Bush defends tax cuts plan to `avert downturn'

 

US President-elect George W. Bush defended his proposals for sweeping tax cuts yesterday in spite of Congressional opposition, arguing that his economic package was vital to avert "a potential economic downturn".

During his first trip to Washington since securing his election victory, Mr Bush dismissed speculation that he would quietly abandon or radically reshape his $1,300 billion (€1,456 billion) plans for across-the-board tax cuts.

Standing alongside Congressional leaders who have expressed doubts about his tax cuts in recent days, Mr Bush said: "I campaigned and say things because I believe them. I believe it's essential for our country to make the code more fair."

Mr Bush said he wanted to cut marginal rates of taxation, particularly for low-income taxpayers, in order to "help spur economic activity and economic growth".

"I talked about marginal rate reduction to serve as an insurance policy against a potential economic downturn . . . I was saying that a year ago. The potential economic downturn is perhaps more real today than it was a year ago."

Earlier, Mr Bush and his economic advisers met Mr Alan Greenspan, chairman of the Federal Reserve. Mr Bush said he talked at length with the Fed chairman about energy policy, including energy shortages and conservation issues. Describing Mr Greenspan as "a good man", he said: "We had a very strong discussion about my confidence in his abilities."

Mr Greenspan was the President-elect's first meeting in Washington, underlining how keen the new administration is to build bridges with the Fed chairman. Mr Greenspan has signalled a preference for spending the federal budget surplus on reducing the national debt rather than tax cuts. He also has a history of a strained relationship with the Bush family, having been criticised by Mr Bush's father, former President Bush, for failing to act rapidly enough to end the recession before his 1992 election defeat.

Mr Bush later began interviewing potential cabinet appointments, including candidates for Treasury Secretary. Mr Bush's aides said that the President-elect lunched with Mr Paul O'Neill, chairman of Alcoa, whom they suggested was a leading candidate for the Treasury position.

Mr O'Neill was deputy director of the Office of Management and Budget in the Ford administration, and formerly president of International Paper. He holds an economics degree from Fresno State College in California and a masters degree in public administration from Indiana University. However, he is perhaps best known for his role as chairman of Rand, the public policy think-tank, where he took a strong interest in education issues, the first legislative priority for the incoming Bush administration.

Other candidates for Treasury Secretary include Mr William McDonough, president of the New York Fed, and Mr John Hennessy, former chief executive of Credit Suisse First Boston. Mr Bush also met privately Mr Dan Coats, the former Indiana senator, who is tipped to head the Pentagon.