US economic policy after Bush's reelection

US President George W. Bush pledged to seek to earn the trust of those who did not back him during the election campaign, after claiming a reelection victory on Wednesday.

How will he win the trust from people in the coming four years when the US economy is facing so many challenges?

Bush took office in January 2001, when the US economy, coming down from the summit of the longest growth period in history, was plunging into a recession.

Taking tax cuts as the core of his economic policies, Bush unveiled four tax-cut packages in the past four years to spur the economy, resulting at last in a strong recovery starting from the middle of last year.

However, the US economy is still facing many problems when Bushsucceeded in his efforts to win a next term.

There is a sluggish labor market. Although 1.8 million jobs have been added to the payrolls of US businesses since August 2003,there are about 800,000 fewer jobs than the level when Bush took office four year ago.

US federal deficit soared to a record high of 413 billion dollars in fiscal year 2004 ending September 30, compared with a surplus of more than 230 billion dollars just before Bush became president.

Income gap between the rich and the poor is also expanding as most of the tax-cut went to the pockets of the richest Americans.

Some analysts said that the gloomy economic picture in the pastfour years would have pushed Bush out of the White House if there had been no terrorist attacks in 2001, which has changed the US dramatically ever since.

"A new term is a new opportunity to reach out to the whole nation," Bush said when announcing his success on Wednesday. But how to realize it economically? There is much to wait and see.

Undoubtedly, tax-cut will continue to be the core of economic policies in his four-year new term. Bush has promised time again in his presidential campaign that he will make his tax cut measures permanent in a bid to realize a long-term economic growthand thus increase job growth.

He also stressed the need to simplify the complicated US tax code to increase the government revenue. Yes. The tax-cut packageshave been successful in the past years in terms of stimulating theeconomy.

However, they also contributed to the soaring federal deficit. Making the tax cuts permanent would add nearly one trillion US dollars to federal debt by 2014. It will possibly smash Bush's hope that the government deficit will cut by an half in the next four years. High federal deficit will also become one of several hinders in the US economic growth.

Among Bush's most ambitious domestic goals is to remake Social Security which remained largely unchanged since it was created about 70 years ago. Trying to change the system is politically perilous, because of the program's popularity and the large numberof seniors who depend on it.

Bush vowed both to shore up its finances and to create new private accounts in addition to the venerable government program. It may be a good test but with serious risks.

The US policy in its foreign trade relations with other countries is also a concern for many nations.

US Federal Reserve Chairman Alan Greenspan has warned for many times against the increase of trade protectionism in the country in recent years, warning that protectionism has resulted in increasing trade disputes between the US and other countries.

Bush should adjust his trade policy in the new term to smooth the relations because the trend of globalization has became stronger these years and surely will become much more stronger in coming years.

Source:Xinhua