WASHINGTON, (Reuters):
UNITED STATES President George W. Bush, under fire from Democrats for his economic stewardship, acknowledged yesterday that his tax cuts were partly to blame for record budget deficits.
"I made the decision to address the recession by a tax cut. And so part of the deficit, no question, was caused by taxes," he said at a news conference.
But Bush said his tax cuts have positioned the US economy for a pickup in growth, although he played down the chances of a swift rebound in job creation.
He said his administration has plans to cut the budget deficit in half over the next five years.
"That's good progress toward deficit reduction, that's assuming Congress holds the line on spending," he said.
TAX RESPONSIBLE FOR BUDGET SURPLUSES
Democrats, who want to unseat Bush in the 2004 presidential election, say his tax cuts were responsible for turning record budget surpluses into record deficits.
Bush may be especially vulnerable to attack for his handling of the economy and the failure of his tax cuts, thus far, to spark a broad-based recovery.
Public opinion polls show Americans are concerned about the weak job market and question Bush's policies.
Record budget deficits have yet, however, to become a major political issue outside of Washington.
"We're beginning to see hopeful signs of faster growth in the economy, which over time will yield new jobs. But the unemployment rate is still too high," Bush said.
DEFICITS EXPECTED TO BALLOON
He defended mounting budget deficits, expected to balloon to a record $455 billion this fiscal year and to US$475 billion in 2004, even without factoring in the mounting cost of the US occupation of Iraq.
"We would have had deficits with or without tax cuts for this reason: the slowdown in the economy, the decline in the stock market starting March of 2000, plus the recession, reduced the amount of revenues coming into the federal Treasury," Bush said.
"I had a policy decision to make, and I made the decision to address the recession by a tax cut," he added.
Bush said about 25 per cent of the deficit was attributable to the tax cuts, while the rest was due to lost revenues and spending on the war on terrorism.
According to the White House budget office, even without Bush's tax cuts, the deficit this year would have been projected at US$278 billion, as compared to US$455 billion.
Three of Bush's top advisers Treasury Secretary, John Snow, Commerce Secretary, Don Evans and Labour Secretary, Elaine Chao are touring two states by bus to promote the president's tax cuts, including his latest US$350 billion package.
They have been trailed by a small group of protesters, waving signs condemning the loss of jobs since the Bush administration took office in January 2001.
