Tuesday, July 11, 2006

It’s not breaking news for those who support tax cuts:

This morning the White House announced that it was lowering its 2006 estimate for the country’s budget deficit from $423 billion to $296 billion.

To no surprise, the reason for the decline is a result of tax revenue to the government growing at its second highest level in 25 years. With corporate tax revenue growing at 26 percent and individual tax revenue growing at 14 percent, Democrats must be scratching their heads at how fewer taxes mean more money for the treasury.

Listening to the President’s press conference I’m happy he took the time not only to tout the numbers but also inform the American people how deficits as small as ours are a positive for the economy. As the President stated our deficits relative to the size of our economy is manageable, comparing it to individual American’s mortgages. As the President noted as your pay increases your monthly mortgage, though still a deficit, becomes more and more manageable. His point was as the economy grows deficits like the ones we have today are easier to absorb.

Sticking to the mortgage theme, the President’s comments had me thinking. If Democrats really believe that deficits are bad and that we must run surpluses to have a strong economy then they have to also believe that mortgages are bad as well. If we think about it the average American does not have enough money to pay for the home in cash and usually have just enough to meet the 10-20% down payment. At closing, the deficit Americans take on compared to their net worth is tremendous. If we followed the Democrats way of thinking no one should buy a home unless they could pay for it in cash. You can take the argument further and also compare it to school loans. Every year thousands of people graduate with thousands of dollars in school loans that result in a deficit for that individual.

The conclusion is that deficits are not bad. This doesn’t mean they can’t get bad but with our deficits running at about 3% of GDP and going lower, we’re not even close to reaching levels that would be considered dangerous. The real question is just what will it take for Democrats to finally catch on that tax cuts are an investment in our country’s future like education and the deficits that go with it are an investment in the future of ordinary Americans.

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