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April, 2007 April, 2007 November, 2006 October, 2006 September, 2006
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September 2006 Once again, budget experts were proven wrong by the dynamic and entrepreneurial American economy. I have nothing against the professionals at the Congressional Budget Office and their colleagues in other federal agencies; they’re honest and hard working, but they have a history of underestimating the productive capacity and agility of the private sector in the U.S. To give an example, this year’s federal budget had assumed an economic growth rate of 3.5 percent. In the first quarter of 2006, the economy grew at 5.2 percent. The difference in these projected and actual growth rates makes a huge impact on the size of the projected budget deficit. As unexpectedly higher revenues flow into the U.S. treasury, the expected level of the deficit goes down – fairly quickly. For April alone, the federal government brought in $38 billion more in revenue than the same month in 2005. Corporate income taxes are up almost 30 percent from the previous year. There’s one group that is not surprised by the new numbers: conservative Members of Congress. When I joined my Republican colleagues to pass tax cuts in 2003, we knew we could help spur investment. By giving incentives to business to expand, millions of new jobs have been created, retail sales have grown, and personal incomes have risen. With this revived economy, we are now seeing another positive by-product: a lower federal budget deficit. One other point needs to be made: federal spending is 8 percent higher today than last year. All of that increase is the result of higher spending on national defense, homeland security or entitlements. Congress has frozen all discretionary federal spending. In fact, I am working with other conservatives to eliminate more than 150 federal programs, which we believe are no longer effective or needed. If successful, we will reduce federal spending by another $15 billion. I am also a supporter of reforming many entitlement programs, especially those that have been proven susceptible to fraud, including food stamps and the Earned Income Tax Credit. The Republican majority in Congress has a strategy to balance the budget. It’s simple and follows the same formula that we used to balance the budget in the 1990’s. It boils down to this: keep the economy growing so federal revenues continue to rise. In the meantime, freeze or cut federal spending on programs that we control, while ensuring victory in the War on Terror by providing ample funding to homeland security and our U.S. armed forces. Many of the so-called experts have scoffed at this strategy. But many of those experts were dead wrong in their pessimistic projections of what impact new incentives for business would have on the economy. With final results now rolling in, isn’t time to admit that the pessimists were wrong and the pro-business conservatives were right? Regardless of who wins the debate, let’s at least agree that the economic numbers we’re seeing today represent a huge improvement from even a year ago, and the federal deficit will not be as high as everyone assumed it would be even as recently as the beginning of 2006.
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