Greenspan: There’s Room for Tax Cut
WASHINGTON (AP) _ Federal Reserve Chairman Alan Greenspan, providing critical support for President Bush’s efforts to cut taxes, told Congress today that rising estimates of budget surpluses give Congress room to cut taxes.
However, Greenspan suggested that Congress should consider some mechanism to make sure that the tax cuts could be suspended if the revenue projections turn out to be too optimistic in later years.
Greenspan, who previously had expressed a preference for using the surpluses to pay down the national debt, said he still believes debt reduction is the best use for the added revenue. But he said government estimates project more than enough surplus funds to pay off the debt and still cut taxes.
``The sequence of upward revisions to the budget surplus projections for several years now has reshaped the choices and opportunities before us,″ Greenspan said in testimony to the Senate Budget Committee.
``The most recent data significantly raise the probability that sufficient resources will be available to undertake both debt reduction and surplus-lowering policy initiatives,″ Greenspan said. ``Accordingly, the trade-off (between paying down the debt and other possibilities) faced earlier appears no longer an issue.″
Greenspan in his prepared testimony never discussed what size of tax cut Congress should consider. Bush is recommending a $1.6 trillion cut over 10 years, a level that Democrats in Congress have contended is too large.