AN ENCOURAGING ECONOMIC OUTLOOK FOR THE NEW YEAR
December 9, 2005
Earlier this week, President Bush addressed the nation from North Carolina with some very encouraging economic news. Indeed, the most recent numbers show our economy is quite strong and growing stronger every month.
Over the past five years, the economy has endured some heavy blows - a stock market decline, terrorist attacks, corporate scandals, high energy costs, and devastating natural disasters. Through these setbacks, however, the economy has displayed the most classic of American traits, resilience. Since tax relief was implemented in 2003, economic growth has soared and 4.4 million jobs have been created.
Most recently, in November, the economy added 215,000 jobs, rebounding from the slow-down triggered by Hurricanes Katrina and Rita. Also encouraging is the healthy growth of the gross domestic product and the low unemployment rate, which held steady at 5% and is lower than the average rate for the 1970s, 1980s and 1990s.
One reason the U.S. economy has done so well over the past two years - exceeding its long-run average growth rate and outperforming other industrialized nations - is the 2003 tax relief package. This law reduced income tax rates for all Americans and lowered the rate on dividend and capital gains income. The fact is 24 million families benefited by an average of $950 on their 2004 tax returns due to passage of this law. Recently, the House of Representatives voted to extend this important tax relief.
If provisions of the 2003 tax relief package are allowed to expire, families and small businesses would lose important deductions as well such as those for state and local taxes and higher education expenses, and could see their tax burden rise substantially. I don't believe much else would harm American families more than hiking taxes in this manner. Doing so would destroy jobs and imperil the economic growth that we are currently experiencing.
In addition, economic growth triggered by the tax relief provisions have led to a 15 percent increase in federal revenue over the past year while budget deficit estimates have been reduced by approximately $100 billion. While many believe the only way to balance the budget is to increase the burden on taxpayers, the 2003 tax relief package has proven otherwise.
As we head into the holiday season, we hope to be entering a period of sustained economic growth, which would be great news for folks across the country. Much of this growth is the result of commonsense tax relief. When we lower the tax burden on America's families, we put money back in the hands of the people who earned it - encouraging investment, savings, and entrepreneurship, which results in job creation and a better standard of living.