GCN Guest Opinion
U.S. Economy Still Strong
by: Sen. Trent Lott
Filed 2/23/07 GCN
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.
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
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
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