WASHINGTON -- We interrupt your usually depressing news to bring you some developments that will give Americans cause to be optimistic about our economy.
I know this runs against the grain of the fear-mongering we have been hearing from Wall Street and the whiners and complainers in Washington, but several things happened last week that suggest this country is definitely moving in the right direction.
The government reports that tax revenues are significantly higher than anticipated, cutting the budget deficit much more deeply than was forecast. Unemployment has fallen to a low 4.6 percent after 34 consecutive months of continued job growth. The economy was growing at a blistering 5.6 percent rate in the first quarter, and the U.S. Treasury reports that total worker compensation (including wages and benefits) grew by 7.4 after inflation during the current expansion.
Not surprisingly, the Gallup Poll also reported last week that President Bush's job approval rating, which has been in the low 30s for months, has risen to 40 percent. That's still way below his peak of previous years, but a sign that he is turning his presidency around in his second term.
Let's take some of these developments one at a time because they fully deserve more attention than they have been getting in the national news media.
The budget deficit: It's big, wasteful and mostly unnecessary, but it's a product of many things, including unanticipated events like Katrina, economic downturns and the huge defense costs in the war on terror. Much of it is also due to excessive discretionary spending and runaway entitlements.
One way to shrink the deficit is to boost economic growth by cutting the tax rates on work, investment and savings -- and that's what is happening in the economy right now, despite predictions to the contrary by naysayers who said the tax cuts would worsen the deficit.
The Office of Management and Budget reported last week that the fiscal 2006 deficit will be 30 percent lower than expected. The new estimate -- $296 billion or 2.3 percent of the nation's gross domestic product -- is on track to fall to $188 billion in 2008 or 1.3 percent of GDP.
The reason: "Overall tax revenues are growing at the fastest pace in 40 years," says Brian Riedl, the Heritage Foundation's budget analyst. In fact, since Bush's tax cuts were fully accelerated in 2003, tax receipts have risen by over 34.6 percent.