President Bush says it is an exciting time for the U.S. economy which added more new jobs in the past two-and-a-half years than the European Union and Japan combined.

He told business leaders in the northern state of New Hampshire that the $2.7 trillion budget he sent to Congress this week will cut the federal deficit in half by 2009.

And he warned them against moves by some congressional Democrats to allow parts of his record tax cuts to expire, as the president says that would hurt the economy.

"You will hear the argument during the budget debates, you know all the noise coming out of Washington, that you need to raise taxes in order to balance the budget," Mr. Bush said. "I've been there long enough to tell you that's not the way Washington works. They're going to raise your taxes and they're going to find new ways to spend your money. The best way to reduce the deficit is to make sure we have pro-growth economic policies in place and be smart and wise about how we spend your money."

The president also defended proposed cuts in health care and student loan programs.

Senate Democratic Leader Harry Reid called the budget "immoral," saying it cuts money for the poor and those least able to afford it, while favoring wealthier Americans and special interests.

Despite an improving U.S. economy, recent opinion polls show the president's approval ratings are still below 50 percent. In speeches since last month's State of the Union address, the president has started speaking more directly about what he says is American anxiety about the future.

"One of the interesting things we face here in America is in spite of the numbers and the economic growth, there is uncertainty," Mr. Bush said. "Some of the uncertainty comes as a result of competition from places like India and China. The temptation with [in response to] uncertainty and competition is to say, 'We can't compete. Let us kind of wall ourselves off."

President Bush says he rejects protectionism and will keep America the world's economic leader not by fearing future competition but by shaping that future with good policies in Washington.