January 7, 2006

Bush pressures Congress on spending, tax cuts

By Steve Holland

WASHINGTON (Reuters) - President George W. Bush pressed the
U.S. Congress on Saturday to cut nearly $40 billion in spending
and extend tax cuts, steps he said will help keep the U.S.
economy on track.

"To keep our economy strong and secure the American Dream
for future generations, leaders in Washington must make sound
decisions," Bush said in his weekly radio address.

With Vice President Dick Cheney casting a tie-breaking vote
in a hectic pre-holiday session, the U.S. Senate last month
approved a bill that would cut spending on social welfare and
other programs by $39.7 billion.

But small, last-minute changes pushed by Democrats mean the
bill must go back to the U.S. House of Representatives for
another vote, delaying final approval until late January or

"By passing the first reduction in the growth of
entitlement spending in nearly a decade, Congress will send a
clear signal that the people's representatives can be good
stewards of the people's money," Bush said.

Democrats criticize Bush for seeking cuts in spending on
programs that help poorer Americans, while seeking to extend
tax cuts that they contend help mostly the rich.

At the same time, Bush is putting finishing touches on a
new budget blueprint for fiscal 2007 starting October 1 that
White House budget director Joshua Bolten has said will
emphasize restraint.

Bush's Republicans and opposition Democrats disagree on the
strength of the U.S. economy. The White House says economic
growth is strong, job growth is steady and consumer confidence
is up.

Democrats complain the average American is suffering from
stagnant wages while costs for gasoline, health care and
housing have have soared.

The two sides are divided over extending some of the tax
cuts that Bush pushed through Congress in his first term, The
White House disputes the Democrats' contention that the cuts
unfairly favor the wealthiest Americans.

The Republican-controlled House voted last month to extend
for two years 15 percent tax rates for capital gains and
dividends and are set to expire in 2008.

But the battle over tax cuts is far from over and likely to
be debated on the campaign trail during the 2006 midterm

Bush said letting tax cuts expire would amount to a tax

"Inaction by the Congress will mean a tax increase on the
American people. When you hear people in Washington say we
don't need to make the tax relief permanent, what they're
really saying is they're going to raise your taxes," Bush said.

Democrats said Bush was ignoring signs the economy was not
working for average Americans.

"It's obvious that at the start of this election year, the
Bush economy is an albatross for the administration and
Republicans in Congress," said Massachusetts Sen. Edward
Kennedy. "People are anxious about their standard of living."