the U.S. economy has had much higher rates of economic growth and job creation than our major trading partners over the past decade. In an open economy, like the United States, this means that we have more wealth and freedom to buy products from all over the world and Americans use a higher proportion of that wealth and freedom to purchase imports. Our major trading partners Japan and Europe in particular have grown slowly or not at all for much of the past decade, and their economies are not as open to imports as is the United States. Our trading partners have a responsibility to put in place pro-growth policies that will lead to strong growth and therefore enable them to purchase more goods and services from American producers, which will help bring trade more into balance.
Kristina, from Loretto, PA
Secretary Snow,Is there a real estate bubble in the economy right now?
While we should always be on guard for bubbles or areas where economic activity doesnt correspond with underlying economic fundamentals as was the case with stock market bubble of the late 1990s I dont think this is the case with Americas housing market. For one thing, when we talk about our housing market, were really talking about hundreds of housing markets, each with different characteristics, in local markets. For the most part, strong economic fundamentals are contributing importantly to the housing boom in many local markets. Some of the factors that have contributed to a housing boom include low mortgage rates, rising employment and incomes, a growing population and a limited supply of homes or land in some areas. Well continue to keep a close eye on the health of our housing market because it is so important to our national economy and to the wealth and prosperity of millions of American families.
Taylor, from Kentucky writes:
what is it like being secretary of the treasury,also working for the
Thanks for writing today, Taylor. Being Treasury Secretary is a truly great honor. Its a tough job, but one that I enjoy very much, and one thats made easier every day by the terrific civil servants who work at the Treasury and its bureaus (which include the IRS, the Bureau of Engraving and Printing and the Mint). And of course Im extremely fortunate to have a boss who is a great leader: President Bush. He really is wonderful to work for, and I am humbled by the history of the White House and this great nation every time I go to a meeting in the Oval Office.
jaxon, from sherman oaks, ca
who decides which figure's picture goes on the money
Hello, Jaxon, thanks for this question. There are a lot of interesting facts about our nations currency that might interest you at www.moneyfactory.gov I encourage you to check it out.
The portraits currently appearing on the various denominations of paper currency were adopted in 1929 when the size of the notes was reduced. Prior to the adoption of this smaller sized currency, a special committee was appointed by the Secretary of the Treasury at the time (Andrew W. Mellon) to study this aspect of the design. During this period, there was a large percentage of immigrants in the country and it was believed that portraits of Presidents and other prominent statesmen had a more permanent familiarity in the minds of the public than any others. However, it is unknown as to why these particular individuals were selected by the committee.
adam, from studio city
why did you take away the two dollar bill?
Thanks for this interesting question, Adam. But actually, the $2 note hasnt gone away at all. It continues to be a permanent, circulating paper currency note! There simply is not much demand for this bill in circulation. The key for the successful circulation of the $2 note is for retailers to use them just like any other denomination in their daily operations. Commercial banks will readily supply their retail customers with these bills if their customers request them in sufficient volumes to justify stocking them in their vaults.
A total of 121 million Series 2003 $2 notes were printed in fiscal year 2004 with my signature and former Treasurer Marin. As of September 2005, there were a total of 719,773,534 $2 notes in circulation.
Cliff, from Brimfield, Ohio
Secretary Snow: What affect has mother nature done to the United States
Treasury as a result of all these hurricanes? Short term and Long term.
Thanks for this important question, Cliff. Its great to hear from a fellow Buckeye.
While there is clearly no good time to be hit by a devastating natural disaster, we were fortunate to be standing on very solid economic ground, with robust underlying fundamentals, when these terrible storms struck. Our economic strength undoubtedly enhances our ability to deal with disasters.
The strength of our economy is due in large part to the work that the President and the Congress did to pass economy-invigorating tax cuts in 2001, 2002 and 2003. And while those tax cuts were designed for the good of the American people in terms of economic growth and job creation, we are reminded today that a strong economy can also serve as a type of shelter against storms natural or economic that are beyond our control.
Over the short term, our economy will feel the impact of Katrina and Rita, as jobs, property, and businesses have been lost, and gas prices have edged higher. High fuel prices are a burden on businesses and family budgets.
