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Wednesday, 31 January, 2001, 01:23 GMT
US budget surplus boost
President George W Bush discusses tax cuts with his cabinet
President Bush discussed tax cut strategies on Tuesday
US budget surpluses for the coming decade are expected to total $5.6 trillion, up $1 trillion from the last Congressional Budget Office's (CBO) estimate.

According to figures released by the Senate Budget Committee on Tuesday, surpluses for the fiscal period 2002-2011, excluding social security reserves, will total $3.12 trillion.

The announcement has bolstered Republican proposals for sweeping tax cuts, despite Democrat calls for more of the money to be diverted into paying off the national debt and federal spending.

The CBO report puts the 10-year total surplus more than $600 billion above the $5 trillion estimated by the Clinton administration.

The committee based its forecast on a stronger long-term economic outlook than it used in its October prediction, which predicted an economic downturn.

Tax strategy

Anticipating the figures, President George W Bush held a meeting with top congressional Republicans on Tuesday to discuss plans for his $1.6 trillion tax cuts and reducing the national debt.

"We discussed tax relief, and how we can pay down the national debt and have tax relief, which all of us around this table firmly believe we can do," said Mr Bush.

Senate Republican leader Trent Lott of Mississippi said he hoped Congress would pass the tax cut package before its recess on 4 July.

The Republicans believe that tax relief is needed to stimulate the flagging economy.

Democrat backlash

But Congressional Democrats have made no secret of their reservations, and had counted on Federal Reserve Chairman Alan Greenspan's support in arguing that paying off the debt remains the priority.

However, last week Mr Greenspan told the Senate he was now reasonably confident there would be enough money both to reduce taxes and the federal debt.

Despite this, Democrats contend that the cuts could force the government to start dipping into Social Security reserves to help fund other programmes.

This, they say, will drain vital funds for overhauling Social Security and Medicare programmes, covering natural disasters and other emergencies, or financing major wars.

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See also:

30 Jan 01 | Business
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