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House Report 105-393

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{link: 'http://thomas.loc.gov:80/cgi-bin/cpquery?',title: 'THOMAS - Committee Report - House Report 105-393' }

House Report 105-393 - THE 1997 JOINT ECONOMIC REPORT

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59-006

1997
105TH CONGRESS 1ST SESSION
HOUSE OF REPRESENTATIVES
REPORT

105-393

THE 1997 JOINT ECONOMIC REPORT

R E P O R T

of the

JOINT ECONOMIC COMMITTEE

CONGRESS OF THE UNITED STATES

on the

1997 ECONOMIC REPORT

OF THE PRESIDENT

[Graphic image not available]

NOVEMBER 8, 1997- Committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
House of Representatives Senate
JIM SAXTON, New Jersey,
Chairman
THOMAS W. EWING, Illinois
MARK SANFORD, South Carolina
MAC THORNBERRY, Texas
JOHN DOOLITTLE, California
JIM McCRERY, Louisiana
FORTNEY PETE STARK, California
LEE H. HAMILTON, Indiana
MAURICE D. HINCHEY, New York
CAROLYN B. MALONEY, New York
CONNIE MACK, Florida,
Vice Chairman
WILLIAM V. ROTH,
JR., Delaware
ROBERT F. BENNETT, Utah
ROD GRAMS, Minnesota
SAM BROWNBACK, Kansas
JEFF SESSIONS, Alabama
JEFF BINGAMAN, New Mexico
PAUL S. SARBANES, Maryland
EDWARD M. KENNEDY, Massachusetts
CHARLES S. ROBB, Virginia
CHRISTOPHER FRENZE, EXECUTIVE DIRECTOR
HOWARD ROSEN, MINORITY STAFF DIRECTOR

LETTER OF TRANSMITTAL

Congress of the United States,

Joint Economic Committee,

Washington, DC, November 8, 1997.

Hon. NEWT GINGRICH,
Speaker of the House, House of Representatives,
Washington, DC.

DEAR MR. SPEAKER: Pursuant to the requirements of the Employment Act of 1946, as amended, I hereby transmit the 1997 Joint Economic Report. The analyses and conclusions of this Report are to assist the several Committees of the Congress and its Members as they deal with economic issues and legislation pertaining thereto.

Sincerely,

Jim Saxton,

Chairman.

C O N T E N T S Page
ECONOMIC GROWTH IN 1997 1
JOINT ECONOMIC COMMITTEE MAJORITY 3
The Roots of the Current Expansion
5
SUMMARIES OF SELECTED JOINT ECONOMIC COMMITTEE MAJORITY STAFF STUDIES 17
Monetary Policy
19
Lessons From Inflation Targeting Experience
19
The Importance of the Federal Reserve
19
Establishing Federal Reserve Inflation Goals
19
A Response to Criticisms of Price Stability
19
Transparency and Federal Reserve Monetary Policy
20
Tax Policy
21
Taxes and Long-Term Economic Growth
21
The Administration's Proposal for a Tuition Tax Credit
21
The Welfare-to-Work Tax Credit
21
The Inefficiency of Targeted Tax Policies
21
The Economic Effects of Capital Gains Taxation
21
Optimal Capital Gains Tax Policy: Lessons From the 1970s, 1980s and 1990s
22
Payroll Taxes and the Redistribution of Income
22
Other Selected Topics
22
Tradable Emissions
22
College Affordability: Tuition Tax Credits vs. Saving Incentives
22
Budget Process Reform
23

105TH CONGRESS

Report

HOUSE OF REPRESENTATIVES

1st Session

105-393
THE 1997 JOINT ECONOMIC REPORT

November 8, 1997- Committeed to the Committee of the Whole House on the State of the Union and ordered to be printed
Mr. SAXTON, from the Joint Economic Committee, submitted the following
REPORT
Report of the Joint Economic Committee on the 1997 Economic Report of the President

ECONOMIC GROWTH IN 1997

The economic expansion that began in the second quarter of 1991 continues to generate economic and employment gains, even as the inflation rate continues to decline. Economic growth has been solid over the last four quarters, and employment growth has been sufficient to push the civilian unemployment rate below 5 percent. The overall economic situation is sound and the outlook for continued growth remains healthy.

Among the positive labor market indicators are the lowest unemployment rate in 24 years, near-record highs in the employment-population ratio and labor force participation rate, and continued growth in payroll employment (according to the Bureau of Labor Statistics, establishment survey). On the other hand, continued stagnation in earnings and income for middle and low-income workers, according to a variety of measures, remains a concern.

The sustained economic growth of recent years has contributed to reducing the federal budget deficit and has improved the fiscal situation at the state level as well. Furthermore, the healthy economic environment eases the implementation of policy changes such as deficit reduction and welfare reform. A sustained and stable economic expansion is an ideal time to address other structural issues in federal policy as well.

The challenge for federal policy is to build on the progress made to date in removing impediments to economic expansion, improving the potential for economic growth and raising U.S. living standards.

Joint Economic Committee

The operations of the Joint Economic Committee (JEC) have been focused on the needs of Congress and the public in the 105th Congress. The goals of maximum efficiency, quality, and productivity have guided the Committee in meeting resource constraints and managing Committee functions and procedures. As a result, the Committee has enjoyed a very productive year, and we are naturally pleased that JEC research products and hearings have been well received. In the First Session of this Congress, the JEC released more than 25 studies and reports and held 17 hearings.

The emergence of the information age over the last two decades has caused enormous changes in the economy and in the dissemination of information. As a result, brevity and timeliness are at a premium. Consequently, the format of JEC research products has changed in the 105th Congress. Shorter studies substantively addressing issues raised in the Economic Report of the President as well as other issues before Congress have proven quite effective. This emphasis on substance, reliability, timeliness, and conciseness will continue to be characteristic of the JEC in the next session of Congress.

In conclusion, 1997 has been a successful year for the Joint Economic Committee. We are looking forward to another constructive year when Congress returns in 1998.
Representative JIM SAXTON,
Chairman.
Senator CONNIE MACK,
Vice Chairman.
Senator JEFF BINGAMAN,
Ranking Minority Member.

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