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Politics : THE VAST RIGHT WING CONSPIRACY -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (5311)	1/7/2004 11:05:07 PM
From: calgal	Respond to of 6358

Snow: Economy Will Help Slash Deficit Wed Jan 7, 6:43 PM ET Add White House - AP Cabinet & State to My Yahoo! By MARTIN CRUTSINGER, AP Economics Writer WASHINGTON - The Bush administration is committed to making its tax cuts permanent at the same time it intends to cut the budget deficit in half within five years, Treasury Secretary John Snow said Wednesday. AP Photo Snow: Economy Will Help Slash Deficit (AP Video) Snow warned that Congress would threaten the economic recovery if it rolled back the administration's tax cuts, something that President Bush (news - web sites)'s Democratic opponents are urging because of the exploding budget deficit. Instead, Snow said, the administration would focus on getting Congress to make the tax cuts permanent, saying this would be at the "very center" of the administration's fiscal policy in the coming budget. "Let me be perfectly clear: Failure to make the tax relief permanent would be a huge mistake and would put our recovery in jeopardy," Snow said in an appearance at the U.S. Chamber of Commerce (news - web sites). Snow's comments were immediately challenged by Democrats, who accused the administration of continuing policies of showering the rich with massive tax cuts that will jeopardize the government's ability to honor commitments to 77 million baby boomers who will begin retiring early in the next decade. The International Monetary Fund (news - web sites) also weighed in on the budget debate Wednesday, with its economists issuing a new report warning that the exploding U.S. deficits, if not dealt with, could threaten the global economy through a sharp plunge in the value of the dollar and higher interest rates both in this country and around the world. The IMF report also challenged the administration's basic tenet that the deficit can be dealt with by a rebounding economy generating higher revenues and stronger efforts to curb government spending. "Given the magnitude of this adjustment (needed to get the budget back to balance), it would seem likely that both revenue measures and sustained spending restraints would be needed," the IMF economists said in a report entitled, "U.S. Fiscal Policies and Priorities for Long-Run Sustainability." In his speech, Snow argued that the tax cuts had been a major force lifting the U.S. economy out of a recession and a prolonged period of sluggish growth. Snow said a Treasury Department (news - web sites) analysis showed that without the tax cuts the unemployment rate, currently 5.9 percent, would be a full percentage point higher and as many as 1.5 million Americans would not now have jobs. But Democrats argued that even if the recent positive job growth continues through next November, Bush will not have made up all the jobs lost in the first three years of his administration, giving him the worst job creation record of any president since Herbert Hoover. "Secretary Snow can divide and multiply his tax cut arguments anyway he wants, but one fact will remain unchanged: fewer people will have jobs come November of this year than had them when President Bush took office," said Rep. George Miller, D-Calif. Rep. John Spratt, the top Democrat on the House Budget Committee, said the administration's huge deficits "will stifle future job growth and burden our children and grandchildren with debt." Snow said the federal government faces a deficit "in the $500 billion range" in the current fiscal year, which would be a record in dollar terms although at 4.5 percent of the total economy , as measured by the gross domestic product, the deficit would be smaller than the 6 percent high hit in the 1980s. While arguing that the deficit "is entirely manageable," Snow said the administration intended to reduce it by working with Congress to impose spending restraint. "With adoption of the president's policies, our projections show a solid path toward cutting the deficit in half, toward a size that is below 2 percent of GDP (news - web sites), within the next five years," Snow said. Cutting this year's expected $500 billion deficit in half in dollar terms would mean a reduction to a deficit of $250 billion. However, achieving a deficit equal to around 2 percent of GDP, given that the economy is growing, would allow the red ink to total $300 billion or more, meaning less in spending cuts. The IMF report said deficits at 2 percent of GDP would still be too large given the looming retirement of the baby boomers and the demands they will make on government benefit programs. Associated Press reporter Alan Fram contributed to this report. URL:http://story.news.yahoo.com/news?tmpl=story&cid=542&ncid=703...