Tax Cuts Help The Economy
The booming economy is bad news, writes Alison Fraser of the Roe Institute for Economic Policy Studies at the Heritage Foundation...

Bad news, that is, for those who have continued to insist, in the face of mounting evidence to the contrary, that the tax cuts approved earlier this year aren't working. The critics are running out of negative spin.

For example, when the news came last month that economic growth in the third quarter of the year had surged to 8.2 percent - the best growth we've seen in nearly 20 years - they had a ready retort: It's a "jobless recovery."

Not anymore. Are we where we should be? No. But we're moving there at a remarkable pace. More jobs are available, and fewer people are in the unemployment lines. And the evidence indicates that this crop of good news promises solid economic growth throughout next year and likely the year after that. The recession is finally behind us. And now, fortunately, so is the slow growth that has marked the recent recovery.

Job growth has increased over the last four months, and we've added 328,000 new jobs to the economy. In related good news, the unemployment rate has slipped to 5.9 percent, erasing the poor performance of the last year.

What's significant about these figures is their signal that the economy is not merely poised for recovery, but in the midst of it. Job growth is usually the last patch in the economic recovery quilt. These patches now all appear to be in place. With few exceptions, economic indicators are up across the board.

Indeed, the stellar growth of last quarter outpaced the expectations of even the most optimistic forecasters. Three sources of growth in particular show why the recovery is structurally sound and why we can expect continued growth.

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Many factors are involved, of course, but critics cannot ignore the fact that the tax cuts are working. They built a foundation for bringing the recovery full swing by providing incentives for businesses to expand and invest. Tax relief has lowered the cost of capital and made existing enterprises more profitable and investment and expansion more attractive.

The Bush Boom gains momentum... I'd blame tax cuts, but Fraser already did.