Snow: Rebounding Economy Expected to Help Cut Federal Deficit in Half (?) [View All]

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Snow: Rebounding Economy Expected to Help Cut Federal Deficit in Half Within Five Years
By Martin Crutsinger
The Associated Press

WASHINGTON (AP) - While concerned about soaring budget deficits, the Bush administration is confident that a rebounding economy will help cut the deficit in half within five years, Treasury Secretary John Snow said Wednesday. <snip>

Snow said that instead of rolling back the tax reductions, which Democrats contend have gone overwhelmingly to the wealthy, they should be made permanent. He said if the 2001 and 2003 tax cut bills had not been passed, 109 million taxpayers would face tax bills this April 15 that would be on average $1,544 higher.

"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 prepared remarks to the U.S. Chamber of Commerce.

Snow said that the federal government does face a deficit "in the $500 billion range" in the current fiscal year, which would be a record in dollar terms. However, Snow said this deficit will represent roughly 4.5 percent of the total economy, as measured by the gross domestic product, compared with a modern-day peak of 6 percent set in the 1980s when Ronald Reagan was president.
He said the $500 billion deficit "is not historically out of range and it is entirely manageable." <snip>

In the new budget the president will send Congress on Feb. 2, the administration is expected to propose limiting the growth of discretionary programs to 4 percent, perhaps excluding defense and domestic security.



<snip>But conservatives have complained about the 31.5 percent growth in discretionary spending since Bush took office. That is the one-third of the budget lawmakers approve annually for defense, domestic security, school aid and everything else except Social Security and other benefits. Such spending grew by an annual average of 3.4 percent during the Clinton administration's eight years in office. <snip>