Snow: Bush will trim U.S. spending
WASHINGTON (CNN) -- U.S. President George W. Bush plans to cut spending in his upcoming budget, not just trim the rate of growth in government outlays, Treasury Secretary John Snow said Sunday.
Snow would not disclose details, but he told CNN's "Late Edition with Wolf Blitzer" that Bush would submit "a tight, disciplined budget" to Congress next year.
"I don't want to forecast the new budget, which will be out soon, but there will be actual cuts in many programs as a result of this year's budget proposal," he said.
The U.S. government ran a $413 billion deficit in fiscal year 2004, the Congressional Budget Office concluded. That figure is lower than initially estimated, Snow said, but still $35 billion higher than the previous record of $377 billion set in 2003.
The Bush administration blames the recession of early 2001, the al Qaeda attacks on New York and Washington and the costs of the wars in Iraq and Afghanistan for the deficits, which followed budget surpluses in 2000 and 2001.
In addition, Bush lobbied Congress to enact an estimated $1.6 trillion in tax cuts over 10 years. The administration argues that those cuts have stimulated economic growth, and Bush wants to make those permanent in a second term.
Snow declined to offer an estimate of what the 2005 deficit would be, but he repeated Bush's campaign pledge to cut deficits in half in his second term.
Concerns about U.S. budget and trade deficits have contributed to a sharp fall in the value of the U.S. dollar overseas.
That makes American goods cheaper abroad -- but hurts overseas investors, who hold a growing percentage of the Treasury bonds that finance the U.S. deficits. Analysts say a lengthy slump in the greenback could drive up interest rates as investors seek better returns on those bonds.
Snow acknowledged that growing deficits can drive up interest rates in the long term, by causing the government to lose the confidence of the financial markets. But he promised, "We're not going to let that happen."
"The current deficit is too large. It has got to come down," he said. "The president has acknowledged that, and we are going to bring it down."
Snow, the 65-year-old former head of railroad conglomerate CSX, took over at the Treasury Department in February 2003. He replaced Paul O'Neill, who had expressed skepticism about plans for future tax cuts.
The White House announced December 8 that Snow would stay on in a second Bush term, despite intense speculation that he had fallen from favor and would be replaced.
The CBO estimates that extending the Bush tax cuts by 10 years would cost $2.2 trillion.
Meanwhile, the Bush administration is pressing to overhaul Social Security so that younger workers can set up private accounts. Estimates of the transition costs of that plan range between $1 trillion and $2 trillion.
Snow repeated Bush's warning that, if left unchanged, the Social Security program faces a $10.4 trillion deficit -- a figure based on a 75-year projection by the system's trustees.
But he said the CBO's prediction that it would cost $2.2 trillion over 10 years to make the tax cuts permanent was "on the high end," saying Bush administration figures include projected improvements in economic growth attributed to the cuts.
"When more people are working, when businesses are profitable, the government income stream goes up, and that's happening right now," Snow said. "When we do our budget forecasts, we include making the tax cuts permanent as part of those forecasts. So we have embraced that in our numbers."