These are not the words of President Bush on the stump, speaking to the faithful; these are the words of John F. Kennedy trying to persuade the skeptical of his day (largely Republicans) that his tax-rate reductions were the proper course of action in 1962 to "get our economy going again."
We heard the same talk of "deficits as far as the eye can see" after President Reagan signed his 25-percent, across-the-board tax-rate reductions into law in 1981. Yet for all of the hysteria, the deficit as a percentage of GDP, which was 2.6 percent during Reagan's first year in office, was 2.8 percent of GDP when he left office in 1988.
The press also often neglects to report that deficits spiked at 4.7 percent of GDP in 1995 due to sluggish growth following the Clinton tax hikes. The economy didn't begin its revival until the Republicans seized control of Congress in 1994, forcing a reluctant president to reduce the capital gains tax rate, create Roth IRAs and get spending growth under control. Then the private economy was free to grow faster than the government and budget deficits were transformed into surpluses.
Since the 2003 tax-rate reductions, our economy has grown at an annualized rate of 5.1 percent. The unemployment rate has come down to 5.4 percent, lower than the average during the 1970s, '80s and '90s. As a result, revenue growth has been steadily rising and the deficits steadily declining. Since January the projected deficit has plummeted by nearly $100 billion from earlier estimates of $500 billion to $413 billion.
Another misleading headline constantly repeated by Sen. John Kerry on his soapbox is that the gap between the richest and poorest Americans continues to widen. I have always maintained that the worker and investor are not two different people. They are the same people but at different stages of their lives. Census data show that in just three years, 1996-1999, 38 percent of those among the lowest quintile of income earners had progressed to a higher bracket. Similarly, with approximately 70 percent of American families owning a home, homeownership is hardly the domain of the "rich." Ditto with stock ownership. Today, more than 50 percent of families directly or indirectly own stock.
It always drives me politically crazy to hear Democrats engage in class warfare. Democrats can complain all they want about tax cuts for the top 2 percent, but the reality is that our tax system is becoming more progressive, not less. By 2002, the top 20 percent of all taxpayers earned 50 percent of all income. And by 2002, that same group paid 82 percent of all taxes. Moreover, according to the nonpartisan Congressional Budget Office, as a result of the Bush tax cuts all taxpayers faced lower effective tax rates, and 7 million of the lowest income workers were removed from the tax rolls altogether.
Looking ahead to the next four years, our goal should be economic growth rather than reducing deficits per se. If growth is the goal, then tax increases, trade restrictions and nationalized health care are the wrong choices. If long-term growth is our goal, then we will reject tax-and-spend redistributionist policies masquerading as fiscal discipline; and, if long-term growth is our goal, we will continue to pursue lower tax rates on all Americans, free trade, less regulation, tort reform and entitlement reform. Those are the right choices.