The Bush team is set to release its fiscal 2007 budget, and Treasury Secretary John Snow says it will contain spending restraint and permanent tax cuts. Bush officials project that the 2007 deficit will top $400 billion again, what with increased spending on hurricane-hit areas.
Expect the Democrats (and some green-eyeshade Republicans) to hit some sour notes as they fall all over themselves decrying the size of the deficit. They should be singing a different tune. It would be a lot easier to take their criticisms seriously if they hadn’t accused the administration of killing the poor by not spending moremoney on Katrina relief and for reducing Medicaid by $10 billion over five years.
But remember that the government showed a surplus in December for the first time in five years. That means revenues grew faster than spending. In this case, revenues grew by 12.1 percent, while outlays “only” grew by 5.6 percent.
The revenue growth stemmed largely from a record level of corporate tax receipts, even as the amount of spending hit an all-time high, as well. Hmmm. Spending at record levels but the deficit turned into — a surplus?
That strongly suggests that the Bush tax cuts of 2001 and 2003 have helped spur economic growth and thus, revenues. But the deficit will be used by Bush’s critics to try to block making those tax cuts permanent.
Fortunately, there are a handful of fiscal conservatives, such as Senators Tom Coburn, R-Okla., and John Ensign, R-Nev., as well as most of the Republicans from Arizona, who have recognized that spending is the real culprit in the deficit picture.
And they have been leading efforts to slow down the explosion in spending. They’ve put the spotlight on other Republicans’ pork and helped pressure the rest of Congress into end-of-the-year spending reductions.
That’s the tune we need for continued economic prosperity. It’s an old melody much favored by the Founders, and more members of Congress should be singing it.