Apparently pioneering the adage that "you can fool enough of the people enough of the time to regain political power," liberal politicians and commentators constantly allege a "record" budget deficit.
For instance, the House Democratic Budget Committee's website explicitly asserts "record deficits," and Virginia's Democratic Senate candidate James Webb attempts to parlay deficit claims into an excuse to raise taxes.
Don't buy it for a second.
This week, the Treasury Department announced that the budget deficit fell to $248 billion for fiscal 2006. The deficit thus shrinks to merely 1.9% of our $13 trillion economy, which is one-third below the 40-year deficit average of 2.7%.
Some "record deficit."
Back in 2004, President Bush's critics lambasted him for pledging to cut the post-bubble $521 deficit in half by 2009, but he remarkably achieved it three years early.
Bear in mind that even the notoriously deficit-obsessed European Union allows its members to run 3% budget deficits (which many of them notably fail to achieve). In other words, rack up another manner in which America outperforms Europe.
Thank you, Bush tax cuts.
After all, the shrinking deficit certainly isn't due to sober spending restraint. Federal spending actually increased 9% last year to $2.7 trillion. Accordingly, the rapidly-shrinking deficit is instead a consequence of brimming tax revenues flowing from a bustling economy, not spending discipline.
In 2003, you'll recall, the Bush Administration successfully promoted tax cuts on income, corporate dividends, as well as capital gains. At the time, liberal opponents predictably thundered that the cuts would cripple the economy by bloating the deficit and launching interest rates upward.
But a funny thing happened on the way to the Next Depression. Lo and behold, interest rates continued their decline, and the deficit has come in below post-tech bubble projections.
Over the past two fiscal years, tax revenues have increased by $521 billion, which is the largest two-year increase in history (even accounting for inflation). For their part, corporate tax receipts increased 76% over the past two years due to a record 13 consecutive quarters of corporate earnings. Similarly, income tax receipts increased 30% during the same period, and dividend tax receipts have also increased.
The benefits of the 2003 tax cuts extend far beyond improved federal coffers. Since 2003, the U.S. economy has created 6.6 million jobs, and the Labor Department just discovered that it previously underestimated job growth by 810,000 for the period ending March 2006. The unemployment rate also declined to 4.6% and falling, and 2.5 million jobs were added last year alone.
These employment gains commenced in 2003, hardly a coincidence following the Bush tax cuts.
Furthermore, workers' wages have increased 4% during the past year, which surpasses the historic 3.3% average annual wage growth, and is the largest since 2001. Add to that the fact that the Bush tax cuts put an average $2,700 into the pocketbooks of married households with children.
Despite the mainstream media's best efforts to bury the Dow Jones under an avalanche of Mark Foley reports, it closed at a record high again this week. Over at the S&P 500 Index, two-thirds of stocks have surpassed their peak prices of 2000. Thus, the stock market record is yet another manifestation of our robust economy, especially since price/earnings ratios stand at very healthy levels.
Bizarrely, liberals recklessly disregard this mountain of positive economic news flowing from the 2003 tax cuts. Indeed, they actually attack the Bush economic record and promise growth-stifling tax increases in the event that they regain power after Election Day.
For instance, House Minority Leader Nancy Pelosi recently announced her "100-Hour Plan," which would immediately raise taxes. Further, Congressman Charles Rangel (D-NY), who would chair the tax-drafting House Ways and Means Committee, echoed Congresswoman Pelosi's promise by stating that he "cannot think of one" of President Bush's 2003 tax cuts that wouldn't be reversed.
Undeterred by simple economic reality, they apparently prefer the highly-taxed and oppressively-regulated European model, where the E.U. this week lowered its growth projection to between 0.4% and 0.8%, and where the unemployment rate is double the U.S. unemployment rate.
In other words, brace yourself and your family for possible tax hikes and slowing economy should Pelosi become Speaker and have her way after the November 7 elections.
If that is too frightening a thought to ponder, imagine how great the American fiscal condition would be if we could actually pair some much-needed spending restraint alongside pro-growth tax cuts...October 13, 2006