Washington, March 19 (Bloomberg) -- President George W. Bushsaid he's confident his tax-cut plan will help the U.S. economy beatexpectations. Bush's comment to reporters came after Japanese Prime MinisterYoshiro Mori urged the president to take steps to prevent the slowingU.S. economy from serving as a further drag on a Japaneseeconomy that's trying to pull out of a recession. ``I'm very confident about our economy,'' Bush said. ``I know it canbeat expectations.'' Several recent indicators, including a 0.6 percentdecline in February industrial production, showed the economy hasslowed. Just last week Bush was criticized by Senator Tom Daschle,Representative Dick Gephardt and other Democrats in Congress fortalking down the health of the U.S. economy. Today Bush said theslowing economy can be revived by his plan to cut taxes by $1.6trillion over 10 years. ``We need to get our own economy growing the way I know it can,''Bush said. ``That's why I'm advocating tax relief.'' Meanwhile, Bush's Energy Secretary, Spencer Abraham, toldindustry executives and lobbyists that high energy prices werehurting the U.S. economy, and raised the specter of a recession. ``This nation's last three recessions have all been tied to risingenergy prices, and there is strong evidence that the latest crisis isalready having a negative effect,'' Abraham said in a speech at a U.S.Chamber of Commerce energy summit. ``The power crisis isn't just pinching our wallets, it's changing theway we live our lives,'' he said.
Mori Under Pressure
The first meeting between Bush and Mori may also be their last.Mori, facing mounting criticism for Japan's faltering economy,recently signaled his tenure as prime minister may end as early asnext month when his party elects a new leader. Japan is trying to avoid slipping back into recession for the secondtime in 11 years, and its stock market reached a 16-year low earlierthis month. With the U.S. economy growing at the slowest rate inmore than five years, Japan's ability to ride rising U.S. imports to arecovery may be hampered. Both leaders agreed to ``work together closely for the launch'' of anew round of World Trade Organization talks this year, Bush andMori said in a joint statement. They also said it's important to step up arms control diplomacy andconsult closely on how to develop defenses against ballisticmissiles. Mori pressed Bush on relocating U.S. military stationed in Okinawa,according to a senior administration official who briefed reporters.Bush told Mori the issue would be looked at in the context of U.S.interests in the region, the official said.
Sub Accident
Calls for U.S. military to leave Okinawa intensified after the USSGreeneville, a Navy nuclear sub, collided in February with aJapanese fishing school boat. Nine of the 35 people aboard the shipare missing and presumed dead. Bush restated his regrets over theincident, the official said. The two leaders' main focus was bolstering the two nations'economies, White House spokesman Ari Fleischer said. With few options for stimulating growth left, the Bank of Japanreversed long-standing policy today and agreed to increasecommercial banks' reserve requirements and buy additionalgovernment securities in the open market. The moves are aimed at boosting the amount of yen in circulation,fueling consumption and bank lending. New laws taking effect in Aprilrequire banks to value their vast stock holdings at market prices forthe first time. That could crimp already stagnant bank lending,starving the economy of the fresh money it needs to grow. The central bank's move will also have the effect of pushing thecountry's benchmark interest rate, currently just 0.13 percent, tozero. Analysts generally applauded today's moves, although theysaid the 7 percent increase in the money supply expected by thecentral bank still may not be enough to keep the Japanese economyfrom slipping back into recession.
BOJ's `Positive Effect'
Mori said he's ``certain'' that the Bank of Japan's latest moves ``willhave a positive effect on our economy.'' Even as it announced its own new policies, the bank took theunusual step of publicly demanding Mori's government do more toforce Japanese banks to dispose of trillions of yen worth of badloans. The government has resisted tough reforms, which wouldlikely result in a number of business failures and an increase in thesecond largest economy's record unemployment. White House advisers met last week to discuss how Japan mightjumpstart Japan's economy. Meetings between the two governmentswill continue at undersecretary levels even if Mori leaves office. ``Botheconomies are obviously crucial to world economic stability,''Fleischer said. Bush will visit Japan in October, before participating in the annualAsia-Pacific economic conference in China.