[Congressional Record (Bound Edition), Volume 152 (2006), Part 10]
[Senate]
[Pages 13933-13934]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          STATE OF THE ECONOMY

  Mr. ALLARD. Mr. President, I have in my hand a report that has been 
released about 12 or so minutes ago. It is a report on the fiscal year 
2007 midsession review. It is on the budget of the U.S. Government, put 
out by the Office of Management and Budget. It says pretty much what 
the Congressional Budget Office has been telling us for the last 30 
days: That our tax cuts are working, the economy is strong, revenues 
are up, and deficits are down. Let me talk a little bit about the tax 
cuts and how they are bringing in additional revenues.
  The Republican progrowth tax policies enacted in 2003 have triggered 
2\1/2\ years of economic growth, unprecedented tax revenue increases 
and job creation. Since the 2003 tax cuts, America has increased the 
size of its entire economy by 20 percent or $2.2 trillion.
  A remarkable observation was made by CNBC's Larry Kudlow over the 
weekend, which I think helps to put this in perspective:

       This $2.2 trillion expansion is roughly the same size as 
     the total Chinese economy, and much larger than the total 
     economic size of nations like India, Mexico, Ireland, and 
     Belgium.

  Pursuant to the extraordinary economic growth spawned by the 2003 tax 
cuts, Federal revenues have rebounded sharply following several years 
of decline. I would attribute most of this to the fact that we targeted 
reducing taxes on those industries that would create more jobs and 
create more revenue for the Government, particularly the small business 
sector. I think one of the greatest incentives for the economy to grow 
has been the expensing provisions that we directed toward small 
business which allowed the small business to write off a greater 
percent of their operations within 1 year. It was a huge tax benefit to 
small business which has resulted in a lot of increase in the number of 
jobs and a lot more productivity and innovation from the small business 
sector. It is the small business sector that drives the major portion 
of our economy.
  Revenues grew by a dramatic 14.5 percent last year and are forecast 
this year to grow by $245 billion or 11.4 percent.
  Last week, the Congressional Budget Office reported corporate tax 
receipts for the first three quarters of this fiscal year hit $250 
billion, nearly 26 percent higher than the same time last year. 
Corporate tax receipts, the taxes that corporations are paying, 
increased nearly 26 percent higher than the same time last year. The 
deficit is down. The expanding economy is good news for the budget, 
specifically the budget deficit.
  This morning, the White House Office of Management and Budget 
released its annual midyear budget update. This year's budget deficit 
is now forecast to be $296 billion, 30 percent below the 
administration's February forecast of $423 billion, or 3.2 percent of 
gross domestic product. This deficit represents 2.3 percent of our 
economy, equal to the historical average. Progrowth policies, combined 
with ongoing efforts to restrain spending, continue to reduce the 
deficit and have put us on track to cut the deficit in half in 2008, a 
year ahead of the President's goal.
  Jobs are growing. Last Friday, the Department of Labor reported that 
job growth continued for the 34th consecutive month in June. The 
economy has created about 1.85 million jobs over the past 12 months and 
more than 5.4 million since August of 2003. Similarly, the unemployment 
rate dropped from its peak of 6.3 percent in June of 2003 to 4.6 
percent today. To put that in perspective domestically, at 4.6 percent, 
today's unemployment rate is lower than the average of the 1960s, 
1970s, 1980s, and 1990s.
  Let me repeat: Today's unemployment rate is lower than the average of 
the last four decades.
  To put that in perspective globally, since 2004, the United States 
has created nearly twice the number of jobs as the rest of the G7 
countries combined. This job growth is not isolated to just one part of 
the country. Employment increased in 48 States over the past 12 months, 
ending in May.
  Not only is the number of jobs on the rise, so, too, are wages. 
Hourly compensation has risen 3.9 percent over the past year, while 
average weekly earnings have grown to 4.5 percent.
  The economy is strong, strong and poised to stay strong. The gross 
domestic product, a broad measure of the economy, grew at an annual 
rate of 5.6 percent for the first quarter of this year. This is the 
fastest growth in 2\1/2\ years and even stronger than previous

[[Page 13934]]

estimates. It follows economic growth of 3.5 percent in 2005, the 
fastest rate of any major industrialized nation.
  This remarkable growth has come on the heels of the burst of the 
technology bubble, the devastating attacks of 9/11, corporate scandals 
and destructive natural disasters. Similar to the American people, the 
economy has weathered the storm. The economy has done so due, in large 
part, to the Republican tax cuts and progrowth policies instituted 
since 2001.
  On restraining spending, the question becomes, What can we do to 
continue these positive trends? I believe the answer includes keeping 
taxes low and restraining spending. We need to work harder in holding 
down our excessive spending. With respect to the latter, I remain 
gravely concerned about the runaway growth of mandatory spending. For 
example, 20 years ago entitlements, or mandatory spending, comprised 45 
percent of the budget. Today they comprise nearly 60 percent of our 
$2.8 trillion budget. If left unchecked, spending on just three 
entitlement programs--Medicaid, Medicare and Social Security--will 
consume 20 percent of our gross domestic product in just 30 years. To 
put that in perspective, the entire Government consumes 20 percent of 
gross domestic product today. Clearly, the growth is unsustainable and 
threatens our economic well-being, as well as that of our children and 
grandchildren.
  I commend the Budget Committee chairman, Chairman Gregg, for his 
leadership on this issue and for introducing, along with myself and 24 
other cosponsors, the Stop Overspending Act of 2006. This bill proposes 
tough measures to force Congress and the administration to adhere to a 
disciplined budget process.
  The bill includes a line-item veto, or expedited rescission process, 
to allow the President to identify items of wasteful spending and send 
them to Congress for an up-or-down vote. It creates a new mechanism to 
essentially balance the budget by 2012. It reinstates discretionary 
spending caps in law, and it creates a bipartisan commission to 
identify and eliminate agency duplication and programs that have 
outlived their usefulness, as well as a commission to ensure the 
solvency of entitlement programs. It ensures a budgeting process to 
allow Congress to have more oversight, and it addresses the shadow 
budget that has developed due to emergency spending by building 
reasonable assumptions of emergency spending into the discretionary 
caps.
  In conclusion, the economy is strong, progrowth economic policies 
have fueled robust expansion which has, in turn, increased revenues at 
a rapid pace. As a result, the deficit is on target to be cut in half 
by 2008, a year earlier than the President's schedule. To continue 
these positive economic trends, we need to keep taxes low and further 
restrain spending.
  I yield the floor. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DeMINT. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Allard). Without objection, it is so 
ordered.

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