FROM THE OFFICE OF PUBLIC AFFAIRS

April 29, 2004
JS-1486

The Honorable John W. Snow
Prepared Remarks for the Export-Import Bank Annual Conference
Washington, DC
April 29, 2004

Thank you so much for having me here today.

I can’t think of a better time for your meeting than now, as we are in the midst of a global economic recovery, with the U.S. leading the way. Your work plays a critical role in national as well as global economic growth.

As those of you in this room know well, the world is our marketplace and we should always take advantage of that opportunity. Only 5% of the global population lives in the U.S. That means that 95% of our potential market is outside the U.S. This is important for all American businesses – large and small – to know and to remember when they are making decisions about new markets for their products.

I want to let the exporters in this room know how much your work is appreciated, because you create and sustain jobs – the most important part of our ongoing recovery and strong economic growth.  Exports support millions of American jobs.

The resilience and strength of our economy, particularly when given the proper stimulus of tax relief and low interest rates, has been proven once again in recent months.

Our economy is on very solid footing, our upward trend is strong, and there can be no doubt that President Bush’s leadership on tax cuts made the decisive difference.

We are unique in the world in terms of our ability to rebound. Just one year ago, there was a very different economic picture, and some forecasters were pessimistic. State budgets were struggling to achieve balance and even those who saw the economy in pretty good shape characterized the recovery as at best wobbly, weak or anemic.

Today, more than half of the states are projecting budget surpluses for this fiscal year. Our economy is running on all four cylinders, thanks in large part to the fact that Americans are keeping more of their hard-earned money – after-tax incomes are up 10 percent since December of 2000 and are substantially above levels following the last recession.

As you know, exports are up, and that’s good for jobs.

It’s great to see that the manufacturing sector is coming back – another important job creator. We’ve seen new orders for durable goods jump in recent months – 3.4 percent in March and 3.8 percent in February. A manufacturing activity index was up in March – near the 20-year high reached in January – showing broad-based strength.

The housing industry remains very strong, with homeownership at an all-time high, and this is something to be very proud of, as a nation. New home sales surged in March, rising 8.9 percent to reach a new record high. Also worth noting, housing starts were up in March, as well as building permits, which are a forward-looking measure of housing activity.

Business spending has rebounded. Business and consumer confidence is up. Consumer confidence increased 4.4 points in April. This means that American households sense that the job market is strengthening.

And now I’d like to talk specifically about the job market. Because jobs are the most important thing – any of us who have ever looked for work and couldn’t find it for any period of time know this well – and jobs are what follows all of these other indicators that I’ve just mentioned.

The news on jobs is good. Our economy has created 759,000 jobs in the last seven months… 308,000 in March alone. Layoffs are down, unemployment is down. At 5.7 percent, the unemployment rate remains lower than the average of the 1970s, 80s and 90s, and far below its peak of 6.3 percent in June of 2003. Over the past year, the unemployment rate has fallen in 45 of the 50 states. Initial claims for unemployment insurance have fallen substantially: down 20% over the last year.

I anticipate that this economy will be creating a lot more jobs in the coming months.

I’m often asked to make a prediction about how many jobs will be created going forward. I don’t know exactly, of course, and I don’t make personal predictions or estimates. But what I am confident of, what I do know, is that jobs will follow economic recovery, and jobs will follow economic growth.  History tells us that and history will repeat itself today.

So I am optimistic, but I carry a word of caution: if the President’s tax cuts aren't made permanent, the U.S. economy, in our view, will lose its current momentum. The tax relief is the key stimulus for increased capital formation, entrepreneurship and investment that causes sustained, long-term economic growth.

The continuation of that growth is important to our country, and it is important to the world.

I was reminded of that fact during my conversation with the G7 Ministers and Governors here in Washington over the weekend.

The unifying theme of our discussions was economic growth, and the strengthening global recovery provided an upbeat backdrop.

There is good news beyond the United States. Japan has turned in several good quarters, as has the United Kingdom. In continental Europe, there are some encouraging initial signs of an upturn, but growth still lags in too many areas and thus needs to be more broad-based.

My fellow G7 ministers and I agreed that this is the time to redouble our efforts to strengthen and broaden growth for the future. We reviewed the progress made under the G7 Agenda for Growth, including, key steps on tax reform, and labor markets flexibility.

But we also agreed that additional pro-growth reforms are essential to boost employment and raise incomes. We focused in particular on the importance of low marginal tax rates in encouraging job creation and income growth.

Of course, sound fiscal policies are also fundamental to sustained growth, and we underscored the need for fiscal consolidation during times of expansion.

In the United States, we are operating with an unwelcome, but manageable and understandable, short-term deficit which we are taking action to reduce dramatically. I reiterated to the G7 ministers President Bush’s commitment to deficit reduction, which will cut the deficit in half over five years, restoring it to a level below the 40-year average in terms of the size of our economy.

And now a word about our partnership.

Working with other nations to grow the global economy is a modern challenge with great rewards. You are part of this historic effort, and the Treasury Department is pleased to have you as a partner.

Over the last quarter of a century, Treasury and Ex-Im Bank have worked together successfully in the Organization for Economic Cooperation and Development (OECD) to reduce foreign financing subsidies to level the playing field for U.S. exporters. This work has been and remains a high priority at Treasury. It has kept U.S. exporters competitive, while at the same time saving U.S. taxpayers hundreds of millions of dollars each year, a win-win outcome.

Today we have strong OECD agreements in place requiring market-based interest rates, and exposure fees, and rules on tied aid. These agreements set rules for official financing that averages around $50 billion a year.

Our next priority in the effort to reduce export subsidies and level the playing field is to secure an agreement on the other major source of aid-financed subsidies – disguised tied aid, officially referred to as “untied aid.” 

I look forward to continuing to work with Ex-Im to achieve our shared priorities, and to advance the agenda of national and global economic growth.

Thank you again for your contributions to the prosperity of the American people, and to the people of the world.

And thank you for having me here today.