These terrible storms likely took away from economic wealth in the third quarter, but I am optimistic that rebuilding efforts will restore lost GDP next year.
We can encourage this rebound even further by preserving the tax cuts that gave our economy the opportunity to grow and put us on the solid footing we enjoy today. Its very important to note that now is not the time to increase the tax burden on the American people. Lower tax burdens encourage innovation, economic growth and job creation all the things we need to help hurricane-ravaged communities recover and rebuild.
John, from Texas writes:
What the excuse for allowing US corporations to cheat on their taxes by
having offshore tax havens?
Everyone should pay their fair share of taxes. When anyone breaks the law to avoid paying taxes it hurts all of us. Rest assured that the Treasury Department is committed to enforcing penalties for tax evasion.
Emily, from Woodlake CA.
I've heard that the economy is falling but to me it seems to be raising.
Is that true? Thanks "Emmy"
Hi, Emmy, and thanks for writing in with this important question. The U.S. economy has endured a number of shocks in recent years, and I know that can be worrisome, but the good news is that weve not only survived these shocks, weve recovered wonderfully and our economy is the largest, strongest and most resilient in the world. Thanks to the Presidents pro-growth policies, our economy is growing steadily and Americans are better off. Homeownership has reached an all-time high, and over the past 28 months the economy has created more than 4.2 million new jobs. Our unemployment rate is lower than the average rate of the 1970s, 80s and 90s at just 5.1percent. A figure that is important to economists is the growth of our Gross Domestic Product (GDP) which shows our economy has grown at a rate of 3.6 percent over the past year. Emmy, youre right to note that the economy seems to be doing well; it absolutely is.
Jacques, from Baltimore, Maryland
Mr.Secretary,First and foremost, I'd like to thank you for taking the
time out of your busy schedule to discuss the economy with the american
This is a vital discussion at a crucial time. I have three questions for
What are some of the positive actions the Bush administration is taking
to strenghten our economy in 2006. Some have argued that the budget
deficit (National Debt) and the ongoing war in Iraq have adversely
impacted the economy. What's your take on that? Do you see a more
vibrant economy in the upcoming year. The president had promised to cut
the budget deficit in half in five years. Do you think that's feasible?
I look foward to your reply.
Once again, thanks for discussing the state of the economy with us.
Thank you for writing in today, Jacques. All of your questions are good! As the President outlined in a speech on the economy yesterday, his Administrations efforts to keep taxes low and restrain federal spending are going to be very good for our economy. At the same time, were addressing long-term economic challenges because, while our economy has shown incredible resilience, we must continue to make it more flexible and responsive so that it can meet the needs of the future. These long-term challenges include reducing our growing dependence on foreign oil, ensuring that our education and worker training systems are preparing new generations of American workers to fill the jobs of the 21st Century, and reforming our health care system to put patients in charge of decisions, offers greater choice and allows workers to own their own health care. Were also continuing to open foreign markets to American products because 95 percent of our potential customers are abroad. Free trade helps our economy and creates jobs.
As to your question about budget deficits and the economy: the President is dedicated to cutting the deficit in half by 2009, and were on track to achieve that goal. A strong economy has increased federal revenue, and our budget deficit was $108 billion less than was expected this year as a result. To continue reducing the deficit we need to keep taxes low and be responsible with the taxpayers money by spending it wisely and prudently. The President has called on Congress to push the envelope when it comes to cutting spending, and I think thats very important. With a strong economy, we can afford to meet any challenge and I am confident that we can meet our spending priorities of protecting the homeland and helping our neighbors after natural disasters while also continuing on the path of deficit reduction.
Jessica, from Gardner, MA
I would like to know why the government is so insistant that the economy
is fine? Gas, heating oil and electric prices are outrageous, there is
no enforcement on cost of living raises and there is NO extra money.
