O'Neill Says Economy Near Zero Growth
WASHINGTON (Reuters) - U.S. Treasury Secretary Paul O'Neill said on Thursday that he agrees with Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites)'s recent assessment that the U.S. economy is close to a zero rate of growth.
But he was upbeat about the future, saying the technology revolution would lead to more money in government coffers than is currently forecast and that the U.S. economy stands on the threshold of a ``golden era'' of prosperity.
``At the moment, I agree with Alan Greenspan. I've looked at the data with Alan and I think we're hovering around the zero rate of growth, I would say someplace between minus 0.5 and plus 0.5, in that range,'' O'Neill told the PBS television show Newshour with Jim Lehrer.
He has made the rounds of television networks this week as he and President George W. Bush (news - web sites) push the $1.6 trillion tax cut package.
He said that while tax cuts will help sentiment and could keep the economy from sliding too sharply, the economic slowdown was not the principal reason behind Bush's tax cut package, which was conceived during the boom.
Bush sent his tax proposal to Congress on Thursday, after several days of press conferences to tout the package's benefits to families and small business. O'Neill went to Wall Street on Wednesday for the same purpose, and he told Newshour that he met with a consensus of ``concern'' about the economy.
Now that the economy has slowed, a tax cut makes sense as an insurance policy and it would be ``intelligent'' to make the cut retroactive to January 1, 2001, O'Neill said.
``One of the reasons to move forward quickly with the president's tax proposal, it sends a signal to the people out there that help is coming in the form of tangible money that you can use for whatever you decide to spend it for,'' he said.
He reiterated Bush's conviction that $1.6 trillion is the ''Goldilocks'' amount -- not too much and not too little.
O'Neill said he believed Democrats were coming around to the idea of tax relief, and that it was just a question of negotiating the composition of a package and its size.
While the Federal Reserve and Greenspan could help the economy through lower rates, the central bank did not have the ability to directly put money into consumer hands, he added.
``At the end of the day it's up to the Congress now to act on the president's proposal to get money into the hands of real Americans,'' O'Neill said.
Nor will the government's coffers be emptied by the tax reduction scheme.
``I believe we have only realized maybe 20 percent of the technology-led revolutionary productivity that we've seen in the last five years,'' O'Neill said.
``So I think we have this prospect out in front of us of a period of prosperity that's unprecedented in the world and is going to throw off a lot more money than what we're currently estimating,'' he added.
Last month, the Congressional Budget Office (news - web sites) predicted the total 10-year U.S. budget surplus would be $5.6 trillion.
The economy may be impacted along the way by occasional ''overreaching'' by the economy and sometimes developments in other countries will weigh on the United States, O'Neill said.
``But I really do believe that we have in front of us a continuation of what we've had, the beginning of a golden era of economic prosperity,'' he said. |
