Bush asks Congress for tax cuts to aid investment

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President George Bush acknowledged yesterday that last month's terror attacks on the twin towers had "shocked" the American economy and appealed to Congress to pass a package of tax cuts and investment incentives worth between $60bn (about £40bn) and $75bn (£51bn).

The call was made during the President's second visit to New York since the tragedy.

Although he was only in the city for a few hours, he held a meeting with leaders of America's 30 largest corporations before visiting a school class of five-year-olds in lower Manhattan and joining Mayor Rudy Giuliani for lunch.

"We all agree that the events of 11 September shocked our economy," Mr Bush said. However, he deflected questions on whether he thought the country had been tipped into a recession, saying: "We all believe that the underpinnings are there for economic recovery."

Mr Bush, who had been applauded when he walked into "ground zero" on his first visit on 14 September, said tax cuts were needed to increase consumer spending.

The "two most effective ways to do that", he said, would be to provide rebates to consumers and to accelerate tax cuts already in the pipeline.

Mr Bush was speaking after he had held talks with chief executives from the country's biggest companies in Federal Hall, across from the New York Stock Exchange. They included Betsy Holden from Kraft Foods, Kenneth Chenault from American Express, and Michael Armstrong from AT&T.

At the Hernando De Soto School in Manhattan's Chinatown, Mr Bush posed for photographs with Mayor Giuliani and the Governor of New York, George Pataki, behind a somewhat bemused class of first graders. Then, after Mr Bush led the children ­ who come from mixed ethnic backgrounds ­ in the Pledge of Allegiance, they showed him patriotic drawings they had made for his visit. It was a carefully organised, unashamedly saccharine event designed as a counterpoint to the pall of grief that still hangs over the city.

One small boy had drawn a Stars and Stripes flag for Mr Bush with the message, "I love America, because it has freedom." Mr Bush told him, "You and I think the same way."

Other drawings were pinned under the blackboard. One said: "I feel very sad four [sic] the pepal [sic] who lost loved ones."

At the same time, the United States' Treasury Secretary, Paul O'Neill, appeared before the Senate Finance Committee in Washington to echo Mr Bush's appeal.

The aim, he said, was to "formulate a package of actions with a fiscal year 2002 impact of about $40bn to $75bn". The US had already authorised about $40bn in emergency spending, which includes $15bn to bail out the airlines.

Officials in New York are reportedly preparing to ask Washington for $40bn to help cover the extraordinary costs to the city of the attacks, including the clean-up bill and losses of revenues.

That is roughly equal to a whole year's budget for the city. Without aid of that magnitude, the city's public finances would be seriously threatened and public spending would be gravely reduced. "If the city is unable to get full reimbursement for all of its costs, including those lost revenues, there will be difficult choices that have to be made," Adam Barsky, the city's budget director, commented. Nearly two-thirds of New York voters believe the World Trade Centre should be rebuilt, according to a poll released yesterday.

The Quinnipiac University Polling Institute, which contacted 1,262 New Yorkers by telephone between 24 and 30 September, found 63 per cent of those surveyed said the trade centre should be rebuilt by the Port Authority of New York and New Jersey, while 28 per cent said they did not it believe it should be.

Mr Bush, Mayor Giuliani and Governor Pataki have said they support rebuilding at the site, although no decision has been made regarding what should be built there or which agency would oversee the project.