MercoPress. South Atlantic News Agency

Bush optimistic about cutting the budget deficit

The United States federal budget deficit is forecasted to drop below 300 billion US dollars by next September 30, announced the White House attributing the improvement to President Bush administration's tax cutting policy.

The deficit reached a record high of 412 billion US dollars in 2004, and earlier in the year the White House was admitting it could reach 423 billion because of the Iraq war, the Katrina hurricane relief effort and mounting payments on national debt.

"The increase in tax revenues is much better than we had projected", said President Bush adding that the latest deficit projections were evidence of the strength of the US economy. President Bush has pledged to cut the federal deficit in half by the time he leaves office in 2009.

The White House said the impact of massive tax-cutting bills passed by Congress in 2001 and 2003 was now being felt in the economy with tax revenue 11% higher than a year ago for individuals and 19% for corporate taxes.

The Congressional Budget Office is currently forecasting a similar deficit in the range of 300 billion US dollars. The White House comments come a day after the swearing in as new US Treasury Secretary of Henry Paulson, (60) former chief executive of investment bank Goldman Sachs.

Mr Paulson said he would look to boost US economic growth and trade: "we must always remember that the strength of the US economy is linked to the strength of the global economy".

"If we retreat from the global stage, the void is likely to be filled by those who do not share our commitment to economic reform" he added during the swearing ceremony which was also attended by President Bush.

Paulson's nomination was backed by both Republicans and Democrats after earlier speeding through the Senate Finance Committee. He is considered a China expert, where he has done over 70 business trips, and during the hearings promised to keep insisting for a more flexible exchange rate policy from Beijing.

Paulson becomes the third Treasury Secretary under President Bush and takes over from John Snow who proved an efficient Treasury Secretary but was not considered by the Bush team an effective communicator of the good economic news. The change is seen as part of the Bush administration efforts to keep Republican control over Congress in the coming November mid term election.

It is not his first time Mr Paulson has worked for the White House since he was a member of the domestic council as staff assistant to President Nixon in 1972.