MercoPress. South Atlantic News Agency

Greenspan backs tax cut

Talking before the House of Representatives Alan Greespan, US Federal Reserve president openly supported President George W. Bush proposal to cut taxes in view of the forecasted budget surplus, but did not reveal much concerning the state of the world's leading economy.

Last week President Bush proposed US Congress a 1,6 trillion tax reduction for the next ten years which was described a "fantasy" by the Democrat opposition which favors reducing national debt and considers the program a handout for the rich. "I prefer containing the surplus by cutting taxes instead of increasing spending", said Mr. Greenspan, who has been criticized by Democrats for "changing sides" when Mr. Bush took office. During the Clinton years Mr. Greenspan stated he favored buying back debt rather than cutting taxes.

However the Federal Reserve President has not endorsed specifically the Bush program and has also pointed out that he would like to see a trigger system by which a balanced budget is ensured if the projected surplus of 5,6 trillion in the next ten years turns sour.

With his typical luxuriant ambiguity, Mr. Greenspan said that the US economy was still abruptly slowing down, but "limited" at a "less evident" rate than at the end of 2000.<'>"Even after the January decisions (two interest rate reductions) the risks are that the economy will continue to incline towards a path inconsistent with a satisfactory development", explained Mr. Greenspan, "but if long term productivity factors remain intact, rationalization of spending presumably will be limited". No possible way of guessing interest rates cuts before the next Federal Reserve Open Market Committee meeting on March 20th.