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.
Tax Relief Came At Just the Right Time.
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.
George W. Bush, Fact Sheet: Economic Growth & The President's Tax Relief - One Year Later Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/280556