WICKER PLEASED WITH GOOD ECONOMIC NEWS
REPORT FROM CONGRESS
By Congressman Roger F. Wicker
July 18, 2005
The Office of Management and Budget (OMB) announced last week that the federal budget deficit for this year will be nearly $100 billion less than earlier projected. This good news on the deficit and the latest positive employment figures provide further evidence that the pro-growth policies advanced by Congress and President Bush are working.
The announcement by OMB noted that the expanding economy and a big boost in tax revenues are responsible for the dramatic drop in deficit projections. Department of Treasury data show that federal tax receipts are up by almost 15 percent compared to the same time a year ago. More good news came on July 15 with the report that U.S. industrial production, led by the manufacturing sector, rose nearly one percent in June. That is twice as much as forecasters had expected and the biggest jump in 14 months.
BEST PERFORMANCE IN 20 YEARS
The national news media has been slow to report on the economic recovery that is now entering its third year. The facts will show that major tax relief measures enacted over the past three years spurred the economy to overcome the effects of recession and the terrorist attacks of September 2001. These initiatives have provided impetus for a sustained expansion, representing the best growth performance for the economy in 20 years.
While the great majority of the $94 billion deficit decline comes from a surge in government receipts, more than $7 billion is the result of lower than expected spending. Efforts in Congress to enforce greater fiscal discipline have produced results. For 2005, the growth rate for discretionary spending not related to defense and homeland security was held to 1.4 percent, which is less than the rate of inflation. That trend continues for 2006 with the 11 House-passed appropriations bills reducing expenditures below this year's levels.
JOB GROWTH CONTINUES
The Bureau of Labor Statistics reported that the nation's unemployment rate in June fell to 5.0 percent, the lowest since September 2001. It marked the 25th consecutive month of job growth, with more than 3.7 million jobs being created during that time period. More than 146,000 new jobs were created in the month of June.
The gross domestic product, which measures the output of all goods and services, is expected to grow by 3.4 percent for the four quarters of 2005, according to OMB. The economy has increased by 12.4 percent since the recession ended in the final quarter of 2001. OMB Director Josh Bolten said, "We are seeing what happens when you have a strong economy, more businesses investing, more people working, with more income, so that Americans can spend and invest as they see fit. And with all those economic gains, we are also seeing more revenues coming into the federal treasury."
TAX RATE CUTS, SMALL BUSINESS INCENTIVES HELPED
Legislation to reduce income tax rates, boost incentives for small businesses to invest in new equipment, and cuts to the tax rates on dividends and capital gains were among the actions Mr. Bolten listed as positives for economic growth.
Many of these pro-growth tax cuts are set to expire soon unless Congress takes action. This week's welcome economic news provides a powerful incentive to make this tax relief permanent.