NEW YORK (CNN/Money) - A large federal budget deficit threatens the strength of the U.S. economy, Treasury Secretary John Snow said Tuesday, as he repeated the Bush administration's previous pledge to cut the deficit in half in five years.

CNNfn's Allan Chernoff reports from MONEY Magazine's third annual Money Summit on Treasury Secretary John Snow's comments. Play video (Real or Windows Media)

Speaking in New York at MONEY Magazine's third annual Money Summit, Snow noted recent job growth and other evidence of a healthy economic expansion, and he said the tax cuts promoted by President Bush were the reason for the strong recovery from the 2001 recession, the Sept. 11 terror attacks and other woes.

But some critics have complained that the tax cuts helped foster the largest budget deficit, as a percentage of gross domestic product, in 20 years in 2003. And, in response to a question from one of the summit participants, Snow acknowledged deficits were a problem potentially threatening the economy's health.

"Deficits do matter," he said.

Snow said deficits have to be viewed in terms of their relationship to the business cycle; many economists believe deficit spending can help lift a sluggish economy. But he also said that the current deficit level is "too high."

"It's unwelcome, it has to come down, and it will come down," he said, saying strong economic growth would help the government collect more taxes and that Bush would try to keep spending by Congress in check.

Some tax cut supporters, in fact, have suggested that deficits don't matter, saying the economy survived massive deficits incurred during the late Ronald Reagan's presidency. A large tax increase during Reagan's second term, and other tax increases and spending curbs during the administrations of George H.W. Bush and Bill Clinton helped close the budget deficit in the mid 1990s.

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Vice President Dick Cheney spoke at the Summit Monday night and also promised to cut the deficit in half in five years. Former Treasury Secretary Paul O'Neill, in his book The Price of Loyalty, said Cheney was one of the tax-cut supporters who said deficits don't matter, an assertion Cheney has denied.

Sponsored by MONEY magazine, the Money Summit is a gathering of more than 90 financial leaders and regulators, including Vanguard founder John Bogle, Smith Barney CEO Sallie Krawcheck, Treasury Secretary John Snow and New York Attorney General Eliot Spitzer.