- The Washington Times - Tuesday, January 28, 2003

WASHINGTON, Jan. 28 (UPI) — At his nomination hearing Tuesday as U.S. Treasury Secretary, John Snow made clear that he would be the chief spokesman and cheerleader for the Bush administration, actively defending the White House's efforts thus far to bolster the economy.

"We must continue to move toward policies that will generate economic growth and more good jobs and rising living standards for all," Snow said before members of the Senate Finance Committee.

But some Democrats, most notably Sen. Max Baucus, D-Mont., questioned whether it was prudent to pursue tax cuts that favored high-income households, especially in light of the ballooning budget deficit.

Lower-income families "will be helped by the job effects of the bill … which should add another 500,000 additional jobs by the fourth quarter of this year," Snow said.

Earlier this month, Bush unveiled an economic stimulus plan that included the elimination of double taxation on corporate dividends, which he argued would give investors a greater incentive to buy stocks. That, in turn, would raise share prices by about 10 percent from current levels and potentially boost consumer spending.

But critics have argued that the bulk of dividend income goes to higher-income households. Indeed, according to the Internal Revenue Service's latest available data, 63 percent of dividend income that was taxed was earned by those who made more than $100,000.

Another issue of concern is the growing budget deficit, particularly as the prospects for increased spending loom large with a potential attack on Iraq. The Congressional Budget Office Wednesday is to announce its latest economic and budget outlook, and many expect the deficit to be far greater than the government expected only six months ago. Earlier this month, the Office of Management and Budget reported it expects a budget deficit of $200 billion to $300 billion in fiscal years 2003 and 2004, but some private investors such as Salomon Smith Barney peg the deficit to swell to $400 billion.

Snow defended the administration's efforts to press ahead with further tax cuts, however, pointing out that the "best thing … is for the economy to grow."

Meanwhile, the former head of CSX, who is poised to take over from Paul O'Neill as treasury secretary, stated at his hearing that a strong dollar remains in the country's national interest. The greenback has fallen steadily over the past few weeks both against the euro and the Japanese yen, in light of heightened geopolitical risks, with increased tensions about war against Iraq. But while some have welcomed the dollar's devaluation, Snow emphasized the need to keep the value of the currency strong.

"There has been a consistent policy on the dollar going back the better part of a decade, which I support. I favor a strong dollar," he said. "A strong dollar is in the national interest. A strong currency provides a reliable medium of exchange and serves as a stable store of value that people choose to hold. Sound, pro-growth economic policies and a commitment to free and open markets are the foundation for a strong dollar."

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