FROM THE OFFICE OF PUBLIC AFFAIRS
July 15, 2003JS-557
Authorizes The Treasury Department To Release An Estimate of How The Administration’s
Tax Relief Proposals Have Provided Powerful And Necessary Economic Stimulus
Treasury Secretary John Snow's Statement
on the Administration’s Mid-Year Budget Review
"While the projected federal deficits in today's report remain manageable, they are unwelcome and we need to do everything we can to bring them down. But today’s report also confirms that our country, over the past two years, has faced challenges that have had an impact on our economy and the budget. The recession, war on terror, and corporate scandals have all played a part in slowing the growth of our economy and increasing the deficit in the short term. The best way to battle deficits is to take steps to control wasteful Washington spending, while boosting our economy as we did by passing the Jobs and Growth Act. Today's report makes me doubly committed to keeping federal spending under control and our economy strong."
In concert with the Secretary’s above statement, the Department today also released an estimate of what U.S. economic performance would have been without fiscal stimulus measures implemented under President Bush. The Department used the Macroeconomic Advisers (MA) macroeconometric model to estimate how the economy would have performed had there been no fiscal stimulus from 2001 through 2004. To do this, Treasury eliminated the tax and spending provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, June 2001), the Job Creation and Worker Assistance Act of 2002 (JCWAA, March 2002), and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA, May 2003). The Department’s findings (assuming interest rates set by the Federal Reserve are taken as unchanged from their actual levels):
By the second quarter in 2003, had there not been the fiscal stimulus measures proposed by President Bush:
• The unemployment rate would have been nearly 1 percentage point higher.
• The economy would have created as many as 1.5 million fewer jobs.
• Real GDP would have been as much as 2 percent lower.
By the end of 2004, had there not been the fiscal stimulus measures proposed by President Bush:
• The unemployment rate would be as much as 1.6 percentage points higher.
• The economy would have created as many as 3 million fewer jobs.
• Real GDP would be as much as 3.5 to 4 percent lower.
This analysis demonstrates the importance of President Bush’s economic stimulus measures to the economy. These measures helped make the recession one of the shallowest in our nation's history. Growing the economy and strict spending controls are the best ways to attack deficits.