Please explain to me on how the economy is "strong". Thank you
Hi, Jessica, thanks for participating in Ask the White House! My answer to Emilys question, earlier, addressed a lot of your concerns about the economy (which is doing very well growing and creating jobs at a terrific rate), but I do want to address your concern about energy costs. Youre right that this has been a challenge for Americans. High energy prices act like a tax on individuals, families and small businesses. Thats why the President is dedicated to reducing Americas dependence on foreign oil. The energy bill he signed this summer made an unprecedented commitment to energy conservation and efficiency by promoting new technologies and giving consumers incentives to use energy-saving products. Over the long term, these steps are going to make this country more energy-independent and save us money.
daniel, from westport, ct
Can you tell me how much of the excess Social Security payroll taxes --
payroll taxes collected by the government but not spent on benefits --
have been spent on government operations in the past five fiscal years?
And if Social Security is facing a crisis, why were those funds spent on
Thanks for this terrific question, Daniel. The total amount of Social Security surpluses that have been spent on other programs is at $1.7 trillion today. Its a bad habit that government has, of borrowing money from the Social Security fund and writing itself IOUs. I think its time to put a stop to that, dont you? Thats why the President wants to let younger workers put their Social Security dollars in personal accounts the ultimate lock box for their hard-earned retirement dollars.
We also need to make the program solvent. Progressive benefit growth, which would bring the program about 70 percent of the way to solvency, is another important element of the Presidents proposed changes. It would mean that the lowest income seniors would have the fastest-growing benefits while benefits for those who are more well-off grow more slowly, with protection from inflation.
Thanks again for this question, Daniel. Addressing the problems of Social Security is one of the keys to ensuring a strong economic future for this country.
shirley, from ohio writes:
a lot of us voters believe Greenspan is hurting the ecomomy with
interest hikes. President Bush nominates another man who says he'll
continue Greenspan's policy of hiking interest rates. how are we failing
to see that interest rate hikes are helping the economy?
Greetings to my fellow Buckeye, Shirley. Thanks for your question. As Treasury Secretary, interest rates are not part of my responsibilities the Federal Reserve Board, which is independent, oversees monetary policy and I believe that it does a very good job of doing so. Dont forget that an important part of their job is to keep inflation under control. Alan Greenspan, in his 18-year tenure as Chairman, has expertly helped to guide the Federal Reserve Board and our economy through many challenges. The American people have reaped the benefit of his wise leadership in the form of a strong growing economy and low inflation.
I believe that Dr. Ben Bernanke, who will bring a wealth of experience in economic and monetary policy to the Federal Reserve chairmanship, will be a worthy successor to Alan Greenspan. Ben is the right person to carry on the strong, independent leadership of the Fed.
Kate, from Ohio writes:
We are all lulled into a false sense of security and most of us are
shielded from the truth about the economy. Why doesn't the
administration tell the people the truth, don't we all deserve that?
Isn't that part of the American Dream that millions of people strive to
accomplish? The purpose of the government is to keep us, the people,
informed, is it really that hard to just tell us the truth even if it is
not what we want to hear?
Thanks for joining us on Ask the White House today, Kate. Dont forget that America also has the largest economy in the world and deficits as a percentage of GDP is the more important measure. When looked at as a percentage of our economy, the U.S. deficit is actually lower than most countries, including Japan, France, Italy, Germany and others.
I absolutely do not see any reason for an economic depression in this countrys foreseeable future. The underlying fundamentals of our economy are very strong, were growing at a robust rate and have recovered quickly from each the challenges that weve been dealt over the past five years. You are right to be concerned about our budget deficit it needs to be reduced and we are on a steady path toward reduction and the financial reality of helping our neighbors in the hurricane-ravaged parts of our country. But with a strong economy and a dedication to making tough decisions on spending (specifically, cuts where they can be made), we really can afford any challenge.
Preserving the tax cuts that gave our economy the opportunity to grow a will help our economy stay healthy. Now is not the time to increase the tax burden on the American people. Lower tax burdens encourage innovation, economic growth and job creation all the things we need to both reduce our budget deficit and help hurricane-ravaged communities recover and rebuild.
Daniel, from Lakeville, CT
How much impact will the many hurricanes this season have on economic
growth? Thank you.
As I mentioned to Cliff earlier, the storms likely took away from economic wealth in the third quarter, and weve already seen the impact in terms of lost jobs, but I am optimistic that rebuilding efforts will restore lost GDP by the first quarter of next year.
Thanks to everyone for all these wonderful questions. It's always a pleasure to be on "Ask the White House" and I look forward to our next online