For Immediate Release
Office of the Press Secretary
February 12, 2007
Fact Sheet: The Economic Report of the President
Press Briefing by CEA Chairman Lazear on the 2007 Economic Report of the President
In Focus: Jobs & Economy
"Our economy is on the move and we can keep it that way by continuing to pursue sound economic policy based on free-market principles."
- President George W. Bush, 2/12/07
Today, The White House Released The Economic Report Of The President. The Economic Report of the President is an annual report written by the Council of Economic Advisors. It overviews the Nation's economic progress and is transmitted to Congress no later than 10 days after the submission of the Budget of the United States Government.
Chapter 1: The Year In Review And The Years Ahead
Economic Growth In The United States Has Been Above The Historic Average And Faster Than Any Other Major Industrialized Economy In The World. The economic expansion continued for the fifth consecutive year in 2006. This economic growth comes despite numerous headwinds, and results from inherent U.S. economic strengths and pro-growth policies. Chapter 1 reviews the past year and discusses the Administration's forecast for the years ahead. The key points are:
Chapter 2: Productivity Growth
Strong Productivity Growth Underlies Much Of The Good Economic News From The Past Few Years. Productivity growth rarely makes the headlines, but is important to the Nation because higher productivity growth improves the outlook for economic issues such as standards of living, inflation, international competitiveness, and long-run demographic challenges. Chapter 2 reviews the sources of the recent strength in productivity growth, highlighting the role that flexible markets and entrepreneurship play in explaining cross-country differences. It also explains the benefits of productivity growth and discusses how policymakers can further promote it. The key points are:
Chapter 3: Pro-Growth Tax Policy
Sound Economic Policy Begins With Low Taxes. Chapter 3 discusses the advantages of adopting a more pro-growth tax system. It reviews recent changes that have reduced tax distortions on capital investment decisions, and evaluates options to reduce such distortions further. The key points are:
Chapter 4: The Fiscal Challenges Facing Medicare
The President And Congress Should Work Together To Spend The Taxpayers' Money Wisely And To Tackle Unfunded Liabilities Inherent In Entitlement Programs Such As Social Security, Medicare, And Medicaid. Social Security, Medicare, and Medicaid are three entitlement programs in the United States that provide people with important economic security against financial risk. However, the projected long-term growth in entitlement spending is unsustainable because of the pressure it puts on future Federal budgets. It is crucial that reforms to these programs preserve the protection against financial risk that these programs provide without having negative effects on economic growth. Chapter 4 focuses on Medicare by examining the main reasons for its projected financial pressures and by discussing ways to improve the efficiency of the program and thus slow the growth of Medicare spending. The key points are:
Chapter 5: Catastrophe Risk Insurance
Insuring Economic Losses Arising From Large-Scale Natural And Manmade Catastrophes Such As Earthquakes, Hurricanes, And Terrorist Attacks Poses Challenges For The Insurance Industry And For Federal And State Governments. Chapter 5 examines the economics of catastrophe risk insurance. The key points are:
Chapter 6: The Transportation Sector: Energy And Infrastructure Use
We Must Continue To Diversify Our Energy Supply To Benefit Our Economy, National Security, And Environment. The transportation sector accounts for the majority of the petroleum consumed in the United States and – whether plane, train, ship, or automobile – almost all transportation is powered by petroleum. Understanding the petroleum market, and the ways in which consumers and firms respond to changes in world oil prices, is key to understanding the transportation sector. In addition to petroleum, the transportation sector also relies heavily on infrastructure. The key points of Chapter 6 are:
Recent increases in the price of oil and the external costs of oil have led to renewed interest by markets and governments in the development of new alternatives. Government can play a role in ensuring that external costs are taken into account by markets, but ultimately markets are best suited to decide how to respond.
Chapter 7: Currency Markets
Open Commerce And Financial Markets Allow Productivity To Flourish. The need for international transactions provides the impetus for a huge, well-functioning market that facilitates currency conversions and allows global economic integration and trade to occur smoothly and quickly at low cost. Both by volume of trade and ease of making transactions, currency markets today are the world's deepest, most liquid markets. Currency markets range from common markets where parties simply exchange one currency for another to sophisticated markets where parties buy and sell currencies far into the future. The key points of Chapter 7 are:
Chapter 8: International Trade And Investment
We Must Keep Our Economy Open And Break Down Barriers To Trade And Investment Abroad So Our Workers And Consumers Can Continue To Enjoy The Benefits Of Global Commerce. The United States derives substantial benefits from open trade and investment flows. Over many decades, increased trade and investment liberalization has been an important catalyst for greater productivity growth and rising average living standards in the United States. The key points of Chapter 8 are:
Chapter 9: Immigration
To Improve Border Security, Reduce The Number Of Unauthorized Workers, And Maintain The Economic Benefits Of Immigration, We Must Pursue Comprehensive Immigration Reform. The United States is a nation of immigrants and a nation of laws, and we value both historical legacies. Immigrants continue to make positive contributions to our Nation and our economy, yet our current immigration laws have proven difficult to enforce and are not fully serving the needs of the American economy. The key points of Chapter 9 are:
Immigration policy plays a key role in determining the volume and composition of the foreign-born workforce. Comprehensive immigration reform can help ensure an orderly, lawful flow of foreign-born workers whose presence continues to benefit the American economy.
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