(COMTEX)     A: Greenspan Gives Backing to Tax Cuts
A: Greenspan Gives Backing to Tax Cuts
 
 WASHINGTON (Jan. 25) XINHUA - U.S. Federal Reserve Chairman Alan Greenspan
said Thursday the weakening U.S. economy could benefit from tax cuts, giving a
critical support for President George Bush's efforts to reduce taxes.
 
"Should current economic weakness spread beyond what now appears likely, having
a tax cut in place may, in fact, do noticeable good," Greenspan said in a
testimony before the Senate Budget Committee.
 
Greenspan said that rising estimates of budget surpluses make room for a tax
cut.
 
"The sequence of upward revisions to the budget surplus projections for several
years now has reshaped the choices and opportunities before us," he said.
 
However, Greenspan said he still believes debt reduction is the best use for the
added revenue and suggested that Congress should consider some type of trigger
that would trim government spending or tax cuts if the budget surpluses aren't
as large as currently estimated. He also suggested any tax cuts or spending
increases be phased in.
 
Bush is advocating a 1.6-trillion-U.S.-dollar tax cut over 10 years, a level
that critics fear could eat into the surplus and hamper efforts to reduce the
federal debt.
 
Analysts said Greenspan's endorsement of the economic soundness of cutting taxes
represented a significant victory for the new administration.
 
Worried that the economy is slowing too quickly and could slip into a recession,
the Federal Reserve on January 3 unexpectedly slashed short-term interest rates
by half of a percentage point. Many analysts believe the Fed will cut interest
rates by a quarter or a half of a percentage points when it meets next Tuesday
and Wednesday.
 
 
 
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