U.S. Economy Proves Robust Under Pres. Bush
Just as President George W Bush has been saying for the past six years, economic advisors at the White House proved once and for all that his policies have indeed created a robust economy.
Ed Lazear, chair of the Council of Economic Advisors, said 27 July 2007, "...[W]e believe that the economy is back on track. The 3.4 percent GDP growth that we saw during the second quarter is an encouraging sign. I would say it can be summarized as follows: We got one point for consumption, we got one point from non-residential construction and equipment and software, we got a point from exports, a point from government spending, and we lost a half a point on housing. So a very balanced picture this time."
The chairman added that while consumption (consumer spending) was down and saving rates remained in negative territory, the new focus of the administration would be to reverse those trends. "The negative aspect of that, of course, is that when consumption declines, we take a hit in that quarter in terms of GDP growth and job growth. That did not happen, and the reason it did not happen is because we've had strong growth everywhere else," Lazear said.
He said employment remained strong and that wages continued to grow.
Commenting at a press conference in Washington DC, secretary of commerce, Carlos Gutierrez said that President Bush's economic leadership has now come across "loud and clear" that the economy is now "very resilient," "very diversified," "very flexible," and "in spite of the fact that it is the largest economy in the world, because of our free enterprise system it has a way of naturally self-correcting and it shows a tremendous amount of flexibility."
Gutierrez explained that the growth of exports, helped by a weak dollar, contributed to the GDP growth. "And we know that we've had to get economies around the world growing faster to be able to export more. The fact that we have more free trade agreements, and they're now rolling up and we see more and more companies exporting, and just the fact that we are the largest exporter in the world, but we're growing our exports at a very fast pace, and I think that says a lot about our economy, our businesses, our system. And that's a very important contributor to this quarter's growth," he said.
The commerce secretary explained that while during the first three years of President Bush's White House real exports declined by 4 percent annually, but after 2003 the growth averaged 8.3 percent.
Exports to Europe doubled in the first quarter from a year ago, and continue to become a real source of growth for the United States the economists concluded.
"So, we're exporting more, economies around the world are growing faster so they're able to buy more of our goods, and a very important factor here is the president's policy on free trade -- opening up markets, focused on exports, helping exporters access markets. That's all paying off," Gutierrez said.
The secretary of the Treasury, Hank Paulson, said that while he has been measuring the global economy for years he could not recall any time in which he'd seen such strong global growth. "That's why it is so important to get our trade agreements with Peru, with Colombia, Panama, Korea done; why it's important to keep working...," Paulson said.
Paulson emphasized how important the CFIUS bill, signed by President Bush on 26 July, is key to supporting 10 million jobs (5 million directly related, and another 5 million indirectly related.) The administration is boosting efforts to invest in business outside of the United States, and in the perfect play --where a business is headquartered in the states but invests outside the country-- the scenario sets up for creating export platforms. "They make a disproportionate contribution to our economic growth through exports, and that if they're not making those investments, some other country is making those investments. And growth outside of the U.S. leads to more growth in the U.S. And again, that's something that we think is going to be -- has been important for a long time, and we can't forget it," he said.
Rob Portman, director of the office of management and budget for the White House, said that as a result of the improved economic conditions there is a record level of revenue into the treasury -- a 37 percent increase since 2004. The resulting increase along with spending restraint by the federal government has helped limit the budget deficit. Portman said that for the past three years the deficit has dropped $43 billion. "We are now at about 1.5 percent of GDP --our economy in terms of our deficit-- which is far below the average of the last 40 years of 2.4 percent."
Portman said progress would continue so long as spending is held in check and federal revenues continue to grow. The only way for this to continue Portman contended is that "tax relief stays in place."
The president has introduced a 7 percent increase in the annual budget spending, but Democrats, who control Congress at the moment, say "we need to spend more than -- almost triple our inflation," Portman said. "And what the president has said is, 'no, there's a top line here and there is a number beyond which he cannot go.' And that's the reason for the red line or the top line veto threat on some of these spending bills that are working their way through Congress now."
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