U.S. Treasury Secretary John Snow Tuesday defended the administration's request to Congress for $75 billion in additional cash to finance the war in Iraq. Mr. Snow spoke at a Washington meeting of corporate economists.
Mr. Snow said still more supplementary budget requests for war-related costs could be forthcoming. This $75 billion of extra spending will go for several defense-related purposes.
"The monies will go to support our forces in Iraq and provide humanitarian aid and assistance in relief to the people of Iraq," he said. "And to help defend our homeland against the threats we face."
Mr. Snow minimized the budgetary impact of the additional spending. The U.S. budget has recently shifted into substantial deficit after several years of surpluses.
The outlook for the U.S. economy is mixed, with much depending on the price of oil. Crude oil is down 25 percent over the past two weeks and dropped further Tuesday on news that the southern Iraqi oil fields have not been substantially damaged.
Diane Swonk, chief economist at Bank One in Chicago, believes the economy is likely to grow at a three percent pace for the rest of the year.
"I think the economy will rebound," she said. "Certainly Iraq is not the only problem but it has certainly created paralysis and there are real problems created by higher oil prices. So, as we get through this situation, with the war lasting less than the five weeks of 1991or somewhere in that range, even as bloody as it may be, the economic fundamentals are very positive to have a rebounding growth above three percent."
The stock market has rallied sharply over the past two weeks while at the same time oil prices fell and the dollar rebounded against the yen and euro.