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Bush Predicts Balanced Budget By 2012

by Mike Godfrey,, Washington

04 January 2007

President George W. Bush has claimed that prudent tax and spending policies will result in a balanced federal budget by the year 2012.

In an op-ed for the Wall Street Journal, published Tuesday, Bush said that tax cuts passed during his administration have boosted economic growth and led to higher revenues, leaving the government better placed to cope with long-term fiscal challenges.

"It is a fact that our tax cuts have fuelled robust economic growth and record revenues. Because revenues have grown and we've done a better job of holding the line on domestic spending, we met our goal of cutting the deficit in half three years ahead of schedule," Bush wrote.

"By continuing these policies, we can balance the federal budget by 2012 while funding our priorities and making the tax cuts permanent. In early February, I will submit a budget that does exactly that," he claimed.

While Bush's article praised the spirit of bi-partisanship which seemingly pervades on the eve of the 110th Congress, set to be sworn in today, he urged Democrats, who now control the House of Representatives and have a one-seat majority in the Senate, not to undo his work by raising taxes.

"The bottom line is tax relief and spending restraint are good for the American worker, good for the American taxpayer, and good for the federal budget. Now is not the time to raise taxes on the American people," he warned.

While the Democrats have opposed many of President Bush's tax cuts, particularly the investment tax cuts which have temporarily reduced capital gains and dividend taxes to 15%, Charles Rangel, the New York Democrat poised to assume the chairmanship of the House Ways and Means Committee, which has jurisdiction over taxation, has said repealing this legislation would be counterproductive, and would merely throw the area of tax policy into chaos.

Instead, Rangel has encouraged both parties and the government to find common ground on taxation and has proposed a tax policy 'retreat' involving senior Democrat and Republican figures, as well as key administration officials such as Treasury Secretary Henry Paulson.

Rangel has set tackling the alternative minimum tax and relieving the tax burden for the middle class as high priority tax issues.

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