US President George W. Bush's advisers presented Congress on Friday with an upbeat assessment of US economic prospects, predicting faster growth would help offset nearly half the cost of sweeping tax cuts over the next five years while reducing record deficits.
"The economy is not growing fast enough," Bush said at a ceremonial swearing-in for Treasury Secretary John Snow.
"We believe the best way to deal with our deficits is to encourage economic growth and to encourage spending discipline in Washington."
Bush's nearly US$700 billion tax cut plan, which calls for eliminating taxes on corporate dividends paid by shareholders, has run into stiff opposition from Democrats and some moderate Republicans who say it would do little to revive the economy while pushing budget deficits to record levels.
"The president is going to fight for the plans that he submitted to the Hill," White House spokesman Ari Fleischer told a news conference.
To that end, Fleischer said Treasury Secretary John Snow, Commerce Secretary Don Evans and White House economic adviser Stephen Friedman would meet with Republican lawmakers.
In addition, Fleischer said 15 to 20 members of Bush's Cabinet and other senior administration officials would fan out over the next two weeks to more than 20 cities to tout the package, which would accelerate income tax rate cuts scheduled for 2004 and 2006.
The 400-page "Economic Report of the President," released on Friday, makes the case for conservative, free market policies, including sweeping tax reform.
It also prods China to meet its trade obligations, warning that failure to do so could prompt other members of the WTO to retaliate.
White House officials played down the impact of Bush's tax cuts on government debt and interest rates.
Bush economic adviser Glenn Hubbard estimated that the Treasury would recoup 40 percent of the cost over the next five years through increased economic growth.
But he warned of "very prominent downside risks" to recovery, chief among them slow growth in business investment. He played down the impact of a possible war with Iraq on business sentiment, saying it was one of several factors.
"The economy is recovering" from the recession and the Sept. 11 attacks, Bush said in a statement accompanying the report.
"Despite these challenges, the economy's underlying fundamentals remain solid -- including low inflation, low interest rates, and strong productivity gains. Yet the pace of the expansion has not been satisfactory," he added.
Bush's economic report forecasts rosy days for the now-floundering economy.
Growth is forecast to pick up to 3.6 percent in 2004, followed by 3.4 percent in 2005, according to the report, which is prepared by the White House Council of Economic Advisers.
Hubbard, who chairs the council, said he expected the economy to grow even faster, barring unforeseen setbacks.
The economic report also plays down the impact of the tax cuts on interest rates, estimating they would rise by about 3 basis points for every US$200 billion in additional debt.
"Concerns that higher interest rates would choke off the stimulative effects of recent tax reductions seem unwarranted," the report said.
The report did not mention a possible war with Iraq, which many analysts cite as a risk to the economy because of its potential to cause an oil price spike and sap consumer confidence.
With the US massing its military for a possible invasion, uncertainty over how a conflict would end has clouded markets for months.
Bush is projecting budget deficits of US$304 billion for the current fiscal year and US$307 billion next year, surpassing a 1992 record of US$290 billion in dollar terms. Over the next five years, he expects the budget shortfall to add up to more than US$1.08 trillion.
But the administration says these deficits are manageable, noting that in proportion to the size of the economy they would be well below the record level of 6 percent of gross domestic product during the Reagan administration in 1983.
The White House report also highlights the importance of free trade and urges China, which now accounts for a bigger portion of the US trade deficit than Japan, to follow WTO rules.
"With its new WTO obligations, China has now made a formal external commitment to a whole range of trade-related reforms," the report said.
"Failure to live up to these commitments will put Chinese exports at risk in other WTO members' markets, because members may enforce China's commitments through WTO dispute settlement proceedings and may retaliate if China refuses to cease its actions deemed WTO-inconsistent."
The report singles out Chinese anti-dumping procedures, saying they would be "carefully scrutinized by other WTO members for inconsistency with WTO rules."
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share of the global foundry market rose to almost 70 percent last year amid booming demand for artificial intelligence (AI), market information advisory firm TrendForce Corp (集邦科技) said on Thursday. The contract chipmaker posted US$122.54 billion in revenue, up 36.1 percent from a year earlier, accounting for 69.9 percent of the global market, TrendForce said. Its share was up from 64.4 percent in 2024, it said. TSMC’s closest rival, Samsung Electronics, was a distant second, posting US$12.63 billion in sales, down 3.9 percent from a year earlier, for a 7.2 percent share of the global market. In the
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
RSS