O'Neill sees tax cut passed by Congress by end of week

WASHINGTON (AFX) - Treasury Secretary Paul O'Neill predicted that Congress will pass tax cut legislation by the end of the week.

	    "I do believe on Friday we will have a tax bill that is passed legislation," O'Neill said in remarks to a community banking conference.

	    The Senate is expected to vote tonight on a 1.35 trln usd tax cut to be implemented over 11 years, including 100 bln usd of tax-cut stimulus this year and next.

	    The House of Representatives, which passed in pieces the bulk of President George Bush's 1.6 trln usd, ten-year tax cut, and Senate will then have to reconcile differences into a single bill.

	    Private analysts said a compromise is likely to take weeks to negotiate, with final Congressional passage expected by July 4.

	    O'Neill noted that analysts previously forecast the tax cut would not come until September.

	    He said data show the U.S. "can easily afford" the tax cut because of its continuing large budget surpluses.

	    He cited last Friday's monthly budget report, which showed the U.S. ran a 165 bln usd surplus over the seven months to April 2001, 40 bln wider than the previous year.

	    "That's while spending rose by 4.8 pct (and) even with the slowdown in our economy that began last August," O'Neill said.

	    The Secretary predicted that even after passage of the tax cut, there will still be large surpluses, leaving room for further tax cuts.

	    "This is the first tax bill, and not the last," he said.

	    Further tax cuts could include an accelerated phasing-in of the tax cuts included in the current package, he said.

	    The Senate bill includes across-the-board reductions in marginal income tax rates, eventual repeal of the inherited estate tax, expansion of tax free retirement accounts, lower taxes on married couples, and expanded credits for children.

	    O'Neill has previously identified the elimination of corporate taxes as a long-term goal, because their indirectness makes them inefficient and 

expensive to administer.

	    Separately, O'Neill praised Federal Reserve Chairman Alan Greenspan's management of monetary policy, and said he was uncomfortable with public criticism of Greenspan for not responding sooner to the slowing economy.

	    "I winced a little bit in the last few months when I saw some of the criticism Alan (Greenspan) was getting -- 'you raised the rates too much and you're not lowering them fast enough.' This is a very complicated business," he said.

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