US Treasury Secretary John Snow, launching the Bush administration's defence of its new budget proposals, made clear on Tuesday that tax cuts remain a cornerstone of its plans for boosting economic growth. "This administration appreciates that cutting taxes and exercising fiscal discipline must go hand in hand," the US Treasury chief said in prepared testimony to the US House of Representatives Ways and Means Committee.
As he has done in the past, Snow called deficits "unwelcome" and attempted to head off any criticism that excessive tax-cutting zeal helped create them.
"We are not under-taxed and higher taxes will not be the solution to reducing deficits," he said. "Fiscal discipline, combined with economic growth, is the correct path."
Snow said the fiscal 2006 budget submitted to Congress on Monday demonstrates the administration's commitment to spending control and the administration was "making headway" toward cutting deficits and would cut it in half "by 2009."
In the budget documents, the Bush administration shows a goal of halving the budget deficit can be met by 2008, a year earlier than promised. But the budget uses as a starting point the $521 billion deficit that was forecast early last year, a figure critics say was inflated.
Current estimates are that this year's budget deficit will be a record $427 billion. The budget shows it narrowing to $390 billion in 2006 and shrinking over the following five years to about $207 billion by 2010, but omits costs for military operations in Iraq and Afghanistan.
Snow said steady US job creation has provided "an unmistakable sign of an economy that has recovered from very tough times, and is now expanding."
He added that a Group of Seven finance ministers' meeting in London last weekend - which he missed because of a bad chest cold and where the United States was represented by Treasury Under-secretary John Taylor - discussed the importance of promoting growth and keeping finances in order.
"These two issues are inextricably linked," Snow said.
On the domestic front, Snow described the current Social Security retirement plan as on a road to bankruptcy unless it is reformed - striking a theme that President George W. Bush already has identifies as a top priority.
Snow said Social Security "will be exhausted and bankrupt" when today's young workers begin to retire in 2042, but any fix should not increase taxes.
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