Madam Speaker, we have been talking about the budget in this body for several weeks now. As I visit back in the district, I find it instructive to deal with the questions that the voters are bringing to me, and so I have brought a series…
Madam Speaker, we have been talking about the budget in this body for several weeks now. As I visit back in the district, I find it instructive to deal with the questions that the voters are bringing to me, and so I have brought a series of slides tonight where we can discuss the budget, take a calm look at it, look at some of the factors that surround it and help voters make an assessment of the truth on the budget and the condition of the U.S. economy.
First of all, one of the most pressing questions is a concern of exactly what is the state of the economy today. I have got a chart here that shows the last 10 years of gross domestic product in the U.S., and we see a fairly consistent line of, generally, a 4.9 percent average. We had a slight recession in the period that I have marked here, 2001. It does not show up on the chart, but if we had an expanded chart, we would see that the recession flattened out and caused a depression in the receipts into the treasuries of the United States.
So basically, we can say overall that the economy in the United States is solid, it is in good shape. But people want to know exactly why did we go through this period in the last couple of years.
First of all, the stock market back with the dot-com expansions, we found stocks that were overvalued. They were based not on recognized profit or recognized product, but on the hopes and on some speculation. The stocks were overvalued, and it was necessary at some point for those stocks to collapse back down. They did that and put us into a mild recession that would not have lasted very long, except 9/11 came along.
We had a pretty big shock to our economy on 9/11. Forgetting the human impact, just talking about the impact financially on the country, the estimates range anywhere from a hundred billion to several hundred billion, depending on how it is evaluated.
So first we had the collapse of the dot-coms and the stock market, and then we had 9/11.
Just about the time we were to come into a recovery, then the corporate scandals, the governance issues of Global Crossing and Enron and other corporations that had misused their accounting methods did not actually cause that much financial difficulty in the market, but actually did affect the confidence. So we found that our economy went into slight recession that was accentuated by later factors. Those factors are the reasons that we are running deficits today.
If we look at the next chart, Members can see the revenue line. This is revenue and taxes, and we see the bulge there in 2000-2001. It is interesting to note, if we were able to extend this line directly up, we would find that in fact our tax revenues are actually very stable, but our capital gains in that period where it deviates upward, were creating an anomaly, a bubble in revenues, that could not be sustained; and when the market collapsed back down, then our revenues fell right back in line with the predetermined historic perspective that we had established.
That is an interesting note because people want to assume that our economy is in bad shape, and our friends on the other side of the aisle talk in horrific, frightening terms to people, who are just paying their rent every month, about how desperate our economy is and the reasons for it. I think this chart begins to show that we have been quite predictable except for a little bit of a bubble that was on the positive side, frankly.
People want to know why are we running deficits. The deficits are caused because we oriented our spending to an increased revenue that could not be sustained, and now that our revenue has collapsed back down, we have got a problem with our spending exceeding the revenues that we are bringing in. That is the short answer to why we have a deficit.
People want to know, are we running historic high deficits. They are hearing the talk coming from Washington, and it causes fear among people who do not watch these figures closely. If the postwar average of 1.5 percent, the red line across here, is looked at, we can see that our deficits right now are nowhere near historic highs.
We also see that our surpluses in the period that just preceded us, our surpluses actually reached a very high level, but they were artificial, created by the capital gains on that overinflated stock market.
So again, as we take a patient, honest look, we see that deficits are existing, but they do not necessarily mean that our economy is in horrific shape or that there is reason for fear and concern. There is reason for fiscal discipline.
A lot of people wonder that with deficits, then we create debt; that is, we do not have the money to pay for the bills today, we spend negatively, we borrow money and we create longer-lasting debt. A lot of Americans ask, are we facing a skyrocketing debt. That again is an interesting question that deserves an answer.
Looking at the next chart, we again see the median line of 42.9 since World War II, and we find that our debt is actually quite low, somewhere around 36 percent. The projections there from 2002-2007 would show that if the projections are right that come from the economists, if we do in fact pass the tax relief, if we do in fact cause the economy to grow, that we can hold our debt at the level of 36 percent.
