(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
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Thank you very much for inviting me to speak before you today. It's always a tremendous pleasure to come out to the Great Pacific Northwest, and it is particularly pleasant to visit Seattle, one of the most beautiful cities in America.
It is also a great honor to appear before a group of men and women whose professional careers are dedicated to improving the lives of their fellow citizens. It is perhaps too often overlooked that those who work in the financial services industry are performing a public service. One of the great advances in human history was the creation of a stable, reliable system of credit; the rise of the merchant class, and thus the creation of democratic societies, was indispensably facilitated by the earliest poolers of capital, who made that money available to ordinary citizens. And our own country may have been founded by the grit of Pilgrims, but it was a sea of venture capital that allowed them to cross the oceans and create a new world.
Lest you think I am being overly dramatic, think for a moment about the business efforts of you in this room. How many families are able to live in their own homes today because of the work you do? How many people are able to drive to their jobs because of the auto loan your institution gave them? By expanding opportunities to access credit in our communities, you are making the world a better place. Thousands of individuals and families in the Northwest enjoy better lives because of your work.
Because you are in the financial services industry, you know firsthand the tremendous obstacles America has faced in the last several years. We now know that as early as the fourth quarter of 2000 our country was slipping into a steep decline. The recession was infused with the shocks of the bursting of the tech bubble, the terror attacks of 9-11, and the corporate scandals of 2002. Individually these strains would have pushed most countries' economic health to the breaking point. Put together, they threatened to create a real crisis in our economy and our way of life.
Fortunately, we now know that far from being immitigable disasters, these events instead showed once again the resiliency and resolve of the American people. President Bush immediately recognized that the correct way to deal with an economic downturn was to put more money back in the hands of those who earned it. Despite the opposition of some, who felt that government and not the people could best direct where to spend our nation's resources, the President knew that the American work ethic and entrepreneurial spirit could see us through any economic crisis. Higher after-tax incomes and continued access to credit proved potent remedies in allowing our country to withstand these shocks. The results of the President's plan speak for themselves:
Job growth continues. Because of the President's commitment to strengthen the environment for job creation, and the positive impact of his tax relief measures, 1.7 million jobs have been created over 12 consecutive months of growth, including 144,000 in August, according to the payroll survey. According to the household survey, also conducted by the Labor Department, 2.4 million jobs have been created since August of 2003. The unemployment rate fell to 5.4 percent in August, lower than the average of each of the past three decades and far below its peak of 6.3 percent in June of 2003.
Because of the President's commitment to strengthen the environment for job creation, and the positive impact of his tax relief measures, 1.7 million jobs have been created over 12 consecutive months of growth, including 144,000 in August, according to the payroll survey. According to the household survey, also conducted by the Labor Department, 2.4 million jobs have been created since August of 2003. The unemployment rate fell to 5.4 percent in August, lower than the average of each of the past three decades and far below its peak of 6.3 percent in June of 2003.
Americans are keeping more of their hard-earned money. After-tax incomes are up nearly 10 percent since December of 2000 and are substantially above levels following the last recession. Since the President's 2001 & 2003 tax cuts, personal consumption levels have risen substantially.
After-tax incomes are up nearly 10 percent since December of 2000 and are substantially above levels following the last recession. Since the President's 2001 & 2003 tax cuts, personal consumption levels have risen substantially.GDP growth is solid. The U.S. economy continued to grow at a solid pace in the second quarter following an exceptionally strong performance in the previous four quarters when the economy grew 5 percent, the largest such gain in nearly twenty years.
The U.S. economy continued to grow at a solidpace in the second quarter following an exceptionally strong performance in the previous four quarters when the economy grew 5 percent, the largest such gain in nearly twenty years.There is encouraging news for the manufacturing sector. The gain of more than 100,000 manufacturing jobs since February is the best seven-month performance in about seven years.
The gain of more than 100,000 manufacturing jobs since February is the best seven-month performance in about seven years.Another area where the economy has far exceeded expectations is one of special interest to those in this room: Homeownership is at an all time high, at just over 69 percent, and minority homeownership rates continue to gain, setting a new quarterly record in the second quarter, 51 percent.
Clearly the economy is strong and growing stronger. But despite the progress we have made, there is still more to do. That's why the President continues to push forward on a pro-growth economic agenda to further stimulate the economy and create jobs and opportunity.
Tax relief was vital to getting the economy moving again, and for the sake of job creation, it must be made permanent. There need to be fewer regulations so business owners can focus on their business rather than spending hours on paperwork. We need legal reform to cut down on frivolous lawsuits. Even the threat of frivolous lawsuits puts a damper on job creation, investment, and expansion. We need to address the high cost of health care and provide coverage for the uninsured through association health plans, health savings accounts, and medical liability reform. We need affordable and reliable supplies of energy so we can reduce our dependence on foreign oil. And we need to open more foreign markets to U.S. products and services.
As the President's plan demonstrates, keeping America's economy healthy and competitive is a continuing obligation. The people of Washington State know this first hand. Washington was particularly hard hit by the recession. But here, as elsewhere in America, things are starting to look up. So far this year, 46,000 new jobs have been created here in Washington. By continuing to follow the President's plan, the recovery will continue on course for even greater prosperity and economic opportunity both here in Washington, and throughout America.
Now let me turn to an issue of importance to all of you: the Administration's plans with respect to GSEs. When it comes to creating prosperity, the housing government sponsored enterprises have proven to be an important partner in making America's housing markets the most liquid, most accessible in the world. And it is because of the importance of the GSEs that the Administration has proposed creating a world-class regulator equipped with the tools and the stature of America's other financial institution supervisors. This new regulator should have authority over the setting of capital levels and the approval of new activities, as well as the power to conduct an orderly wind-down of a GSE in the unlikely event one should fail.
Currently, the Federal Home Loan Banks and Fannie Mae and Freddie Mac have separate regulators. The Administration's plan calls for the creation of a single regulator for the housing GSEs. In part, this is to reflect the evolving businesses of the entities. As the activities of the housing GSEs converge, so too arises a symmetry in the risk profiles of the entities. Having a single regulator should create the institutional expertise necessary to monitor and evaluate those risks both with regard to the enterprises individually, as well as with an eye towards the health of the housing finance system as a whole. However, recognizing as well that important differences remain between Fannie Mae and Freddie Mac, and the FHLBanks, the Administration's plan calls for two divisions within the new regulator. One division will focus on the Federal Home Loan Bank System, while the other will concentrate on the other two housing GSEs.
The Administration remains committed to reform of the regulatory structure of the GSEs. As this process goes forward, it will continue to be important that all participants in the system continue to provide their input to policymakers. We at the Treasury welcome the opportunity to hear from you.
Let me conclude by saying again what a privilege it is to be here today. Thank you for allowing me to speak with you, and thank you especially for the role you play in promoting economic growth and opportunity.
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