President Bush said Wednesday that the combination of Republican tax cuts and new pro-business policies is helping to spread "economic vitality" across the country and has put the White House ahead of pace toward trimming the deficit in half by 2009.

"The economy of ours is strong, and it is getting stronger," Bush told a group of economic conservatives gathered for the American Legislative Exchange Council meeting here. The president said the tax cuts enacted in his first term "stimulated" economic growth and helped generate a recent surge in government revenue that is helping to erase some of the deficit.

Bush's comments marked the beginning of a White House offensive to take credit for both the economic uptick and three pro-business policies recently passed by the Republican-controlled Congress.

The president has not realized the lift in public polls that aides had hoped for amid the upbeat economic news and bipartisan agreements on Capitol Hill. With Bush's approval ratings stuck at or near all-time lows in several national surveys, GOP strategists suspect that high gasoline prices and uncertainty in Iraq have overshadowed job gains, a strong stock market, and better-than-expected economic growth and legislative results.

The economy expanded at a 3.4 percent annual pace from April through June, the ninth straight quarter at 3 percent or above, the Commerce Department reported last week. At the same time, unemployment has dipped to 5 percent, which is low by historical standards.

Bush and congressional Republicans plan to spend much of August touting the economic indicators and the potential benefits of the new energy and transportation policies, which will pour billions of dollars into local communities and scores of industries.

The president plans to sign the energy bill, which provides a mix of tax breaks and subsidies to promote domestic production of oil, natural gas and other energy sources, at a ceremony Monday in New Mexico, two days before flying to Illinois to sign the highway spending bill. Bush did not discuss the high cost of these programs with the crowd, which was filled with advocates of a smaller federal government.

While some of Bush's signature second-term priorities, including the restructuring of Social Security, are stalled in Congress, Republicans have delivered a number of victories for their corporate allies. In addition to the energy and highways bills, Bush recently signed a new trade agreement with Central America, while Republicans neared final agreement on legislation to shield gun manufacturers from lawsuits.

"I am proud to report to you that we're making headway when it comes to legal reform," Bush said.

Still, the president faces several challenges to the agenda he laid out in the early days of the second term, including Social Security, expanding the No Child Left Behind education law to cover high schools and changing the immigration system.

It is also unclear whether Congress will restrain spending enough for Bush to meet his goal of cutting the deficit in half by 2009. The White House recently projected the budget deficit will slip to $333 billion this fiscal year from $412 billion in 2004, as a result of an unexpected surge in tax receipts.

The president is also headed for a collision with many Republicans, most notably Senate Majority Leader Bill Frist (R-Tenn.), over government-funded stem cell research. Frist infuriated many social conservatives, including some Bush advisers, last week when he endorsed legislation that would expand federally funded research, increasing the odds it will pass this year.

Bush, in an interview with regional newspapers published Wednesday, said he would veto the bill. "They have the prerogative to pass laws. I have the prerogative to set limits on what I think is right," he said.