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Japan has long been pressing Washington to raise taxes to cut the federal deficit, and a senior Tokyo official said Wednesday that may have helped get President Bush to agree to the idea of "tax revenue increases."

Misoji Sakamoto, chief Cabinet secretary, said Japanese officials strongly supported U.S. measures to cut the deficit in talks with U.S. negotiators in Tokyo this week. The negotiators held a previously unscheduled third day of talks Wednesday.Japan has long argued that a chief cause of the U.S. trade deficit and general lack of competitiveness of American companies overseas is the budget deficit.

The United States told Japan Tuesday it will try to put its budget into the black as its part of the bargain in trade talks.

A drop in the federal deficit helps increase U.S. business competitiveness by lowering the amount of money the government borrows. With fewer borrowers chasing a limited amount of money, it is easier for businesses to borrow money at lower interest rates.

The yearlong talks, known as the Structural Impediment Initiative, are aimed at reforming the basic economic structures in both countries underlying the nearly $50 billion annual U.S. trade deficit with Japan.

The U.S. side outlined a budget-cutting plan Tuesday that calls for a balanced budget by 1993, said a senior Bush administration official participating in the negotiations.

The senior official, who briefed reporters on the condition of anonymity, did not say tax increases were part of the plan but said surplus cash from the Social Security fund would be used to pay off federal debt.

In April, Japan pledged to reform its distribution system and take other market-opening measures and the United States promised to cut its deficit and attack its low savings and investment rates.