Yesterday the President unveiled his budget for FY ’07. Among other aspects, he proposed making his existing tax cuts permanent. A few years back, we said that tax cuts would spur investment and investment would spur recovery. In short, we were right. We had an unfair advantage, though — we were peeking at the cards, knew what had happened in the past.
In fact, tax receipts in 2005 soared by almost 15% or over $270 billion dollars. That’s still a lot of money to us. It was also the largest increase in tax receipts in almost a quarter century. Manufacturing production has risen by about 5% in the two years plus since the tax cuts, with business equipment spending (including software) rising over 10%.
In any event, you’ll read all the stories today about how the budget “slashes” this and “cuts” that pet program. It is a favorite parlor game of the mainstream media when the rate of growth is slowed (as with Medicare in the President’s budget) to cry “slash” and “cut”. See, anything less than a meteoric rise in spending equals a “slash” in Washington parlance. Gotta get with the lingo. In this budget, domestic spending on non-security items will be slashed by a whopping .5%. Note the “.” before the 5. That would be one-half of one percent. Horrors! Think you can find a half of one percent worth of fat in the federal budget? Every US manufacturer could find it, that’s for sure. Will consult for free.
For our money, we’re glad the Administration is putting money into innovation, the life’s blood of manufacturing. In keeping with his “American Competitiveness Initiative” proposed in the State of the Union address, the President has proposed increase spending for math and science teachers and research and technological innovation.
We’re still wading through the budget, but here’s a link to our press release applauding its apparent emphasis on competitiveness and innovation. As for the slashing and cutting, beware the hysteria. The screams you hear are of the various (fat) oxen being gored.
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