Wicker: Lower Deficit Reflects Success of Pro-Growth Policies

Press Release

WICKER: LOWER DEFICIT REFLECTS SUCCESS OF PRO-GROWTH POLICIES

The Congressional Budget Office (CBO) reported on August 23 that its federal budget deficit estimate for this year had dropped dramatically over previous projections. Coming during the dog-days of August and with Congress in recess, this news got little press attention, but the report is significant because it reaffirms that our current pro-growth policies have kept the economy strong and put us on-track to balance the budget without new taxes.

The deficit dropped by $19 billion over the past five months and is now projected to fall to $158 billion for the year. That overall figure is $90 billion below the $248 billion deficit CBO had predicted earlier. Faster-than-expected revenue growth is credited for this positive economic news. That infusion of federal revenues can be attributed to tax relief measures enacted by the Republican majority in Congress in 2001 and 2003.

BALANCED BUDGET BY 2012

Funds coming into the federal treasury increased by 14 percent in 2005, 12 percent in 2006, and they are expected to grow by seven percent this year. The CBO report notes that if the present trend continues, the budget would be balanced, and in fact would produce a surplus in 2012.

Despite that good report, there could be dark clouds on the horizon. The CBO figures do not account for the negative impact potential tax increases would have on revenue collections and on the overall economy. Congressional Democrats are intent on reversing present course with a series of measures to raise taxes. I believe this would stifle growth and threaten economic prosperity.

The Democrat budget plan for 2008 contains new taxes totaling $392 billion, representing the second-largest tax hike in American history. President Bush has threatened to veto these tax increases as well as several 2008 appropriations bills pushed through the House of Representatives with excessive spending.

In addition, new tax measures pending or proposed in this Congress include:

* · $15 billion in new revenues in the House-passed energy bill that would increase costs throughout all sectors of the U.S. economy.
* · A $7.5 billion tax increase in the farm bill, threatening five million American jobs and discouraging investment in the U.S.
* · A proposed 50 cent increase per gallon federal gas tax hike to fund global warming initiatives and a five cent per gallon tax boost to pay for transportation infrastructure.
* · A new tax on every American who has a private health insurance policy.

President Bush has promised to hold the line against tax increases, and I have joined with Republican colleagues in the House in pledging to support his efforts. This latest CBO budget projection provides clear evidence that our current economic policies are working. We should not abandon a winning game plan in favor of a return to the failed tax and spend policies of the past.

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