Sec. 803. Policy statement on economic growth and job creation
751 words·~3 min read·
/bill/114/hconres/27/eh/section-803·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
The House finds the following: Although the United States economy technically emerged from recession more than 5 years ago, the subsequent recovery has felt more like a malaise than a rebound. Real gross domestic product GDP growth over the past 5 years has averaged slightly more than 2 percent, well below the 3.2 percent historical trend rate of growth in the United States. Although the economy has shown some welcome signs of improvement of late, the Nation remains in the midst of the weakest economic recovery of the modern era.
Looking ahead, CBO expects the economy to grow by an average of just 2.3 percent over the next 10 years. That level of economic growth is simply unacceptable and insufficient to expand opportunities and the incomes of millions of middle-income Americans. Sluggish economic growth has also contributed to the country's fiscal woes. Subpar growth means that revenue levels are lower than they would otherwise be while government spending (e.g. welfare and income-support programs) is higher.
Clearly, there is a dire need for policies that will spark higher rates of economic growth and greater, higher-quality job opportunities. Although job gains have been trending up of late, other aspects of the labor market remain weak. The labor force participation rate, for instance, is hovering just under 63 percent, close to the lowest level since 1978. Long-term unemployment also remains a problem. Of the roughly 8.7 million people who are currently unemployed, 2.7 million (more than 30 percent) have been unemployed for more than 6 months.
Long-term unemployment erodes an individual's job skills and detaches them from job opportunities. It also undermines the long-term productive capacity of the economy. Perhaps most important, wage gains and income growth have been subpar for middle-class Americans. Average hourly earnings of private-sector workers have increased by just 1.6 percent over the past year. Prior to the recession, average hourly earnings were tracking close to 4 percent. Likewise, average income levels have remained flat in recent years.
Real median household income is just under $52,000, one of the lowest levels since 1995. The unsustainable fiscal trajectory has cast a shadow on the country’s economic outlook. investors and businesses make decisions on a forward-looking basis. they know that today’s large debt levels are simply tomorrow's tax hikes, interest rate increases, or inflation and they act accordingly. This debt overhang, and the uncertainty it generates, can weigh on growth, investment, and job creation.
Nearly all economists, including those at the CBO, conclude that reducing budget deficits (thereby bending the curve on debt levels is a net positive for economic growth over time. The logic is that deficit reduction creates long-term economic benefits because it increases the pool of national savings and boosts investment, thereby raising economic growth and job creation. CBO analyzed the House Republican fiscal year 2016 budget resolution and found it would increase real output per capita (a proxy for a country’s standard of living) by about $1,000 in 2025 and roughly $5,000 by 2040 relative to the baseline path.
That means more income and greater prosperity for all Americans. In contrast, if the Government remains on the current fiscal path, future generations will face ever-higher debt service costs, a decline in national savings, and a crowding out of private investment. This dynamic will eventually lead to a decline in economic output and a diminution in our country's standard of living. The key economic challenge is determining how to expand the economic pie, not how best to divide up and re-distribute a shrinking pie.
A stronger economy is vital to lowering deficit levels and eventually balancing the budget. According to CBO, if annual real GDP growth is just 0.1 percentage point higher over the budget window, deficits would be reduced by $326 billion. This budget resolution therefore embraces pro-growth policies, such as fundamental tax reform, that will help foster a stronger economy, greater opportunities and more job creation. It is the policy of this resolution to promote faster economic growth and job creation.
By putting the budget on a sustainable path, this resolution ends the debt-fueled uncertainty holding back job creators. Reforms to the tax code will put American businesses and workers in a better position to compete and thrive in the 21st century global economy. This resolution targets the regulatory red tape and cronyism that stack the deck in favor of special interests. All of the reforms in this resolution serve as means to the larger end of helping the economy grow and expanding opportunity for all Americans.