Washington ? Federal Reserve Chairman Alan Greenspan told Congress on Thursday that “depressing effects” on the American economy still linger from the terror attacks and the stock market’s steep plunge.

But Greenspan opposed Democrats’ suggestions that President Bush’s future tax cuts be deferred because of the return to federal deficits.

Economic fallout from the terrorist attacks and the huge drop in stock prices is still being felt as the economy tries to make a full recovery from last year’s recession, Greenspan told the House Budget Committee.

“To date, the economy appears to have withstood this set of blows well, although the depressing effects still linger and continue to influence, in particular the federal budget outlook,” he said.

For the federal budget, the outlook has moved from black to red ink. Projections of a decade of surpluses of $5.6 trillion have been replaced with estimates of a return to sizable deficits over the next several years.

The Congressional Budget Office predicts that the deficit for this budget year, which ends Sept. 30, will hit $157 billion, ending four straight years of surpluses.

Greenspan said the fall in stock prices, which have been tumbling since the spring of 2000, was a major reason that government revenues have declined and he said this impact “will likely damp tax revenues relative to earlier expectations for some time.”

Despite the deteriorating budget picture, Greenspan rejected suggestions by Democrats on the committee that some of the $1.35 trillion in tax cuts over the next decade that were approved by Congress last year should be rescinded.

Many businesses had already made investment decisions based on the expectation of those future-year tax cuts and would view their elimination as a tax increase, Greenspan said.

Greenspan repeated his support for a trigger-mechanism that would tie any tax increases or big spending hikes that Congress passes in the future to the realization of surplus projections.

Asked whether a war with Iraq could cause a spike in oil prices that would push the country into recession, Greenspan said he viewed this as a remote possibility.

While three of the country’s past recessions did occur after big run-ups in oil prices, Greenspan said a future oil spike would not have as big an impact because the country uses less oil per unit of production now.