Bush Sees Economic Downturn, Calls for Action March 26, 2001 8:14 pm EST

By Arshad Mohammed BILLINGS, Mont. (Reuters) - President George W. Bush said on Monday the U.S. economy was slowing and "we better do something about it" as he prepared to give a major speech on Tuesday about his plans, including tax cuts, to revive growth.

White House spokesman Ari Fleischer told reporters that Bush believed the United States was in an "economic downturn," a phrase the Republican president declined to echo as he voiced his worries about tepid growth.

"I'm concerned about our economy," Bush said at the start of a two-day trip to sell his $1.6 trillion tax cut proposal in visits to Missouri, Montana and Michigan. "I believe the economy has slowed down and we better do something about it."

"I'm confident, however, if we do the right things we can have economic growth the likes of which we had in the past," he told reporters during a brief stop to greet diners at the First Watch Restaurant in Kansas City, Missouri.

The president has sold his tax plan as a way to revive U.S. growth, which has slowed from 4.8 percent in the first quarter of 2000 to 1.1 percent in the final three months of the year.

Critics argue, however, that his tax cut is excessively tilted toward the rich and could send the U.S. government back into deficits if the economy continues to slow and projected federal budget surpluses do not materialize.

The crux of Bush's plan is an across-the-board reduction in income tax rates, which has easily passed the House of Representatives but faces an uncertain future in the Senate. He also plans to eliminate the estate tax and to reduce the "marriage penalty" paid by two-income married couples.

BUSH SAYS TAX CUTS WOULD HELP SMALL BUSINESS

In Montana, the 21st state that Bush has visited since taking office on Jan. 20, the president made the case that his proposed $1.6 trillion tax cut would revive the economy by helping small business people, farmers and workers.

"When this economy is slowing down, we want you to have more money in your pocket so you can continue to employ more people in the great land of America," he told about 10,000 people at the Billings MetroPark Expo and Convention Center.

Earlier, Bush sat down with about a dozen Montana farmers at a farm supply store and talked about the drought and low prices that have afflicted many U.S. farmers in recent years and led to a series of federal emergency farm aid packages.

Asked what he could do to allay Montana farmers' fears of drought, Bush replied, "Pray for rain," prompting laughter from farmers gathered in front of a tractor. Bush said it was too early to tell if a new federal aid package was warranted.

The centerpiece of the trip was expected to be a speech in Kalamazoo, Michigan, on Tuesday, where the president would offer his take on the health of the U.S. economy and his plan, chiefly through tax relief, to improve it.

"The president knows that we're in the middle of an economic downturn but he has faith that the long-term strength of the economy is solid," Fleischer told reporters as Bush flew to Missouri.

Discussing Tuesday's speech, Fleischer said, "It'll be the president's assessment of where the economy is, why his plan is the best plan to help the economy recover."

"He will share with the American people his view about where our nation stands from an economic point of view -- the strength of the economy, the weaknesses of the economy, and what he proposes to do about it," Fleischer added.

Trying to answer the criticism that Bush's tax cut would not help the economy in the short term, Senate Republicans decided last Thursday that $60 billion of this year's budget surplus should be given back to taxpayers. How to do that -- whether by rebate or rate reduction -- has not been decided.

-- Anonymous, March 26, 2001