Snow Gives Enthusiastic Backing To Bush's Tax Cuts

by Leroy Baker, Tax-News.com, New York

09 January 2004

US Treasury Secretary John Snow has lent strong support to President Bush’s policy of tax cuts, arguing that the current recovery in economic growth and employment would not have been possible without the stimulus package signed into law by the president last May.

In the text of a prepared speech to be given before the American Chamber of Commerce, Snow invited critics of the tax cuts to “consider the situation we might have without the President’s tax plans.”

“The Treasury Department ran an analysis on that scenario and the results were stark. Without the passage of the President’s plans, by the second quarter in 2003, the unemployment rate would have been nearly 1 percentage point higher. As many as 1.5 million fewer Americans would be working, and real GDP would have been as much as 2 percent lower,” Snow observed.

“What’s more, without the President’s tax cuts, it is likely that by the end of 2004 the unemployment rate would be as much as 1.6 percentage points higher than it will be. Three million fewer Americans would be working, and real GDP would be as much as 3.5 to 4 percent lower,” he argued.

Snow also presented the case for making the tax cuts passed in 2003, due to expire after a decade, a permanent feature, warning that “failure to make the tax relief permanent would be a huge mistake and would put our recovery in jeopardy.”

Addressing criticism that the Bush administration’s economic policies are driving the budget deficit to dangerous levels, the Treasury secretary conceded that the $500 billion estimated shortfall for the current fiscal year remains a “concern”. However, he pointed out that at 4.5% of the nation’s GDP, it is “not historically out of range”.

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