A raft of positive economic data and comments from the Fed continues to buoy Bush's argument that the US economy is strong and his tax cuts should be extended. The latest: today's jobs report for January, which shows that businesses added 111,000 new jobs. Unemployment rose one-tenth of one percent to 4.6%.
The New York Times writes that Bush will ask Congress in his budget next week to cut more than $70 billion in savings from Medicaid and Medicare over the next five years. "The proposals, part of a White House plan to balance the budget by 2012, set the stage for a battle with Congress over entitlement spending. Even some administration officials say they cannot imagine approval of such large cutbacks in a Congress now controlled by Democrats."
Treasury Secretary Hank Paulson tells Bloomberg in an interview that Bush's "budget request to Congress will propose new ways to collect some of the $290 billion in taxes that aren't paid to the government each year… Closing the so-called tax gap -- the amount of taxes owed that isn't collected -- may allow the administration to find sources of revenue to narrow the deficit. It may also make it easier for Democrats who control Congress to enforce pay-as-you- go budgeting."
With Bush's budget expected on Monday, Bloomberg notes that Bush and Democrats are talking a good game about erasing the deficit, but aren't really showing the will to do so.