The war in Iraq, economic recession and the aftermath of the September 11 attacks forced the United States into deficit, Bush said in a speech to small business owners, calling for urgent measures to return to growth.

"We need tax relief of at least 550 billion dollars to make sure our economy grows," he said, arguing that an even bigger tax cut he proposed in January would create 1.4 million jobs by the end of 2004.

The "best and fairest way" to restart the economy is by encouraging US consumers to spend more, Bush said -- and the fastest way to do that is to "grant them immediate tax relief," he said.

On Friday the Senate passed a 2.2 trillion-dollar budget blueprint that includes provisions to limit the size of any new tax cut to 350 billion dollars.

The move is a setback for Bush's proposal for a 726 billion-dollar tax cut over 10 years. The president still hopes however for a bigger tax cut when lawmakers consider the specific legislation.

In a sign of how contentious the issue had become, Vice President Dick Cheney was forced to break the tie in a 51-50 vote.

Bush's Republican Party has a slim majority in the Senate, and but easily controls the House of Representatives.

The House also passed its version of the measure on Friday, approving up to 550 billion dollars in tax cuts.

Democrats and moderate Republicans in both chambers worry that the full Bush package would exacerbate already ballooning budget deficits.

The budget resolution, which sets broad guidelines for lawmakers as they enact specific spending legislation, projects a record deficit of 385 billion dollars in the fiscal year starting October 1, and a 1.4 trillion-dollar deficit over 10 years.

According to the bipartisan Congressional Budget Office, Bush's tax-cutting budget proposal would produce a 1.8-trillion-dollar deficit over the next decade.

As part of his package Bush proposed that investors should not pay tax on share income and that small businesses should get bigger tax breaks.

"Now these measures were presented to the Congress in the first week of this year. The pro-growth package was urgent in January, it's even more urgent today," Bush said.

"In two years, this nation has experienced war, a recession and a national emergency which has caused our government to run a deficit.

"The best way to reduce the deficit is with more growth in our economy, which means more revenues to our treasury and less spending in Washington DC."

The president welcomed budget resolutions by the Senate and House "that show real spending restraint. And now the Congress must focus on a robust and effective growth package.

"We need at least 550 billion dollars in that package because the more tax relief that goes to the American people, the more jobs we will create in this economy."

Bush spoke on the last day for Americans to submit their 2002 tax returns to federal and state governments.

SPACE.WIRE