--O'Neill says "I believe in a strong dollar"
--O'Neill: Hard to see situation in which he would change view on dlr
--O'Neill: US should pursue low inflation, high economic growth
--O'Neill: Confident Fed doing all it can to help economy
--O'Neill: Won't "second guess" recent Fed rate cuts
--O'Neill: Fed has done wonderful job on monetary policy last 10 yrs
--O'Neill: Plenty of room in budget surplus forecasts for Bush tax cuts

By Simon Kennedy, BridgeNews
Washington--Feb. 7--U.S. Treasury Secretary Paul O'Neill reiterated that Wednesday that he believes in a strong dollar and that he can imagine no circumstances in which he would alter that thinking. He said the United States should pursue an environment of high economic growth and low inflation, but refused to comment on recent interest rate cuts from the Federal Reserve other than to express the belief that the Fed shares the goal of supporting the economy.
* * * "I believe in a strong dollar," O'Neill told CNBC in an interview. "I can't conceive of a situation when I would change that view."
He said the currency would be best served by having an underlying economy which boasted low inflation and high real rates of economic growth and said such a backdrop would have ramifications for society as a whole. On the Fed, which slashed interest rates 100 basis points in January, O'Neill praised its work over the past 10 years as "wonderful" but said it would not be a "brilliant idea" to "second-guess" its recent actions. However, he said he was confident that Fed Chairman Alan Greenspan was doing all he could to return the economy to its non-inflationary growth rate of around 3-4%.
With the brunt of the interview focused on the current debate over taxes, O'Neill played down allegations that President Bush's $1.6 trillion tax cut threatened budget surpluses. While the independent Congressional Budget Office predicts a $5.6 trillion windfall over the next decade, some economists question the assumptions it used to reach that figure.
But O'Neill said there was "plenty of room" for the tax cuts as tax revenues were likely to grow alongside the economy in coming years, filling up the federal government's coffers.
He also railed against criticism that Bush's tax package, to be sent to Capitol Hill Thursday, unduly favored the wealthy, arguing that while the rich paid more taxes and so deserved the tax cut, the plan was focused on "helping those close to low-, middle-income brackets."
"This is a tax cut package for all Americans," he said.
On the charge that he does not support Bush's sweeping tax relief proposals, O'Neill said he knew what the president wanted when he took the job as Treasury secretary and would seek to implement his manifesto.
Pressed on whether he endorsed the program, O'Neill replied, "I do." In the longer-term, O'Neill said he hoped to work to make the tax code more simple. End
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