(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
JS-1264
Thank you so much for having me here today.
Very few trade associations take on the tough economic issues as aggressively and honestly as you do, and I applaud you for your commitment to an open and productive conversation at this conference and beyond.
I’m very pleased with the direction of our economy today, and there is no doubt in my mind that we have President Bush’s leadership on tax cuts to thank for a strong recovery from a very short recession. When combined with low interest rates, the Bush tax cuts were every bit as effective as we hoped they’d be.
Just one year ago, the American economy was in a very different position than it is today. Then there was talk of a double-dip recession, with some commentators holding out the specter of deflation. Even those who saw the economy in pretty good shape characterized the recovery as at best wobbly, weak or anemic.
Now, as you well know, the economy is now in a strong recovery, with a GDP growth rate of 6.1 percent in the last half of 2003 – the fastest six-month growth rate in nearly 20 years. Leading private forecasts are projecting growth of four percent plus for the 2004 year, well above historical growth rates. The latest Blue Chip report forecast GDP would grow 4.7 percent in 2004, the highest in 20 years.
Exports are up. The manufacturing sector is beginning to come back. The housing industry remains strong. Business confidence is up and business spending has rebounded. We are beginning to see some come-back in the labor markets. It is heartening to see that initial jobless claims have been at their lowest point in over three years.
By sustaining this growth going forward, I am confident that we will see good jobs pick up in the months ahead, as indicated by all the private sector surveys which indicate strong jobs growth over the course of the next year.
The President, the Administration, while very happy with the strength and pace of economic growth, is not satisfied with the pace of job creation.
However, we are keenly aware of the fact that job creation looks very different depending on which of the surveys you are referencing.
According to the Household employment survey conducted by the Department of Labor’s Bureau of Labor Statistics, from January 2001 to January 2004, employment increased in 34 states and fell in 16 states.
While, according to the Payroll survey, also conducted by the Department of Labor's Bureau of Labor statistics – also from January 2001 to January 2004 – employment increased in fifteen states and fell in thirty five states.
Employment in the household survey reached a low point in January 2002, two months after the November 2001 recession trough. Since then, the household survey has registered an employment gain of 2.4 million.
The payroll survey, in contrast, continued to show a decline in jobs though August of last year and since January 2002 has fallen by 341,000.
Thus, the gap in growth shown by the two measures has totaled 2.7 million since January 2002.
We need to look at how each survey is conducted to understand these numbers better.
The household survey (also known as the Current Population Survey) is based on interviews with about 60,000 households and provides information on approximately 112,000 persons 16 years and older. Employment in the household survey represents the number of people who are employed. In addition to nonfarm wage and salary workers, it includes agricultural workers, unpaid family workers, domestic help, the self-employed and those who are on temporary unpaid absences from their work.
The payroll survey (also called Current Employment Statistics), on the other hand, measures the number of jobs and only includes nonfarm wage and salary workers who are on business payrolls. It is based on a survey of 400,000 individual worksites covering nearly one-third of nonfarm payroll jobs. Some workers, who hold multiple jobs or switch jobs within a pay period, may show up on payrolls more than once and could inflate the payroll results.
The payroll survey is missing out on a category that is increasingly significant in today’s economy, and that’s the self-employed.
Because the nature of work is changing in this country. We’ve always been an extremely entrepreneurial society – it’s one of the things that has made America great, and I believe one of the things that has made our economy so strong and resilient.
Working for yourself isn’t as intimidating as it once was. Setting up your own business requires little more than a phone and a computer… things that are relatively inexpensive and which set up in your own home while working for clients who can literally be located anywhere in the world.
And for those who lost their jobs during the dot-com bubble burst, self-employment seems stable in comparison.
I think it’s a positive trend… one that focuses on self-reliance and innovation… it’s a wonderful way to be employed, we just need to be able to measure it better.
But there’s another trend impacting employment that I think is negative, and that is the increasingly litigious environment that businesses must operate in.
After all… there are few things that create a greater disincentive to job creation than an atmosphere where little stands between every business owner, ever manager, every doctor and professional of almost any kind… and the next frivolous lawsuit.
That’s why lawsuit abuse reform is a top priority for President Bush and his Administration. We are deeply committed to ensuring that victims are compensated fairly when they are injured due to the fault of another person, but we also know that key job creators – the top ones being small-business owners – live in fear of frivolous suits that can damage or destroy their businesses and all the jobs they support.
We know that the current tort system is costing America well over $200 billion each year… that’s a tort tax – paid in the form of lower wages, higher product prices, and reduced investments – of $809 for every individual and more than $3200 for a family of four. And this is a regressive tax, imposed indiscriminately across our economy.
Personal injury lawyers are benefiting enormously from the current system and want to keep it the way it is. But it’s a significant drag on our economy. For that reason, we’ve got to tackle it with the same level of commitment and purpose that we have when approaching tax policy.
The final bit of public policy that I want to urge you to consider as you examine the ways to keep our economy strong, is international trade policy.
As our economy goes through changes, it can be tempting to withdraw, to pull down the shades against business with other countries. I want to emphasize: that type of isolationist policy does not work.
Only 5% of the global population lives in the U.S. That means that 95% of our potential market is outside the U.S. We need to stay engaged with the rest of the world, to keep those markets opened to our farmers, our service industry and our manufacturers.
We have the best workforce in the world, the most innovative businesses, and the most competitive companies. We can compete with anybody, given the chance.
Free trade also helps create jobs at home by opening foreign markets to American exports, and by encouraging foreign companies to set up operations here in the U.S. It helps to lower prices and increase choices for American consumers. Exports supported about 12 million jobs during the 1990s and foreign-owned firms provide jobs to around 6.4 million workers today.
We have choices to make in this country regarding our economy. And I believe that we must choose a path that we know will lead to growth.
We have to choose between higher taxes and lower taxes. We have to choose between economic isolationism or embracing the opportunity of the world’s markets. And we must choose between our historic national attitude of “can do” and the attitude that personal injury lawyers have encouraged, and that is: “can sue.”
These are the choices that most impact business decisions and the future of our economy.
I look forward to working with all of you as we pursue the common goal of economic growth.
Thank you for having me here today.