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Welcome to "Ask the White House" -- an online interactive forum where you can submit questions to Administration officials and friends of the White House. Visit the "Ask the White House" archives to read other discussions with White House officials.

John Snow
Treasury Secretary


Latest Economic Numbers

October 7, 2004

John Snow

Good afternoon, and welcome to "Ask the White House." I'm joining this discussion today from Independence, Missouri - the "Show Me State," where I've been talking with local business leaders about the economy. The spirit of entrepreneurship is strong here in Missouri! I'm looking forward to answering your questions; let's get started.

Michael, from Boston writes:
The budget deficit is a huge burden on our future economy. While I am all for the tax cuts, why aren't there an equal amount of spending cuts to balance the budget? Less taxes and less government bureaucracy...Wouldn't that be better for the economy?

John Snow
Thanks for your question, Michael, you raise an important issue. The budget deficit is unwelcome, but it is understandable, and the President is taking on the essential job of its reduction.

We have already seen recent progress, as our growing economy is increasing Treasury receipts. Now we need Congress to adopt the President's budget, which will cut the deficit in half over the next five years, bringing it to a historically low level in relation to Gross Domestic Product (GDP).

Spending restraint is part of the President's plan, and I agree with you that spending is an equally important part of the budget deficit equation.

But at the time when we needed tax cuts to stimulate our economy, we also had the need to fight a war unlike any that had ever been fought in history: the war on terror. We are fighting an enemy that requires a much broader variety of government resources than anything we've ever confronted. And we began this fight when we were economically wounded.

What's most important to remember is that we will be able to fight this war and climb out of the deficit. We can manage this deficit, and we can cut it in half over the next five years by controlling spending and growing our economy.

Stephen, from Colorado Springs writes:
How can you try to spin that the economy is getting better when all the data indicates otherwise?

John Snow
Hello, Stephen! Thanks so much for your question. The economy truly is in good shape, we base our statements on facts.

The President's economic leadership has contributed to one of the strongest years of GDP growth in 20 years, and this growing economy has created 1.7 million new jobs over the past year.

Homeownership is at an all-time high, consumer confidence is strong and even the hard-hit manufacturing sector is generating jobs. All of our underlying fundamentals are strong.

Of course there is more to do - we won't be satisfied until every American who is seeking work can find a job - but if we continue to move forward with the President's pro-growth policies, there is no doubt in my mind that we will continue on this positive path and America's best economic days are ahead of us.

Again, while we are encouraged by the direction the economy is going, we are still not satisfied.

Bill, from Atlantic City writes:
My wife and I had a question about the Child Tax Credit. Is that something that is given every year? We believed we received it around July of last year and hadn't received anything this year. Also, if we are getting it, has it been increased to $1000 or is that still being worked? Thanks for your response.

John Snow
Your question is a good one, Bill, and I have good news to answer it: The President just signed a bipartisan bill this week - the Working Families Tax Relief Act of 2004 - that extends the $1,000 child tax credit (which was increased in 2003, up from $600, thanks to the President's Jobs and Growth Tax Relief Act).

The new law also helps families by extending the marriage penalty relief and the expanded 10 percent tax bracket. In 2003, when the child tax credit was increased by $400, checks were sent to taxpayers so they could use that money immediately.

This year you will not receive a check, however, you will receive the full $1,000 credit when you file your taxes in April.

Tim, from Denver writes:
Can you explain in more simple terms how the tax cuts generated domestic revenue and how that helped the economy come back after 9-11, don't forget the emergency funds to NY and the Pentagon? Also how much money was lost because of 9-11 and the market being down?

John Snow
Hello, Tim, and thank you for your great question. Simply put, a growing economy increases domestic revenues. The more money the economy generates, the more taxes are collected.

The President's tax cuts stimulated our economy, so Treasury receipts are now on the rise. The tax cuts helped individuals, families and small businesses - everyone who pays taxes received a tax cut - and that led to an economic recovery that was impressive after the devastating blows we had received.

As you mentioned, the stock market bubble bust combined with the shock of 9/11 resulted in a market loss of $7 trillion in 2001. That's more than the GDPs of Italy, France and Germany combined.

