Tax Increase Prevention and Reconciliation Act of 2005--Conference Report

TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 2005--CONFERENCE REPORT

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Mr. McCONNELL. Mr. President, in spite of unprecedented shocks to our economy, terrorist attacks, corporate accounting scandals, rising energy prices, and natural disasters, our economy is incredibly strong. It is not an accident that our economy is so strong; it is a byproduct of policies proposed by President Bush and the Republican Congress that encourage Americans to work hard, keep more of their own money, and invest in the economy.

Let's look at the facts. One of the most important components of this Tax Increase Prevention Act that Congress initially passed in May of 2003 was the tax relief on capital gains and dividends. Since enactment of that important tax-reduction measure back in 2003, we have seen absolutely remarkable economic growth and job creation. More Americans are working than ever before, the economy has created over 5.2 million jobs since August of 2003, and we have witnessed 32 straight months of job growth.

Take a look at this chart. It is no accident. The red lines going down represent job growth as late as early 2003, and then we acted with the tax relief package in 2003. There was a very dramatic turnaround in job growth beginning in August 2003, and it continues through today--5.2 million new jobs since we got the tax burden down on the American people. Americans are willing to invest more now because they will be able to keep more of those earnings.

Unemployment remains very low, at 4.7 percent. Of course, we will not rest until every American who wants a job has one. But the fact is that the current low, low rate of 4.7 percent is lower than the average unemployment rate of the 1960s, the 1970s, or the 1980s. It is even lower than the average rate in the 1990s, which our Democratic colleagues would have you believe is the golden period of economic progress.

From the time since the tax cuts to the beginning of this year, which is the latest period for which we have numbers available, America has created more jobs than the European Union-15 and Japan combined.

Let me repeat that. From the time since the tax cuts to the beginning of this year, the American economy has created more jobs than the European Union-15 and Japan combined.

Economic growth remains strong. The economy grew at a rate of 4.8 percent in the first quarter of 2006.

Businesses are investing in our economy because of the 2003 tax cuts. This chart shows that business investment has increased for 10 consecutive quarters, averaging 9 percent growth over that period.

Americans are willing to invest more because they will be able to keep more of these earnings. The stock market is up more than 3,100 points since May of 2003. It has gone from 8,454 on May 1 of 2003 to 11,639 on May 10 of this year, nearly a 37-percent increase in the stock market since we originally acted in 2003 to get the tax burden down on the American people. It is not only good news to Wall Street, but really good news to the folks with pensions and savings on Main Street.

Americans have more money in their pockets. Their real after-tax income is up 8.2 percent since President Bush took office. Over the past year, it is up 2.2 percent.

Consumer confidence is at a 4-year high--a 4-year high.

We cut the tax rate on capital gains, and tax revenues from capital gains have increased from $58 billion in 2002 to $78 billion in 2005. Tax collections are up 14 percent over the past 12 months, even though we have reduced taxes. By the way, revenue is up for State governments as well as a result of this booming economy.

We must never forget that Government does not create growth; entrepreneurs, risk-takers, and hard-working Americans create growth.

However, Government, through its tax, spending, and regulatory policies, obviously can establish an environment that strangles growth or allows it to flourish.

This body, by lowering taxes in 2003, is making growth flourish. These policies have been a resounding success--a resounding success--and the Senate clearly needs to extend them to project this booming economy into the future.

We ought to reject efforts from the other side of the aisle to reverse this course and increase taxes by $70 billion on the American people. Clearly, that is a bad idea.

Mr. President, I yield the floor.

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