Long-term view is necessary as budget review for FY 2007 begins
Washington, DC â?? Today the Senate Budget Committee held its first in a series of hearings to kick off the Fiscal Year (FY) 2007 budget process. Idaho Senator Mike Crapo, a member of the Senate Budget Committee, questioned the Acting Director of the Congressional Budget Office (CBO) about the budget and the economic outlook for the country.â??Our country faces significant budget challenges, and the Budget Committee has a tremendous responsibility to tackle this,â?? Crapo said. â??We must take a long-term view of the proposals that will come before the Committee in the budget season and recognize that short-term fixes will not provide stability and security for many worthy government-funded programs. â??There is a strong case to extend tax relief, especially capital gains and dividends. I have long held that tax reductions result in economic growth and figures from recent CBO reports prove that the 2003 tax cut really paid for itself. CBO originally estimated capital gains revenues would total $125 billion in 2004 and 2005, with a $27 billion drop in capital gains revenue due to the tax cut. However, the actual receipts were close to $30 billion more, not less. That means that instead of a drop in revenue as projected by CBO, there was actually an increase. This is undoubtedly the result of more investment, more job creation, more economic growth, and therefore higher tax receipts. â??Congress also must address entitlement spending. The pressures that will soon face Medicare, Medicaid, and Social Security as the Baby Boom generation begins to retire may overwhelm the resources available. The financial future of our country and the stability of our economy for future generations depend on Congressâ?? willingness to confront these challenges. It will not serve our country well to only give lip service to budget deficit reduction. â??With yesterdayâ??s final vote in the House, we have taken a modest first step in slowing the rapid growth in mandatory spending. Next week, the President will deliver his budget proposal for Fiscal Year 2007 and I look forward to working with like-minded Senators as we take further steps to enact pro-growth tax policy and continue to control the explosive growth of mandatory spending.â??