After World War II, our debt was almost 100 percent. Japan today has a debt of almost 160 percent. Our debt is approximately $3.8 trillion. If we had the same percent of debt as Japan, then we would have $17 trillion. As we look at some of these numbers that come from other developed economies, then we begin to put our numbers into perspective.
Madam Speaker, I would say that, so far, the discussions that come from our colleagues on the other side of the aisle are intended mostly to cause alarm rather than to cause understanding. I would say that right now our debt service, that amount that we pay for the debt is at an historic low. It is approximately 3 percent of our budget.
So if we have a period of deficits and we have a period of debt, why are Republicans calling for spending cuts? The next chart would show us that one of the critical elements, one of the critical measures that most economists agree on is that the level of growth in the private economy is going to be created by the level of spending as a percent of our gross domestic product, that is, how much the government spends as a percent of the overall economy in the United States should fall in a target of anywhere from 16 to 22 percent. As it exceeds above that, we find stagnation. We find that capital is not available for reinvestment by private firms because they are having to compete with the Federal Government, and we find that new jobs are not created.
We in this body have opted to keep our spending within restraints, understanding that if we just continue to spend without the tax revenues, that we will actually cause a dampening effect in our economy. And so a lot of people ask that question, and it is justified to ask why we would be seeking budget cuts at a time like this, and it is because we need to maintain that target in the range of 20-22 percent. We can see from this chart, we have had, historically, far less amounts and far greater amounts, but right now we do not have a situation in our economy that is due alarm.
There are those who complain that this Congress is cutting budgets tremendously, that we do not feel the needs of those people in society, and I have a series of charts all of which are
going to show about the same thing, that under Republican rule the actual amount spent on many budgets have increased dramatically from what it was previous to Republican control.
I will simply go through these charts and take a brief look at them to get an understanding of some of the historic perspectives in our spending to date.
We have complaints that we have cut in the agriculture sector, but we see the spending in 1996 versus 2003. Who among us would say that we are actually penalizing the agriculture market? I think reasonable people would assure themselves that we do need fiscal discipline and we need to be careful how we spend our money, but to say that we have not adequately invested in this program is lacking in full truth.
Similar arguments have been made about Medicaid and Medicare, that we have restricted spending, that we have given deep cuts. Again since 1995, about the time that Republicans took over, we can see the tremendous increase in spending in Medicaid and likewise in Medicare. We again find that we have had abrupt increases in the level of investment in these programs. If we are not getting the output in the programs that we need, it is because the programs themselves have flaws in their design, that the processes in which they choose how much and to whom to pay are the problems rather than the level of spending by the Republican Congress.
Much has been made of the situation of veterans. Again we would see that in 1995 we had $20 billion and today we have $30.6 billion. The slope of the line simply tells us that we have increased spending dramatically. This one abrupt drop here is simply due to an accounting anomaly where we had 13 payments in this period and 11 payments in the other period, and so those would even themselves out to show a fairly steady increase of almost 5.1 percent per year. President Clinton before he left office expanded the number of people who are able to tap into the veterans system. Prior to his regulatory change, veterans who were disabled in the line of duty were able to collect benefits, but those who were disabled in some other way were not allowed to collect benefits. That one change has created a tremendous demand for services that did not previously exist and so you can see that we are investing almost one-third more in the past 6 years, but the drains on it have kept the incremental amounts going to individuals, the amounts that people feel have been kept at a low level because of the increased demand by regulation change. If we have problems with veterans and if we have problems with other programs, the problems are problems of process. They are not problems of a failure to invest.
Many people wonder why we are asking for tax cuts at this time when we have deficits. Tax cuts are the way that we grow our economy. Tax cuts become money that are placed back into the hands of investors. They allow businesses to increase their production, to increase their employment. The estimates if we pass the tax plans that the President has submitted are that we would create 500,000 jobs per year. Those are not insignificant in times of higher unemployment. We must cut taxes in order to reinvest in our economy to create growth. We are finding at this point that because of taxes, many of our corporations are not competitive in the international market. We are losing jobs because of our tax plans which penalize companies located in this country.
