President Bush says his economic policies are shrinking the U.S. budget deficit. VOA White House Correspondent Scott Stearns has the story.

President Bush (r) and Treasury Secretary Henry Paulson, 11 Oct 2007

President Bush closed a meeting of his economic team by heralding new government figures that show a projected budget deficit of $244 billion turned out to be $163 billion.

"In other words, as a result of the hard work of the American people, this economy is growing; the growing economy has yielded more tax revenues than anticipated," he said. "And because of fiscal restraint, those tax revenues went to reduce our deficit."

White House officials say by keeping taxes low and working with Congress to set fiscally-responsible priorities, America's budget should return to balance by 2012.

The opposition-led legislature has proposed a higher cigarette tax to fund broader children's health insurance coverage. Mr. Bush vetoed that measure because he opposed the tax increase and says the plan would move more people from private insurance to government-run programs.