Wicker: Tax Hikes Would Damage Strong Economy

Press Release

WICKER: TAX HIKES WOULD DAMAGE STRONG ECONOMY

The national economy continues to show remarkable strength, growing at a healthy rate of 3.5 percent over the fourth quarter of 2006. The Wall Street Journal calls it the "expansion that gets no respect" and notes that the economy's sustained performance in the face of formidable obstacles is defying critics at home and abroad.

President Bush delivered a "State of the Economy" address on February 2 and talked about the challenges our nation faces in sustaining this strong growth. He urged the Democratic majority in Congress not to raise taxes or allow current tax relief provisions to expire. I share the President's concerns about tax increases and the negative impact they would have on the economy. As we begin consideration of the 2008 budget, it is important to point out what has been achieved during this extended period of prosperity.

GOOD ECONOMIC NEWS

While it has not received widespread media coverage, the U.S. economy continues to produce jobs at a fast pace - an average of 187,000 new hires each month last year. Since August 2003, more than 7.2 million jobs have been created, which is more jobs than the European Union and Japan combined. More Americans are working today than at any time in history. The unemployment rate was 4.5 percent in December, well below the 5.1 percent rate for 2005 and below the average of each of the past four decades.

The surge in activity has fueled increases in retail sales and consumer spending and helped the stock market set records 26 times over the past four months. A recent report from the Federal Reserve showed U.S. household wealth at an all-time high. More opportunities are also available to college graduates. Employers expect to hire 17 percent more 2007 graduates than they signed up from the 2006 class, the fourth year in a row to see double-digit increases in hiring.

TAX RELIEF SUCCESSFUL

Much of the success of our economy can be attributed to Republican pro-growth policies, especially tax relief. The tax-cutting measures included reducing the overall tax rate, doubling the child tax credit, and lowering the marriage penalty. Small businesses received tax relief, and taxes were also reduced on dividends and capital gains. As a result, the economy has grown. Record revenues have flowed into the U.S. Treasury and help cut the budget deficit in half three years ahead of schedule. Receipts coming primarily from high-income individuals and corporations have been growing for more than two years at nearly twice the rate of spending. All this has helped speed deficit reduction.

The President's budget proposes to eliminate the federal deficit by 2012 without raising taxes. This package offers a good starting point for our discussions on Capitol Hill. Any balanced budget plan will require though choices, but those choices should not include more taxes and more federal spending.

RESISTING TAX HIKES

House Speaker Nancy Pelosi indicated on a recent national news program that Democrats might pursue tax hikes during this session of Congress. For the sake of every American worker, we should resist such action. The focus should be on spending restraint and continuing the pro-growth policies that have produced such a strong economy.

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