Extra, unexpected spending was necessary after the terrorist attacks. The President made an unprecedented $20 billion commitment to New York to rebuild after 9/11 and he is making good on that commitment. The Pentagon received $17 billion in post-9/11 emergency funding, of which $1.34 billion went to Pentagon reconstruction.

Thanks to tax cuts, sound monetary policy from the Federal Reserve, and the incredible resiliency of our small businesses and outstanding workforce, America came back from significant economic adversity.

Today, GDP growth is the highest in 20 years and the economy has created 1.7 million new jobs over the past year. Homeownership is at an all-time high. Our economy has recovered and is strong today, and we need to continue growing so that every American who is looking for work can find a job.

Alfonzo, from Maine writes:
Mr. Secretary, would you say this administration would be better servedd to say that they could do a better job on the economny rather than be pessimistic by saying the economy is doing well in the current state of afairs with unemployment at an all time high?

John Snow
Hello, Alfonzo!

While we can do better, and will do better... I think we are doing better than you realize.

For example, unemployment is actually lower today than the average rates of the 70s, 80s and 90s. The President's economic leadership has contributed to one of the strongest years of GDP growth in 20 years, and this growing economy has created 1.7 million new jobs over the past year.

Homeownership is at an all-time high, consumer confidence is strong and even the hard-hit manufacturing sector is generating jobs. While we won't be satisfied until every American who is seeking work can find a job, if we continue to move forward with the President's pro-growth policies, there is no doubt in my mind that we will continue on this positive path and America's best economic days are ahead of us.

Tina, from North Platte, Nebraska writes:
Mr. Snow I am a mother of three children and have a husband that is on Social Security(SSI). I work hard for every penny I earn and yet I feel that with the new tax break the rich get richer and the poor get poorer. Can you explain what Bush is proposing to do for the middle and lower class family's such as mine? And what new jobs did he create because where I am from we are still feeling the pinch on finding jobs or better jobs at that. Don't get me wrong I support Bush I just want to know where my family and other family's like mine will fit into his budget.

John Snow
Hi, Tina. I appreciate how hard you work and hope that you know the President's economic policies are developed with hard-working Americans like you in mind.

The President's tax cuts were for every American who pays income taxes, and tax rates were reduced in every tax bracket, top to bottom. In fact, higher income individuals are now paying a higher percentage of total individual income taxes.

Before the President's 2001 and 2003 tax cuts, the top 1% paid 30.5% of individual income taxes. Now they pay 32.3%. Before the cuts, the top 10% paid 62.6%. Now they pay 64.8%. And on the other end, the bottom 50% paid 4.1% of all individual income taxes before the cuts, and now they pay 3.6 %. Which means that taxpayers that rank in the top 50% pay 96.4% of all individual income taxes.

The fact is that the President's tax cuts have made it so that those in the upper brackets are paying more of our nation's share of taxes than they did before.

I'm sorry to hear that people in your area are still facing difficulty when it comes to finding new jobs. The national economy is creating jobs steadily, and we need to continue to keep taxes low and growth levels high so that the pinch is relieved on every American who is looking for work and can't find it. I'm optimistic that our economy will continue to improve if we stick to pro-growth policies. I wish you and your neighbors the best.

Rosanne, from Illinois writes:
How does the tax cut President Bush signed into law affect married couples earning anywhere from $50 to $100,000 a year with one or more dependents, in terms of REAL dollars.

John Snow
Rosanne, you and your family will benefit from many of the provisions in the "Working Families Tax Relief Act of 2004."

First, you and your husband will have relief from the unfair marriage penalty, which taxes you just because you are married. You also will be able to keep more of your hard earned money because of the expansion of the 10% tax bracket.

The full $1,000 per child tax credit will be available to you and your family through 2010. As a middle-class taxpayer, you and your family are provided greater protection from the Alternative Minimum Tax Relief by the larger exemption (i.e., the first $58,000 of a married couple's income).

The "Working Families Tax Relief Act of 2004" also helps simplify the tax code by providing clear direction for families who qualify for the child tax credit, the Earned Income Tax Credit, the dependent care tax credit, the dependent exemption and those who file as the head of household.