One of the things that our colleagues often talk about is the fact that we had corporations that have misused their accounting methods. Enron would be the example used most often. I would bring Global Crossing up as an extreme example. One of the things that happens when we cause companies to keep cash and not pay out dividends is that that cash builds up and there is stimulation to try to spend it, there is stimulation to try to create different sections of the company that would shelter and hide that cash from taxation.
It would be much easier if we simply gave the money back to stockholders in the form of dividends. That particular tax cut, which has been accused of being only for the extremely wealthy, needs closer inspection. Almost half of the savings of the dividend taxes would go to seniors 65 and older. The average tax saving for seniors receiving dividends would be $936 per year. More than half of all American families today own stock. Eighty-four million Americans are invested in the stock market. Over half receive dividends. Over half of the ones who receive dividends have an income level of less than $50,000, but that story is not told in this body, Mr. Speaker.
That story is not told because we are not always after the truth in this body, that we want to create fear and that we want to create illusions. But the truth is that many, many Americans would benefit from this dividend tax cut, the creation of jobs, the return of dollars to Americans. The fact that we are one of the last three countries in the world that causes double taxation of dividends cannot be overlooked.
Mr. Speaker, I stand fully in support of the President's tax cuts that would give 46 million married couples an immediate check for $1,500 and continue it every year from now on. Mr. Speaker, I stand fully in favor of the President's tax plan which says just repeal the estate tax. Ben Franklin said that the only two things in life that are certain are death and taxes. He never envisioned the American Tax Code that would cause them to occur simultaneously. Mr. Speaker, we hear tremendous comments that this is just a tax cut for the wealthy. It is never explained that the top 25 percent of taxpayers, those people who have incomes $55,000 and over, pay 84 percent of the taxes, that if we are going to give a tax cut that is large enough to create economic growth and economic stimulus, that we must give it to the wealthy because we are describing as wealthy those households of $55,000 and over.
Mr. Speaker, one of the best examples of the tax cut will occur with small businesses where they will be able to write off expense, up to $75,000 of new equipment. As a small business owner, I know that that single tax cut would create jobs. Mr. Speaker, I think I will close with a quote from the Governor of New Mexico. Governor Bill Richardson, a Democrat who served in this body, now Governor of New Mexico, says that reducing taxes puts us on the road to economic growth.
Mr. Speaker, the other side knows the truth. They use it when it is important for them, but they refuse to discuss it on the floor of this House in this budget. Bill Richardson's plan this year passed in New Mexico's legislature reduced New Mexico's income tax rate by 40 percent from the current 8.2 percent to 4.9 percent by 2008. It cuts the State capital gains tax in half, to 10 percent. It offers tax credits to companies opening new facilities in the State. Richardson agrees that his plan sounds sort of like Bush's tax-cutting agenda, and he argues that Democrats nationwide should consider tax cutting a viable strategy. ``We need to stop talking about class warfare and the distribution of wealth,'' he said. ``Economic growth and reducing taxes puts us on the road to economic recovery.''
Madam Speaker, we do not always get a full and honest discussion in this body. I wanted to share these comments on the budget today.
Madam Speaker, I yield to the gentleman from Florida (Mr. Feeney).
Mr. Speaker, I yield to the gentleman from Colorado (Mr. Beauprez).
Mr. Speaker, I recognize the gentleman from Colorado (Mr. Tancredo).
Mr. Speaker, in summary, I just would say that, in perspective, people in this city are saying that the tax cut is just too large, that the original figure of $726 billion over a 10-year period, that compares to $120 trillion. Mr. Speaker, we are asking for seven-tenths of 1 cent back in taxes. Economists on both sides of the aisle declare that this tax cut, this tax relief package by the President of the United States to be the boldest tax plan ever presented, that if the dividend tax is repealed, it can surge our economy upward for a 50-year period with an immediate 10 to 15 percent increase in stock prices.
Mr. Speaker, again, I am going to close with the comments on March 31 of this year from Democrat Governor Bill Richardson from New Mexico when he passed a tax cut in New Mexico: ``We need to stop talking about class warfare and the distribution of wealth,'' he said. ``We need to start talking about economic growth, and reducing taxes puts us on the road to economic growth.''
Mr. Speaker, I cannot say it better.