GCN Guest Opinion
The World’s Best
U.S. Economy Still Strong Despite Difficulties
by: Sen. Trent Lott       Filed 2/23/07 GCN

      During more than 30 years in Congress, I’ve seen a lot of economic cycles.  In the 1970s, double digit inflation and high interest rates were the biggest concerns.  In the 1980s, we had a good economy, but we worried about the deficit and economic competition from fast-growing economies in Japan and Europe.  The 1990s were considered an economic boom, and we balanced the federal budget.  So how will America’s economy of this decade be recalled?  As the world’s best, I’m sure.

We’re not giving America’s working men and women credit for today’s growing economy.  Despite being hit by the most deadly terrorist attack in history and our nation’s worst natural disaster, resilient Americans have produced an economy that frankly no one could have envisioned five years ago.  Here is the data that shows it:

Productivity:  America’s gross domestic product (GDP) – which is the value of all goods and services produced by the nation at a given time, and the primary measure of economic growth – has averaged a 3 percent growth rate during the last 21 quarters.  In the near future, the U.S. economy, as measured by GDP, is expected to increase by 2.9 percent in 2007 and 3.1 percent annually for 2008 and 2009.  That’s pretty good, considering foreign economies like Japan, Germany and France can only expect, at best projections, a 2 percent increase.

Employment Growth:  America’s unemployment rate is just 4.6 percent.  That’s a far cry from the 1970s when unemployment was closer to 10 percent.  Since 2003 alone, more than 7 million jobs have been created.  Adjusted for our modest inflation, wages rose 1.7 percent in 2006, faster than the average rate of even the hot 1990s economy.  That means during 2006, a typical family of four with two wage earners earned an additional $1,003.

In addition, low mortgage interest rates are pushing home ownership to record levels, and the Federal Reserve’s measurement of household net worth for the country was $53.1 trillion last fall, growing $3 trillion over the previous four quarters.

The Deficit:   If there is anything critics like to cite as a harbinger of economic doom, it is the deficit.  They did it to President Reagan as he was spearheading a military build-up that ultimately won the Cold War.  And they’re doing it to President Bush right now as we incur expenses fighting the War on Terror. 

But if you look at the 2006 deficit in its true and fair context – as a ratio to the nation’s production, its GDP – the deficit is merely 1.9 percent of our nation’s total wealth-generating capacity.  And it’s shrinking as our GDP rapidly increases.

The deficit’s size today is accurately measured only when you consider that the historic 40- year average of America’s deficit is 2.3 percent of GDP.  Considering that, today’s 1.9 percent of GDP deficit is manageable and hardly an economic apocalypse in the making.  In fact, it is waning.  The Congressional Budget Office (CBO) predicts the deficit will shrink to just 1.3 percent of GDP by this year’s end.

Tax Relief:  We’ve all heard the tired arguments always advanced by those in Washington who want to raise your taxes:  1) Tax cuts will “deprive” the federal government of needed revenue, as if it was the government’s money in the first place, and 2) Tax cuts are “for the rich,” as the well-worn liberal play book reads.

Here, too, the numbers tell the truth.  When taxes are cut, Americans have more money to spend, and that spending generates job creation, which then generates more tax revenue.  In fiscal year 2005, with President Bush’s tax cut measures in place, federal tax revenues rose almost 15 percent, followed by another 12 percent in 2006.  Since 2003, CBO says tax revenues have exceeded CBO projections by almost 70 percent.

These impressive facts about today’s economy are truly amazing.  Given the tough challenges facing our nation, they are an irrefutable testament to the strength of America’s economy and the working people who make it the world’s best. 

Senator Lott welcomes any questions or comments about this column. 

Write to: U.S. Senator Trent Lott, 487 Russell Senate Office Building, Washington, D.C. 20510 (Attn: Press Office) or Email