White House to push permanent tax cuts

By Martin Crutsinger
The Associated Press

	John Snow
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Snow warned that Congress would threaten the economic recovery if it rolled back the administration's tax cuts, something that President Bush'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 told the U.S. Chamber of Commerce.

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 also weighed in on the budget debate, with its economists issuing a new report warning that the exploding U.S. deficits 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.

Snow argued that the tax cuts had been a major force lifting the economy out of a recession and a prolonged period of sluggishness. He said a Treasury Department analysis showed that without the tax cuts, the unemployment rate — now 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.

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. However 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.

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