For Immediate Release
Office of Media Affairs
June 7, 2002
Fact Sheet: Economic Growth & The President's Tax Relief - One Year Later
Today marks the one-year anniversary of the tax relief that
President Bush promised the American people and delivered in full -- the
largest tax reduction in a generation.
One year after President Bush signed the tax cut into law, the
economy is growing, consumer spending is up and America is on the path
to economic recovery. The tax cut provided a much needed boost to our
economy at just the right time by giving Americans more of their own
money to spend, boosting investment and creating jobs. The economy is
much stronger one year after the tax cut but there is still more work
to be done to ensure long-term growth, a job for every American worker
and a return to budget surpluses. And, to keep us on the path to long
term recovery, Congress should make the tax cuts permanent; give the
President Trade Promotion Authority, a comprehensive energy bill and a
terrorism bill; and hold spending down.
President Bushs tax cut came at just the right time to help American
families and workers. Workers started getting checks in late July,
2001, pumping $40 billion back into the economy and boosting consumer
spending at a critical time. The tax cut will help create 800,000
jobs by the end of 2002. When the Presidents plan is fully phased in:
104 million individuals and families will receive an average tax cut
of $1,040.
Nearly 43 million married couples will receive an average
income tax cut of about $1,720.
Over 38 million parents with children
will receive an average income tax cut of $1,460.
Over 10 million
single mothers will be able to keep, on average, $770 more of their
income.
About 13 million seniors will see their taxes reduced, on
average, by $915.
33 million business owners who pay business income
taxes at individual rates could benefit.
President Bushs tax cut came at just the right time to help a slowing
economy. The tax cut helped shorten the duration and impact of the
recession. Had it not been for the September 11th attacks, many
economists believe our economy would have already recovered. While
there is still more to do to ensure that we have a robust recovery
with job creation, the tax cut has put the nation on the path to
long-term recovery.
The Tax Cuts Put The Economy On The Path to Recovery.
Our economy is much stronger today than it was a year ago:
Economic growth has returned: 5.6% in the first quarter of 2002
compared to 1.2% in 2001.
Residential investment is growing faster
right now than it has in almost six years: the fastest quarterly gain,
14.6% in the 1st quarter.
Consumer confidence in May was at the
highest level in a year and a half.
Home sales and the real estate
market are historically strong.
Household spending is up: Auto sales
hit a record high last winter (Q4), furniture and appliance sales are
up and all durable consumer spending is much stronger -- direct results
of the tax cuts.
Theres Still More To Be Done To Create Jobs And Ensure Long-term
Growth.
To keep America on the path to economic recovery, Congress should make
the tax cut permanent. Unfortunately, the tax cuts we put in place
last year are scheduled to expire in 2011. To ensure a robust
economy, to give every worker a job and to provide American families
and businesses the security and certainty needed to make long-term
savings and investment decisions, the tax cut must be made permanent.
Otherwise, the tax increases that will occur in 2011 will be an
ongoing drag on our economy:
The tax rate on low income families would jump 50% (from 10% to 15%)
The child tax credit would be cut in half (from $1,000 per child to
$500)
Marriage penalties would be restored.
Education savings taxes
would skyrocket (withdrawals for certain savings plans will be taxed)
Retirement savings and IRA contribution limits would shrink by more
than 60%.
The death tax would be restored.
To ensure job creation
and a robust recovery, Congress should give the President Trade
Promotion Authority, a comprehensive energy plan and a terrorism
insurance bill. While the economic signs are encouraging,
unemployment is still too high and business investment is not where it
should be. To speed the recovery and guarantee jobs for all American
workers, Congress should give the President Trade Promotion Authority,
a comprehensive energy plan and a terrorism insurance bill.
To
guarantee long-term growth and future prosperity, Congress must
exercise fiscal discipline. When the federal government overspends,
it has a serious effect on the long-term growth of our economy. The
President has submitted a responsible budget that focuses on our
nations priorities: ensuring economic recovery, winning the war on
terror, and protecting our homeland. If Congress holds spending to
the Presidents budget, we will return to a budget surplus by 2005. As
the President has shown by issuing a stern warning in the SAP for the
Supplemental Bill, he will enforce fiscal discipline.
The War and
Recession -- Not the Tax Cuts -- Drained the Budget Surplus
While some in Washington want to blame the tax cut for the declining
surplus, the facts tell a different story:
The Recession Erased Two-Thirds of the Surplus: The recession and
declining tax revenues drained roughly two-thirds of the budget
surplus.
Homeland Security and War Spending Used 19% of the Surplus:
Immediately following the terrorist attacks, President Bush and
Congress rightly passed significant spending increases for the war
against terrorism, homeland security, airline security, and emergency
response. This necessary spending accounted for approximately 19% of
the surplus.
The Tax Cut Only Used 15% of the Surplus: Despite the
claims of some in Washington, the tax cut used less than 15% of the
surplus.
Economic growth and job creation are the key to future surpluses. Tax
increases do not create surpluses.