Economy Gets a Clean Bill of Health

By U.S. Senator Jon Kyl Its difficult to understand how critics can claim that our economy isnt doing well, when an examination of the facts proves contrary. As Americans begin their annual task of filing taxes, now is a good time to review how the pro-growth tax initiatives currently in place have stimulated our economy and created jobsand why Congress should make the tax cuts permanent to sustain this growth. The U.S. Bureau of Labor Statistics recently released figures showing that in the last month alone, 243,000 jobs were created, adding to the over 2.1 million jobs that the economy has created over the past 12 monthsand almost five million new jobs since August 2003. The unemployment rate remains steady at 4.8 percent in February, and is still well below the averages seen in the last three decades. The economy has been growing for 17 straight quarters, and the leading economic indicators point to continued growth. In the past five years, tax relief initiatives put in place by Congress and the President, have helped sustain growth by returning $880 billion to the Americans who earned those dollars. Tax cuts leave money in the private economy where businesses can use it to expandand that leads to more jobs and economic growth. Spending increases, on the other hand, take money out of the private economy for use by the government. That hurts economic growth by removing resources from the private sector that it could have used much more productively than government does. Americans are not just keeping more of their money with the current policies in place; they are also achieving higher income levels. Disposable incomes have risen 2.2 percent over the past 12 months. Since January 2001, after-tax income per person has risen 8.2 percent. Household net worth is at an all-time high of $51.1 trillion, and the median net worth of American households rose 1.5 percent between 2001 and 2004. Home ownership is also at an all time high. The National Association of Realtors reported last week that sales of existing single-family homes and condominiums rose by 5.2 percent in February to a seasonally adjusted annual rate of 6.91 million units. Home ownership is at its highest levels in over 30 years. It is important to note that government estimators predicted that the reduction in capital gains tax rates in 2003 would cost the federal government $27 billion in lost revenues for 2004wrong. The Congressional Budget Offices most recent report shows that the lower rates actually brought in an additional $26 billion in revenue. Overall revenue for the government continues to grow at an astonishing rate, and in just the first five months of the fiscal year, the government has already brought in an additional $81 billion more than last year at this time. This is not only an indicator of a healthy economy, but it clearly shows that Americans are not under taxed. The government is not struggling to sustain its inflows to the U.S. Treasury. You might not learn this on the television news, but our current pro-growth tax polices have resulted in a vibrant economy that produces jobs and brings low unemployment, higher family incomes, and record levels of people who own homes. Despite claims that tax cuts would be the cause of increased deficits, government revenue is actually increasing. Unless we want to return to the days of economic stagnation, deficit spending, and rising unemployment, we should ensure that these tax rates do not expire. Sen. Kyl serves on the Senate Finance and Judiciary committees and chairs the Republican Policy Committee. Visit his website at www.kyl.senate.gov.