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Tax Cuts Will Stimulate US Economy, says Treasury Secretary - 2003-05-11

President Bush divides his time between domestic and foreign policy matters this week. He will spend Monday and Tuesday on the road, pushing the U.S. Congress to pass his plan for massive tax cuts.

The president said cutting taxes is the best way to give the American economy the boost it so desperately needs.

It is the top issue these days on the Congressional agenda, and could play a key role in next year's presidential election campaign. Aware that a weak economy could hurt his chances at the polls, the president is traveling the country, urging Americans to back his economic policy.

A sign of the importance of the tax debate came on American television. For the first time in weeks, the topic dominating the Sunday interview programs was not Iraq, but the status of the U.S. economy.

Instead of the secretary of state or defense, it was the new secretary of the treasury who gave one interview after another. During an appearance on NBC's Meet the Press, John Snow defended the president's tax cut proposal. He said the economy is recovering but not fast enough.

"It is not a robust recovery. It is sort of a weak - 'soggy' is a word I sometimes use - recovery. Growth rates last quarter were 1.6 percent. We should be growing at 3.5 to 4 percent. So we are under-performing," Mr. Snow said.

He said a big tax cut will put more money in the hands of consumers, money they will in turn use to buy goods and services.

"And that leads to businesses going out and hiring additional workers and putting in additional equipment. As they do that, some other business benefits. That business makes additional investments and hires additional people," Mr. Snow said.

Mr. Snow speaks of a ripple effect that creates many new jobs. But Democrats said the last time the president got a tax cut, the unemployment rate ultimately went up. They also point to big increases in the budget deficit and the national debt, saying the nation cannot afford a loss in revenue at a time when it has so many obligations from national security to health care for the elderly.

Senate Democratic Party leader Tom Daschle told Meet the Press there is good reason to be skeptical. "We support a tax cut. But not when you are going to build the debt to the extent this administration has proposed," Mr. Daschle said.

President Bush originally proposed about $726 billion in tax cuts. The House of Representatives has approved $550 billion, a compromise, which the White House considers acceptable. But the figures being discussed in the Senate are much lower, about half of the president's request.

The Bush administration is trying to pull in support from two small, but crucial groups of lawmakers: Republicans concerned about the deficit, and conservative Democrats who supported an earlier round of Bush tax cuts.

Louisiana Senator Mary Landreu is one of those Democrats. She told ABC's This Week that she gave the administration the benefit of the doubt in 2001, but now believes the president's tax policy is flawed.

"We want to have a tax cut that is fair to everyone, that is in partnership with states to keep their tax burden low, and invests in the long term growth of this country," Mr. Landreu said.

The Senate is expected to complete work on a tax cut package in the next week or so. The bill will have to be reconciled with the measure passed by the House of Representatives. The Bush administration hopes the higher House figure will prevail.