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Jobs Deficit the Top Priority, Snow Says

May 12, 2003|Peter G. Gosselin | Times Staff Writer

WASHINGTON — Warning that the U.S. economy is stuck in a "soggy" recovery, Treasury Secretary John W. Snow on Sunday brushed aside deficit worries and called on Congress to approve President Bush's tax-cutting "jobs and growth" plan -- or something close to it.

Appearing on four television talk shows during the day, Snow asserted that the biggest economic problem facing the country is a "jobs deficit."

"We need to get our priorities right. The [fiscal] deficit we have is manageable," he told NBC News' "Meet the Press." "The real problem the economy faces today is jobs and growth," he said.

Snow's comments came as administration officials, including Bush, prepared for a second week of campaign-style appearances to boost public support for a third round of tax cuts in as many years and the Senate planned to vote on a slimmed-down version of the president's package.

Snow dismissed or discounted a string of recent developments on the federal budget front in pushing for the administration proposal.

He asserted that there is little connection between rising deficits and the fact that Washington must rush to raise its debt ceiling, now $6.4 trillion, by the end of the month or risk being unable to borrow more.

"The two are really different. The debt ceiling ... [is] the product of prior decisions, years ago really, on the part of Congress," he said on NBC. "What we need now, though ... is a major tax relief program to create jobs and growth."

Most analysts agree that Washington's debt total is the accumulation of past deficits. They liken the debt ceiling to a charge limit on a credit card -- with the crucial distinction that in Washington's case, the cardholder can raise his own limit.

Snow appeared to disregard some of the administration's own estimates, as well as those of the nonpartisan Congressional Budget Office, in saying that the White House has the deficit problem well in hand.

"Deficits are not all equal," he said. "A deficit at a time of full employment and a deficit that's rising over time is troubling."

By contrast, he said, "today we have underemployment.... If you're going to run a deficit, this is the time to do it."

The White House's most recent budget shows that under its proposals, Washington would run deficits for the indefinite future, although their size, as a share of the economy, would shrink briefly at the end of this decade and early next.

The CBO raised its deficit estimate for this fiscal year Friday after April tax revenue came in lower than forecast and the costs of the Iraq war added to spending.

The congressional budget agency now says the deficit for the fiscal year ending Sept. 30 will be more than $300 billion, almost a 25% jump from its March estimate of $246 billion.

CBO officials said that Washington ran a $50-billion surplus in April, but that was $17 billion less than it ran a year ago and the smallest April surplus since 1995. April is one of the government's top months for revenue because that is when individual income tax payments are due.

As matters now stand, the White House has proposed an 11-year, $1.46-trillion tax cut package. But it has focused virtually all of its attention on its so-called "jobs and growth plan," a $726-billion slice of the larger proposal that includes elimination of the tax on corporate dividends and a speed-up of the individual tax rate reductions included in its 2001 tax cut.

The House approved its own $550-billion tax cut measure Friday that includes a portion of the president's dividend tax cut, but also a cut on capital gains and other business tax breaks.

The Senate is expected to vote on its $350-billion proposal, perhaps Thursday. To satisfy Senate limits and White House demands, the chamber's budget-writers have had to take the politically embarrassing step of proposing a series of offsetting tax hikes.

Snow reiterated what has become the centerpiece of the administration's case for its latest tax cut package -- that it would create jobs.

"By our estimates, the president's tax plan will create an additional 450,000 by the end of this year, or a million and a half by the end of next year," he told ABC's "This Week."

But the White House's latest job claims are being met with increasing skepticism.

One TV commentator, NBC Washington bureau chief Tim Russert, said Sunday that the president made a similar job-creation argument for his 2001 tax cuts, but the economy has shed 1.7 million jobs since its passage.

Analysts say that the newly promised positions would come at an extraordinarily high price.

Under the president's original $726-billion plan, the price of each of the 1.5 million positions forecast by Snow would be about $500,000. Under the less-costly Senate proposal, it would still be more than $200,000.

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