Adam, from Appleton writes:
Why does the white house continue to deny that there is a problem going on with oil prices? As oil continues to rise it has impacts on all segments of the economy if anything is going to hurt more than Iraq in this campain it is going to be rising oil prices when is the white house going to get off the sidelines and deal with this issue to get it back down under $35 a barrel at least.

John Snow
Thanks for your question, Adam. Prices are causing an economic headwind, no doubt about it. Robust global economic growth, particularly in the U.S. and China, has led to exceptionally strong growth in oil demand.

This growth is the underlying reason for high prices today. The U.S. Congress - specifically the Senate - needs to pass the President's energy plan to make progress on this issue.

The President sent his energy plan to Congress 3 years ago, and had Congress passed it then we would be in far better shape today. The President's plan - which is based on increased domestic energy production, investments in technology, boosting renewables, and increasing efficiency - will make us less dependent on foreign oil, and will also create lots of good jobs for Americans.

We regularly hold discussions with both OPEC and non-OPEC producers from around the world about actions they can take to support the growing U.S. and world economy.

As you've heard from Saudi Arabia, Kuwait, and other OPEC members, producers are committed to providing adequate supplies to the market, including producing more oil if necessary. We look to producers to fulfill these pledges.

Dona, from Sturgeon Bay, Wisconsin writes:
What is status of bill eliminating taxability of social security income?

John Snow
Hello, Dona. In 2003, bills to eliminate the taxability of Social Security income were introduced in the Senate by Senator Shelby of Alabama and in the House of Representatives by Representative Franks of Arizona. The bills were referred to the tax-writing committees and no hearings have been held as of this date.

On the broader issue, Dona, of Social Security, President Bush is committed to ensuring that the promise of Social Security is kept for current seniors and those nearing retirement - and that we fix the Social Security system for our children and grandchildren.

The President will work with Congress to determine the best elements of the proposals that have been put forward, according to these principles: President Bush will not change benefits for today's retirees or near-retirees; he wants to see Social Security permanently strengthened for our children and grandchildren, without raising payroll taxes; the President favors voluntary personal accounts for younger workers that provide ownership, choice, and the opportunity for workers to build a nest egg for their retirement and to pass on to their spouse or their children; those who do not choose to have a personal account would continue to draw their benefits as they always have from the Federal Social Security program.

Josh, from Arkansas writes:
How are you going to get my generation out of debt considering you have spent 4 trillion dollars on the war on "terror"

John Snow
Josh, I hope that you aren't taking the threat of terror lightly.

Terrorism is a real threat that we all experienced on 9/11. The President has said that when it comes to fighting the War on Terror and protecting the Homeland, we're going to spend what we need to in order to win....but we haven't spent $4 trillion.

In fact, the entire Federal government this year will only spend about $2.4 trillion. What we have done is made available the resources to support our troops in the field, strengthen our homeland defenses, train and equip our first responders and improve our ability to disrupt terrorist threats. President Bush has done all of that while putting us on track to cutting the deficit in half within five years. He has done that through tax relief that is getting our economy growing again, which means more people with jobs and more Federal revenue (see my answer to Tim's question, from Colorado).

He has also reduced the growth in Federal spending. Discretionary spending unrelated to Defense and Homeland Security grew by 15% in the last year of the previous Administration; President Bush's Fiscal Year 2005 budget proposed to let it grow by less than 1%, which still allows for substantial increases for education, Veterans' medical care, job training and other domestic policy priorities. That is how we will get our fiscal house back in order following the recession and attacks of 9/11.

Denese, from Euless, TX writes:
I am a divorced, single mother of two wonderful children, who makes approximately $50,000.00 per year. What tax relief can I expect?

John Snow
Hello, Denese, and thank you for your question. Thanks to the bill the President signed this week extending the child tax credit, you will receive a $2,000 tax credit in 2004 - $1,000 for each of your two children.

Not knowing all of your economic specifics, it is difficult to say exactly what your tax liability will be this year, but you will definitely be paying fewer federal taxes than you were before the President's tax cuts. Every American who pays taxes received a tax cut thanks to the President's economic policies.

John Snow
Thank you so much for your terrific questions. I'm on my way to my home-town of Toledo, Ohio to visit a Family Business Center there. I look forward to talking with you next time on "Ask the White House!"

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