y David Dore and Philip Ganz
WASHINGTON (MktNews) - The U.S. annual economic growth rate should increase by 0.5 point to 1 point over the next year, to a rate between 2.0% and 2.5% in the fourth quarter of 2001 and to around 3% in 2002, two senior Bush administration officials said Monday.
Speaking to reporters after addressing a tax reform symposium, R. Glenn Hubbard, chairman of the Council of Economic Affairs, said he was optimistic about the state of the economy in the fourth quarter "because of the fiscal and monetary stimulus that will be in place."
Part of that stimulus will come from the tax refund checks being mailed out to taxpayers as part of the $1.35 trillion tax cut recently passed by Congress, according to chief of the White House National Economic Council Larry Lindsey.
Lindsey called the tax cut "well timed" and noted that it "put a floor under an economy that began falling in July of last year."
"The key here is to maintain consumer spending, and I think the tax cut will do that," he said.
Hubbard said that he expects the growth rate to improve by the fourth quarter of 2001, with growth continuing into next year. "I don't expect the economy to be in the doldrums in '02," he said.
The tax symposium, sponsored by the CATO Institute, Citizens for a Sound Economy Foundation and the Heritage Foundation, called for reforming the U.S. tax system, including replacing the current graduated system with a "flat tax" or a national sales tax.
However, Hubbard said that debating Foreign Sales Corporation (FSC) rules must be part of "fundamental tax reform" because it "will open up the general conversation about how we tax multinationals within the United States."
Along with tax reform, Trade Promotion Authority, which Hubbard called "a very important short-term objective" for the Bush administration, would also help raise the standard of living across the globe, not just in America.
"Certainly, Trade Promotion Authority -- or, more broadly, a free trade agenda -- makes all of us better off," Hubbard said. "It is certainly something that's going to raise living standards here and abroad."