President George W Bush expects the US economy to bounce back later this year.
White House budget chief Mr Mitch Daniels says Mr Bush expects a return to economic growth at the end of 2001. He says Mr Bush expects moderate spending increases next year, while keeping his promise of massive tax cuts.
Mr Daniels was speaking after the release of the Bush administration's mid-session budget review.
He defended the administration's forecast of a return to a 3.2 per cent GDP growth rate in 2002, saying: "Our forecasts are in the mainstream of those that are out there."
Mr Daniels said that even if growth next year was only about 1.5 per cent, the surplus would be more than $100 billion.
The revised budget outlook shows only a tiny surplus - excluding social security tax receipts - in the current financial year, which ends on September 30th, and the 2002 fiscal year.
Mr Daniels said the budget was in "great shape, while the economy was not".
He said all kinds of ideas would be on the table in talks with democrats to protect President Bush's $1.35 trillion tax cut and allow for moderate spending increases in next year's budget.
PA