Snow says new Bush budget will impose tight spending controls and require sacrifice |

Snow says new Bush budget will impose tight spending controls and require sacrifice

WASHINGTON – President Bush’s new budget will call for sacrifices as a way to meet his goal of cutting the budget deficit in half by 2009, Treasury Secretary John Snow said Tuesday.Snow said every government agency would be asked to help reduce the growth of government spending in the budget proposal that Bush will submit to Congress in early February.The spending blueprint for the budget year that begins Oct. 1 will contain “good, tight spending controls” that will “call for sacrifices, no doubt about it,” Snow said in an interview with a small group of reporters.The new budget is being written to accomplish Bush’s 2004 campaign goal of cutting the deficit in half by 2009, Snow said.”The president has made clear that he expects every department to make its contribution to achieving these results, which means stringent budgets,” Snow said.When the 2004 deficit was initially projected to be $521 billion, the administration pledged to cut it in half – meaning the 2009 deficit would have to be $260.5 billion or less. The administration has also said the deficit as a percentage of the total economy will also be cut in half, an easier goal to meet since the economy grows every year.The 2004 deficit did not hit the administration’s initial projection but did set a record in dollar terms of $413 billion. The deficit for 2005 declined to $319 billion, still the third largest on record.Many economists are forecasting the deficit for this year will come in over $400 billion, reflecting increased spending to rebuild the hurricane-ravaged Gulf Coast.The administration is emphasizing its deficit-cutting efforts in part to deflect criticism from Democrats that deficits have exploded because of sweeping tax cuts Bush got through Congress during his first term.That argument is expected to intensify in coming weeks as the administration seeks passage of legislation to raise the national debt limit. Snow has said the government’s borrowing needs will probably bump up against the current limit of $8.184 trillion as early as mid-February.In the interview, Snow said his top priority this year was making sure that Congress does not undo Bush’s tax cuts, either by passing tax increases or allowing the current tax cuts to expire.Snow refused to directly answer questions about the possible resurrection of the administration’s top priority from 2005, reform of the Social Security system.Bush’s proposal to set up private accounts for younger workers went nowhere in Congress last year and experts don’t expect it will be addressed in 2006, a congressional election year.”Whether we will see legislative movement in ’06, ’07 or ’08, I am not in a position to predict,” Snow said. He said the administration will continue lobbying for its proposal.The administration is expected to delay another priority – overhauling the tax code to make it simpler and fairer – until 2007.Snow’s Treasury Department is currently reviewing recommendations from a tax advisory panel appointed by the president, but Snow said he had no timetable for when he will make recommendations to the president.He noted that the last major reforms of the tax system occurred in 1986, with the previous major reform occurring 20 years before that.”If you only get a chance to do it every 20 years, you have to do it right,” he said.In a wide-ranging interview, Snow:-Expressed no concern about the possibility China will diversify part of its vast foreign exchange holdings from U.S. Treasury bonds to the debt of other countries. He said the U.S. bond market and the stock market dwarfed the size of other markets and would continue to attract foreign investment.-Said any decline in housing prices would probably be moderate and not severe enough to derail what he expects will be solid economic growth of around 3.5 percent this year.-Said the administration would continue to work for passage of legislation to beef up regulation of mortgage giants Fannie Mae and Freddie Mac and would keep working to get pension reform through Congress.Vail, Colorado

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