Lazear says third quarter economy should increase 3 percent

After welcoming speeches from Metro Chamber President & CEO Matt Mahood and Cap-to-Cap Trip Chair Robert Dugan, the delegation was greeted by Rep. Dan Lungren, R-Gold River. 

Congressman Lungren echoed sentiments expressed by many in Washington, telling the crowd to never under- estimate the impact the Cap-to-Cap lobbying effort has on the policies and fiscal appropriations that shape our region each year.  With that, Congressman Lungren introduced Ambassador Susan Schwab, U.S. Trade Representative, who is responsible for developing, negotiating and implementing trade policies.  

Schwab pointed out that although people are currently concerned about the state of U.S. economics, we need to remember that trade exports are a bright spot in the economy. 

For instance, California is the second largest exporting state in the country and trade agreements bring a great deal of capital into California, Schwab said.  

Turning to the importance of international trade and the Columbia Free Trade Agreement, Schwab explained that the CFTA, which is currently awaiting action on Capitol Hill, is a common-sense, highly beneficial agreement that the United States should engage in. 

She said an unfair cloud hangs above trade agreements, which promotes the idea that if one entity benefits from the trade agreement, then the entity on the other side of the trade must lose out. 

Schwab maintained that this is a completely inaccurate assessment of trade agreements and that trades can be mutually beneficial.  An agreement with Columbia, which has made great strides in lowering violence, slowing narcotics trafficking and boasted 6 percent annual growth would be an example of a mutually beneficial partnership.  

Schwab noted that in addition to monitoring compliance issues within existing trade agreements, such as with China, it is critical that advanced markets connect with emerging markets. If the United States ignores emerging markets, it is very likely that those new markets will partner elsewhere, in turn, locking the U.S. out of future partnership agreements. This is why, according to Schwab, the United States needs to remain poised and ready to explore new trade opportunities all over the world.

The final speaker of the morning was Dr. Edward Lazear, Chairman of the Council of Economic Advisers.

Lazear presented an official administration speech, which was written specifically for our Cap-to-Cap delegation.  He was quick to point out that while the economy has slowed, we cannot define the state of economy as a depression. 

However, those of living in California may be feeling the pinch a little more than those living in other areas of the country. 

Lazear explained that in California and specifically in our region, it is often feast or famine.  One of the best examples of this statement is the dot-com boom, followed by the dot-com bust that California experienced not too long ago. 

Lazear equated the dot-com situation to the current status of our housing market.  While the whole country is experiencing a slowing in the housing market, it is magnified in California.  Home values quickly skyrocketed and are now depreciating almost as quickly.  To compound this problem, California is experiencing huge fallout from the numerous amounts of subprime loans that were obtained in late 2006 and early 2007.  However, Lazear warns that while lending standards have been changed as a result of the mortgage crisis, we need to be careful that we don't place too many new regulations on lending institutions. Instead, we need to let the market learn its lesson and correct on its own.

While many Californians are deeply concerned with the state of the economy, Lazear said that the world economy is still strong. Additionally, the Administration is extremely optimistic that the recently signed Economic Stimulus Package will have a resounding effect on the economy as Americans begin to receive their tax refund checks. 

He also stressed the importance of tax cuts and asserted that it was crucial to our economy that we renew the Bush tax cuts in 2010.  Finally, Lazear assured the delegation that even though our housing market seemingly collapsed overnight, other sectors in both our state and region will continue to thrive.  This will create an equilibrium that will keep our economy afloat as the state of our economic well being continues to improve.