Economy

Our economy is finally beginning to regain to strength and potential we each expect. The experts are in agreement, the data is apparent, the economy and job growth are both expected to grow.

The evidence for both the cause of our economic woes and the current turnaround are clear. By the end of the 1990’s, the boom of the early 90’s had already begun to subside. A Clinton-era recession caused by irresponsible spending policies, a tax system that was spiraling out of control in complexity and unfairness, corporate scandals that disrupted the stock market and the devastating economic effects of 9/11 put a quick end to the short-lived prosperity.

Something had to be done. My colleagues and I, as well as President Bush realized the distressing effects a struggling economy would have on our nation and worked night and day to develop a plan that would have significant and beneficial results. Through the leadership of President George Bush and the House Ways and Means Committee Chairman, Bill Thomas, the Jobs and Growth Tax Reconciliation Act was written, passed by the House and Senate and signed into law. This growth plan and the two other major tax relief plans led by President Bush, have already had profound effects on our economy, our markets and investments and the creation of jobs.

The Jobs and Growth Tax Reconciliation Act is commonsense and will continue to show noteworthy results. It allows every American who pays taxes to keep more of his or her hard-earned money while laying the foundation for short-term stimulus and long-term economic growth. As the benefits of this economic stimulus package begin to penetrate our economy, we are already seeing, as Alan Greenspan, Chairman of the Federal Reserve put it, a “fairly marked turnaround” in our economy. Thus, the road is being paved for lower unemployment and more people gaining confidence in our markets.

In addition to much needed reduced tax rates on income at all levels, the package includes marriage penalty relief, accelerated increases in child tax credits, and increased deductions on equipment purchases for small businesses and entrepreneurs. Additionally the bill dramatically cuts the double tax on dividends to a top federal rate of 15 percent, which is of great benefit to families that invest and has already led to a boost in our stock market.

With the dividend tax reduction, Congress also seeks to increase corporate accountability, and ultimately remove many of the current barriers to higher economic growth.

Under this plan, our nation’s businesses are also greatly being assisted. More than 85 percent of small businesses in America pay individual income tax rates and will benefit significantly from the 10 percent tax rate reductions included. Two-thirds of taxpayers in the highest marginal tax bracket are small business owners, because profits from their businesses are recorded as personal, not corporate, income.

Additionally, this much needed pro-business piece of legislation increases small-business expensing limits from $25,000 to $100,000 and hikes the overall investment limit to $400,000. This provision will encourage small businesses to immediately invest in capital purchases, including updated machinery and further expansions of their businesses. This will help to stimulate other businesses and other sectors of the economy and as you can imagine, this is a multi-layered cycle that has an endless possibility of economic growth.

While this plan was originally labeled by partisan-politicians, inaccurately as only a “tax-cut for the wealthy”, the significant results for all are already evident.

The long-awaited economic rebound appears at hand. Economic indicators are accelerating, financial markets are signaling faster growth and government policy, both fiscal and monetary, remains highly stimulative.

Real GDP grew 3.1 percent in the first quarter of this year, the 14th consecutive quarter of growth following the recession and the 8th consecutive quarter of growth above 3 percent. In 2004, real GDP grew 4.4 percent – the strongest annual performance in 5 years and one of the strongest growth performances of the past 20 years. Private Blue Chip forecasters expect solid real GDP growth to continue at 3.4 percent for 2005 and 3.3 percent in 2006.

New house sales are at record highs. Housing starts and building permits – although naturally volatile – recently have been running at their highest sustained levels in two decades – at a pace of around 2 million new housing units per year. The economy, bound by the constraints of fiscally irresponsible policies of the 1990’s, is now in full recovery.

The unemployment rate remained at 5.2 percent in April – down from 6.3 percent in June of 2003. The unemployment rate continues at its lowest level since September 2001; it is lower than the decade averages for the 1970s (6.2 percent), the 1980s (7.3 percent), and the 1990s (5.8 percent).

Payroll employment rose by 274,000 jobs in April and is up by 3½ million jobs since May 2003. Private forecasters expect an additional 1.4 million jobs by the end of 2005.

These effects are only the beginning as this historic plan has only been in place a few months. We can expect to see more jobs, greater confidence in our markets and significant economic growth.

Related Documents:

Press Release - Dow Record 10.3.2006

Press Release - Tax Reconciliation Passage 5.10.2006

Press Release - Centenary Grant 5.25.2005

Press Release - Taxpayers Award 5.10.2005


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