Mr Snow: Cuts in tax and spending "must go hand in hand"

The White House set out its spending plans on Monday, renewing its pledge to cut the current shortfall of $427bn (�230bn) in half by 2009.

It plans to cut back on domestic spending programmes, from environmental protection to Amtrak rail subsidies.

Mr Snow defended his plans to cut taxes as a way to stimulate growth.

"This administration appreciates that cutting taxes and fiscal discipline must go hand in hand," Mr Snow told the influential House Ways and Means Committee, which has extensive powers to control the legislative timetable.

Defence of tax cuts

It is the first of four congressional committees he will appear before this week to explain the budget for the next fiscal year which begins in October 2005, according to Reuters news agency.

President Bush wants to save money at home

"We are not under-taxed, and higher taxes will not be the solution to reducing deficits," he said.

Some of the Bush administration's critics contend that tax cuts will contribute to the spending gap while doing little to stimulate the economy.

The leader of the opposition House Democrats, Nancy Pelosi, has already branded the budget "a hoax on the American people" that puts "our fiscal direction on an unsustainable course", according to a report in the Wall Street Journal.

Home and abroad

The administration laid out a budget of $2.57 trillion for the next fiscal year, or $89bn more than in the current year.

It envisages cuts in spending on farm subsidies, health, education, welfare and other domestic spending programmes of at least 1%.

It increases defence spending by 4.8% to $419.3bn, though there will be cutbacks in the Pentagon's planned new submarine fleet.

The full costs of operations in Iraq and Afghanistan were not covered by the budget as they will be the subject of a separate fundraising bill.

Mr Snow also defended plans for sweeping changes to the system of retirement benefits, known as Social Security, which many US pensioners rely on.

President George W Bush wants a new system under which a portion of Social Security entitlements would be diverted into personal savings accounts to encourage retirement saving. In the short term, the reforms would create extra costs as the central pool of Social Security receipts would be lowered.