Tax cuts work, spending restraint needed
July 12, 2007| By Nathaniel Ward
The government has released a new report showing once again the benefits of the 2001 and 2003 tax cuts. The tax cuts allowed an economic expansion, which in turn drove higher government revenues. But this news is tempered by sobering spending numbers.
Heritage expert Brian Riedl explains that “lower tax rates have increased the incentives to work, save, and invest, and as a result the economy has grown faster than projected.”
But the news is not all good by any means.
First, he also notes that “by historical standards, Americans are now overtaxed” in terms of the percentage of GDP paid to Uncle Sam.
Second, this year is the 14th consecutive year where federal spending growth has outpaced inflation, Riedl points out. Since President Bush took office, the portion of the economy run by the government has increased to more than 20 percent, from 18.5 percent, and overall federal spending will be up 49 percent over 2001 levels by the year’s end.
Worse, he continues, the coming entitlement surge will drive spending up still further in the coming decades.
Now is the time to take real action to control this growing problem.
Nathaniel Ward is the Editor of MyHeritage.org—a website for members and supporters of The Heritage Foundation.
