Q: Is the U.S. economy picking up steam?
A: There are signs of improvement, but the lackluster job market continues to feed anxiety and concern among those who are out of work and looking for a job. Although the economy is growing annually at 2.6 percent, it hasn’t triggered robust job creation. However, we are seeing good news in stronger-than-expected retail sales, an increase of 1.4 percent for July. Many are crediting the first round of spending from the refund checks mailed to American families for the increase in the child tax credit that was signed into law in May. Putting more cash in people’s pockets ought to trigger growth because consumer spending drives two-thirds of the U.S. economy. As chairman of the tax-writing Senate Finance Committee, I helped steer through Congress two landmark tax relief packages in 2001 and 2003 that are allowing Americans to keep more of their hard-earned money. Letting small business owners, investors and entrepreneurs save, invest and spend their own money will help create jobs and grow the economy better than recycling it through the U.S. Treasury. The bonus depreciation and expensing provisions recently enacted in the new tax law also have contributed significantly to a recent surge in business investment. Also consider the recent growth in the stock market. The 2003 jobs and economic growth package included substantial reductions in the capital gains and dividend tax rates. Since the agreement was reached in Congress on May 21, stock market wealth in the United States has increased by $1 trillion.
Q: What about the government’s return to budget deficits?
A: As a lifelong Iowan, I was raised to appreciate that a penny saved is a penny earned. And since Iowans first sent me to Washington, I have worked hard to keep a tight-fisted grip over the public purse, serving as a guardian over taxpayers’ hard-earned money. As a senior member of the Senate Budget Committee, I work tirelessly to hold the line on government spending and rein in bureaucratic excess. When the federal government got out of red ink in the late ‘90s, I remember thinking I’d never see the day when Uncle Sam achieved a balanced budget. Unfortunately, after four years of operating in the black, the federal government’s coffers started to shrink after a recession started in March 2001. And the attacks of Sept. 11 dramatically changed the government’s spending needs to beef up national security and military readiness and pay for the war on terrorism. Consumer confidence wavered with the uncertainty of war and possibility of future terrorist attacks. Scandal-ridden corporate America and a jittery stock market shook investor confidence. But the sluggish economy has put the greatest downward pressure on the federal budget. If the economy doesn’t grow, neither does federal revenue. From my committee assignments on the Senate Finance and Budget Committees, I’ll continue my best efforts to enact fiscal policy that encourages job creation and economic growth and pursue responsible stewardship over taxpayer dollars.