White House has confidence in Fed: budget director

WASHINGTON (Reuters) - The Bush administration has "a lot of confidence" in the Federal Reserve and its chairman, Ben Bernanke, and wants to maintain their independence, White House budget director Jim Nussle said on Tuesday.

Nussle, speaking on CNBC television, declined to comment directly on the Fed's decision on a half-percentage point cut in interest rates on Tuesday, but said he welcomed actions to promote U.S. economic growth.

"Making sure we have strong growth in the economy is always important. Anything that can positively impact that is something that is a good thing," Nussle said.

Nussle, a former Republican congressman from Iowa who started his White House job earlier this month, said he believed that the federal government was still on a path to balance the budget by 2012.

But that balance was only "one step on the way" to bigger budget challenges by 2017, when Social Security payouts are forecast to exceed payroll tax collections, Nussle said.

The budget director said rising spending demands from so-called entitlement programs such as Social Security, the Medicare health care funding program for the elderly and Medicaid for the poor were the biggest challenge to the nation's fiscal health.

"They are growing at unsustainable rates," he said. "We need to have a policy."