22 August 2001, 20:20  White House sees US rebound late this year, early 2002

WASHINGTON (AFX) - The White House expects the US economy to rebound late this year, White House budget chief Mitch Daniels said. "We are expecting a return to economic growth at the end of this year, the first of next year and...back on a reasonable growth track from then on," Daniels told reporters at a briefing after release of the Bush Administration's mid-sesion budget review. "Economic growth is the key to continuing the very strong fiscal picture," Daniels said, adding that a "return to growth will be the focus of the president in the month's ahead." Daniels defended the administration's forecast of a return to a 3.2 pct GDP growth rate in 2002. "Our forecasts are in the mainstream of those that are out there," he said. Even if growth next year is only about 1.5 pct, the surplus would be over 100 bln usd, he said. The revised budget outlook shows only a tiny surplus excluding Social Security tax receipts in the current fiscal year ended Sept 30 and the 2002 fisc al year. The budget would have shown that Social Security reserves would be tapped this year if not for a change in an accounting method and if the Treasury Department did not estimate that corporations would pay 5 bln usd in taxes this fiscal year that are not due into next year. Daniels said "the budget is in great shape and an economy that is not" and Democrats should focus on the "real problem" of slow growth and not on whether the Social Security reserves need to be used. Daniels added that "all kinds of ideas" will have to be on the table in talks with Senate Democrats to protect the Bush 1.35 trln usd tax cut and allow for moderate spending increases in next year's budget.

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