Sun, Jan 08, 2006 - Page 11 News List

Save taxes, slow benefits, Bush tells Congress

US BUDGET The US president disregarded the big setback to consumer confidence this month and urged restraints on programs such as Medicaid, Medicare and student loans


Boasting that the US economy is strong and growing, US President George W. Bush urged Congress yesterday to save tax cuts from expiring and adopt the first spending restraints in nearly a decade on such benefit programs as Medicaid, Medicare and student loans.

In his weekly radio address, Bush said the federal budget faces the challenge of long-term deficits driven by mandatory spending on those entitlement programs.

"We do not need to cut entitlements, but we do need to slow their growth," he said.

Before leaving for the holidays, the Republican-controlled Senate passed legislation to cut federal deficits by US$39.7 billion. The measure passed by the narrowest of margins, 51-50, with US Vice President Dick Cheney casting the deciding vote.

The legislation, the product of a year's labors by the White House and congressional Republicans, imposes the first restraints in nearly a decade in benefit programs.

"Congress needs to finish its work on this important bill," Bush said. "By passing the first reduction in the growth of entitlement spending in nearly a decade, Congress will send a clear signal that the people's representatives can be good stewards of the people's money."

The bill would take on, for the first time since 1997, the spiraling growth of federal benefit programs such as Medicaid health spending on the poor, Medicare for the elderly and student loan subsidies.

It is part of a campaign by Republican leaders to burnish their party's budget-cutting credentials as they try to reduce a deficit swelled by spending on the Iraq war and Hurricane Katrina.

Opponents said the bill will hurt the middle class.

In his broadcast, Bush also called on Congress to make permanent all the tax cuts passed at his urging earlier in his administration. Most are due to expire before or at the end of 2010.

With Republican leaders having had little success making the cuts permanent, the House and Senate are debating bills to extend some through the end of the decade.

Democrats particularly oppose extending the lower rates for capital gains and dividends.

"Some people in Washington said these tax cuts would hurt the economy," Bush said. "The day the House voted for tax relief in May 2003, one Democratic leader declared it a `reckless and irresponsible tax plan that will undermine opportunity in our country.' Since those words were spoken, our economy has added more than 4.6 million new jobs for the American people."

Bush was referring to a comment made by the Democratic House minority leader Nancy Pelosi, who said during floor debate that the cuts were a "reckless, irresponsible tax plan that will undermine opportunity in our country."

US consumer confidence took a big hit earlier this month, dragged down by Americans' worries about the future.

The RBC CASH Index, based on polling by Ipsos, showed that consumer confidence fell to 78.2 this month, the lowest level in three months and 8.5 percent below last month's reading.

Consumers' attitudes had taken a sharp hit in September and October when confidence was jolted by the devastating Gulf Coast hurricanes and a resulting spike in energy costs that sent gasoline prices briefly above US$3 per gallon.

However, confidence had posted sizable gains in November and last month as gasoline prices retreated and the job market staged a solid rebound. The confidence level for last month of 85.5 was the second-highest reading for last year.

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