|Washington, D.C. – U.S. Senator Mike Enzi, R-Wyo., believes elements of President Bush's job/economic growth package should help improve the economy. Enzi is also working on a mechanism to allow the Senate Agriculture Committee to provide emergency drought assistance.
Enzi made his comments at a Senate Budget Committee business meeting today, part of which he chaired. He and other members of the Senate Budget Committee have been writing the nation's budget plan over the past few weeks and their work will come together today and tomorrow as the committee votes on amendments to the budget resolution. The committee is expected to pass a resolution tomorrow that will be debated before the full Senate in the coming weeks.
The $2 trillion federal budget sets taxing and spending parameters and provides a blueprint for Congress as it crafts legislation in the coming year.
"I believe the President's proposal is the most effective engine for spurring growth and getting the economy back to where it was before the recession that started three years ago," said Enzi. "It will aid the people and businesses who make up our economic machine and get it moving down the tracks at full speed again."
Enzi said the answer to improving the economy is not through increased spending on government programs, but through growing tax revenue from the private sector.
"This does not mean we have to decrease spending for critical programs in order to spur investment, but instead we must hold our spending in check, and then increase revenue by creating an environment that allows businesses to grow and subsequently pay more into the federal pot," said Enzi.
Enzi, also a member of the Senate Foreign Relations Committee and a western senator, said other budget issues he will focus on include the foreign affairs budget and drought assistance.
"An important issue to many senators from rural states is the issue of drought assistance. I have been working with my colleagues on the Budget Committee to include a provision that would allow the Agriculture Committee to provide emergency and disaster assistance for drought relief to livestock and agriculture producers on a deficit-neutral basis," said Enzi.
Enzi said it's important for people who want to know where their federal tax dollars are going to understand a little bit about the federal budget process and the differences between a budget, funding authorization and actual appropriations.
"Many people have a misunderstanding of what the budget does. It is the roadmap, the blueprint of all federal spending. It outlines the general spending categories and amounts. During the authorization stage the committees of jurisdiction in particular areas authorize specific programs. Only during the appropriations stage are actual dollars allocated to specific programs."
Enzi's statement from the Budget Committee meeting is included below.
While I believe the President has proposed an aggressive budget that will help us meet the challenges of 2004, I am particularly appreciative of the hard work of this committee and Chairman Nickles in developing a fiscally responsible and realistic budget.
The resolution as introduced today will not only enable us to win the war on terrorism, secure the homeland, and generate long-term economic growth, but it will also provide critical funding for America's children and our national transportation system.
As a new member of the Budget Committee, this is my first opportunity to work on the federal budget in depth. The night the President's Budget was released, I read the entire thing from front to back. Since then, I have studied the summary tables for each of the budget functions and have worked through the costs and benefits of the President's economic growth and development plan. As an accountant and businessman, I believe I have a unique understanding of the President's growth package and the budget, and I strongly urge my colleagues to pass the resolution as introduced by the Chairman.
I would like to speak specifically about the President's economic and growth package for a moment. I have taken the last several weeks to closely analyze the President's Economic Growth and Jobs Plan, because I think we must ensure that each initiative will act as a stimulus and not just another expenditure.
While I have a degree in accounting, you don't need to be an accountant to know that we cannot spend our way out of debt. Accounting does not work that way. We either have to increase revenue or decrease spending in order to balance the budget in the coming years.
Unfortunately, while the federal government's accounting offices are good at estimating expenditures, they are not very good at estimating projected revenues. The static numbers provided by the Congressional Budget Office do not take into account the long-term positive effects the President's growth package would have on the economy. I believe this erroneously skews the debate. Positive results should be reflected right along with negative results, and increased revenues should be taken into account when making decisions about an economic growth package.
The answer to improving our economy is not through increased spending on government programs, but through growing our tax revenue from the private sector. As we know from past economic reports, dollars invested by private companies tend to circulate through the private sector nearly twice as much as those spent by the government on domestic programs.
For example, when one business buys something, the business that sold it to them receives the money, the business that sold it to them turns it around and spends it at another company, who takes it and spends it at another company who spends it. The result is efficient use of capital.
This does not mean we have to decrease spending for critical programs in order to spur investment. Instead, I believe we must hold our spending in check, and then increase revenue by creating an environment that allows businesses to grow and subsequently pay more into the federal pot. We need to grow the economy back to where it was before the recession that started three years ago and before Sept. 11 and then grow it beyond.
I believe the President's proposal is the most effective engine for spurring that growth. We need to aid the people and businesses who make up our economic machine and get it moving down the tracks at full speed again.
The President's economic growth package makes sense. Eliminating the double taxation on dividend income is fair and right. Income should not be taxed twice. The proposal will eliminate the current tax bias against equity investment, and because a little more than 50 percent of American households own equities - it will benefit a wide range of income levels. Further, eliminating the double taxation may encourage investors to reward companies that pay out a healthy dividend, not just by purchasing their stock, but by purchasing the stock at a higher multiple of corporate earnings.
The President's proposal to accelerate the 2001 tax cuts will put money back into the hands of hardworking taxpayers. I believe the most important acceleration would be the reduction in the highest tax rate because sole proprietorships, partnerships and sub-chapter S corporations are taxed at this level. As some of you know, I owned a shoe store in Gillette, Wyoming and our store's income was taxed at the individual rate. Simply put, the more money I was required to pay in taxes, the less money I had to invest in inventory, to maintain my building, and more importantly, to hire more people to take care of the customers.
As such, I think reducing this tax burden on small businesses will be the most effective growth mechanism. I also applaud the President's efforts to encourage long-term economic growth through higher expensing caps for small businesses expenditures.
In closing, I would briefly like to mention two other budget issues on which I will be focused now and in the future. First, an important issue to many senators from rural states is the issue of drought assistance. I have been working with my colleagues on the Budget Committee to include a provision that would allow the Agriculture Committee to provide emergency and disaster assistance for drought relief to livestock and agriculture producers on a deficit-neutral basis. I thank Chairman Nickles for working with me on this, and hope it stays in tact through the entire budget process.
Second, I would like to raise an issue related to the Foreign Affairs budget and the overall tax package. I am one of the Congressional Delegates to the United Nations, and I have seen first hand that the United Nations Secretariat building in New York is in dire need of repair.
The safety of each and every employee and diplomat is threatened by the current conditions of the site. The United States ensures the safety of domestic employees through the Occupational Safety and Health Administration but the UN building couldn't pass a basic OSHA inspection. UN employees are Americans, Indonesians, Brazilians, Egyptians, Kenyans, Russians - citizens from every nation in the UN.
The Secretariat building is a truly international community and the entire community is at risk. While this is an issue that will need to be taken up with the Finance Committee as they begin debating the tax bill, I would encourage my colleagues to recognize the immediate need to improve the safety and security of the diplomats who serve the UN in New York.
With that, I thank you the opportunity to serve on the Budget Committee and look forward to further discussion.