WASHINGTON – President Bush pledged Wednesday to work with Congress to reduce the United States' huge deficits (search) to assure markets that his administration supports a strong dollar.
"The policy of my government is a strong-dollar policy," Bush said during an Oval Office meeting with Italian Prime Minister Silvio Berlusconi (search).
"We're going to take this issue on seriously with the Congress," the president said, after Berlusconi raised concerns about the dollar's fall.
Bush, during a photo opportunity in the Oval Office, also expressed confidence about resolving bitter differences between Israel and the Palestinians. "I think there's a very good chance we can achieve that peace," Bush said. "I look forward to working toward that end."
The president also issued a warning to Iran and Syria, saying that "meddling in the internal affairs of Iraq is not in their interest." His comments came after Iraq's defense minister accused neighboring Iran and Syria of supporting terrorists in his country and charged that a senior Iraqi Shiite was leading a "pro-Iranian" coalition into next month's national elections.
Berlusconi expressed agreement with Bush on a wide range of policies. "So we fully share the work carried out by the American administration. And the political program that has been announced for the next four years is something we fully agree on," Berlusconi said.
Bush noted that in addition to the budget deficit, America suffers from a huge trade deficit (search).
"That's easy to resolve," Bush said. "People can buy more United States products if they're worried about the trade deficit."
Bush's comments came a day after the government reported that America's trade deficit hit a monthly record of $55.5 billion in October.
Some economists believe that the administration, while publicly professing support for a strong dollar, actually prefers the decline in the greenback's value against other currencies as a way of dealing with the country's huge trade deficit.
A weaker dollar would make U.S. goods cheaper on foreign markets while making imports more expensive for Americans, thus boosting the fortunes of domestic manufacturers. The country has lost 2.7 million manufacturing jobs over the past three years.
Europeans have been particularly hard-hit by the dollar's decline because most of the adjustment has occurred against their currencies, including the euro and the British pound.
Despite White House expressions of support, the administration has not taken action to prop up the dollar. During Bush's four years in office, not once has the administration intervened in currency markets to support the dollar or done anything else to stop the dollar's slide.
"We believe that the markets should make the decision about the relationship between the dollar and the euro," Bush said.
The decline in the dollar means that a vacation for Americans in Europe is now more expensive, and European products coming into this country cost more.
Berlusconi raised the dollar issue with Bush, and expressed the concern of many Europeans.
"The best thing we can do from the executive branch of government in America," Bush said, "is work with Congress to deal with our deficits. One deficit is a short-term budget deficit. Another deficit is the unfunded liabilities that come with Social Security and some of the health programs for the elderly."
He said Social Security was at the top of his agenda.
While at a meeting of Pacific Rim economies in Santiago, Chile, last month, Bush said some of the leaders there had also expressed concern about the declining value of the U.S. dollar. In a joint press conference with Chilean President Ricardo Lagos, Bush said he had reiterated to them the U.S. government's commitment to a strong dollar.