WASHINGTON - President Bush told Congress on Friday that America’s vibrant free-market system was the key factor in allowing the country to deal with the shocks of a recession, terrorist attacks and corporate scandals. But he said a new round of $1.3 trillion in tax cuts would help lift economic growth to a higher level.
The president used this year’s annual economic report as a defense of his sweeping tax proposals, which would accelerate and make permanent the $1.35 trillion, 10-year tax cut Bush won from Congress in 2001 plus enact a number of new proposals to help promote savings.
Urging Congress to quickly enact his economic stimulus program, Bush said it would “restore the robust growth that creates jobs.’’
Treasury Secretary John Snow, who was publicly sworn in on Friday at a Treasury Department ceremony attended by Bush, said that getting Congress to pass the new tax cuts was his top priority.
“My first responsibility shall be to deliver your plan to the American people, so that all those who seek work can find it, all families can provide for parents and children and all businesses can invest with confidence,’’ Snow said with Bush standing by his side.
Snow was chosen by Bush in December after the president shook up his economic team by firing his first treasury secretary, Paul O’Neill, with the aim of getting more effective salesmen for a new round of tax cuts.
“Swift enactment of this package is my top priority,’’ Snow told the president. O’Neill, before his ouster, had expressed reservations about a sweeping new round of tax cuts that would drive up the deficit.
Glenn Hubbard, chairman of the president’s Council of Economic Advisers, the panel that prepared the economic report, said that the administration’s program would not only represent a short-term boost for the economy but would make reforms in the tax code that would reward savings and thus promote long-term growth.
Hubbard dismissed complaints that the president’s tax program was too expensive in light of the sharp reversal in the government’s economic fortunes with the administration’s new budget released on Monday forecasting record deficits of $304 billion this year and $307 trillion next year.
He said the administration believed there were other priorities that took precedence currently over fighting the deficit, such as promoting stronger economic growth.
“We think there is a recovery under way, but there are a lot of prominent downside risks,’’ Hubbard told reporters at a briefing on the 404-page report.
The report sought to provide the economic justification for the various tax cuts the administration is promoting. Those include accelerating into this year the tax rate cuts that were passed in 2001 but not scheduled to go into effect until 2004 and 2006.
The president’s stimulus package also proposes providing faster marriage tax relief; faster increase in the child tax credit from $600 currently to $1,000 this year and slashing taxes on corporate dividends paid to investors.
Democrats have attacked Bush’s economic policy, pointing out that the country has lost nearly 2 million jobs since Bush moved into the White House.
Bush said even with the challenges of the past few years, a flexible and dynamic market has helped keep solid the mainstays of the economy: low inflation, low interest rates and strong productivity gains.
However, Bush said in his two-page message, “the pace of the expansion has not been satisfactory; there are still too many Americans looking for jobs.’’
The president said as the economy recovers the administration is trying to help Americans who are out of work by extending unemployment payments for those who lost their jobs; improving incentives for investment to create new jobs; and proposing a new program of reemployment accounts to help workers searching for jobs.
By putting more money back in the hands of shareholders, strengthening investor confidence in the market and encouraging more investment, there will be more growth and job creation, Bush said.
“Government does not create wealth, but instead creates the economic environment in which risk-takers and entrepreneurs create jobs,’’ he said.