Bush Airs Economic Stimulus Package
President Bush is putting together his first public call for an emergency fiscal stimulus bill, while negotiations on Capitol Hill focus on rebates for taxpayers and other steps to jump-start the sagging economy.
According to The Associated Press, Bush planned to lay out his position today (Jan. 18), but he wasn't expected to go into specifics. Press secretary Dana Perino said Bush would demand that any package be effective, simple and temporary – mirroring calls by Democratic lawmakers for a "timely, targeted and temporary" stimulus measure.
Taxpayers could receive rebates of up to $800 for individuals and $1,600 for married couples under a White House plan. Although lawmakers were considering smaller rebate checks and more money for food stamp recipients and the unemployed, Bush told congressional leaders that he favors income tax rebates for people and tax breaks for business investment.
Federal Reserve Chairman Ben Bernanke entered the stimulus debate Thursday, endorsing the idea of putting money into the hands of those who would spend it quickly and boost the flagging economy.
The scramble to take action came as fears mounted that a severe housing slump and a painful credit crisis could cause people to clamp down on their spending and businesses to put a lid on hiring, throwing the country into its first recession since 2001.
Aides to lawmakers involved in the talks said the White House also wants to eliminate the 10% income tax bracket for one year and issue a rebate within months. Advocates for the poor said that tens of millions of people in lower income ranges would be left out or not fully feel the benefit of the White House plan.
Lawmakers were instead discussing a $500 rebate for individuals, the aides said, with details for couples and people with children still being negotiated.
The rebates would likely be limited to individuals with incomes of $85,000 or less and couples with incomes of $110,000 or less, the aides said, speaking on condition of anonymity because no final decisions had been made.
The president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010, officials said. That would eliminate a potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.
Bernanke voiced his support for a stimulus package in an appearance before the House Budget Committee. He stressed that it must be temporary and must be implemented quickly – so that its economic effects could be felt as much as possible within the next 12 months.
"Putting money into the hands of households and firms that would spend it in the near term" is a priority, he said.
Especially important is making sure a plan can put cash into the hands of poor people and the middle class, who are most likely to spend it right away, he said, though he added that research shows affluent people also spend some of their rebates.
Bernanke declined to endorse any particular approach, but he did say he preferred one that would not have a long-term adverse impact on the government's budget deficit.
Senior aides to House Democrats and Republicans said in addition to included tax rebates for individuals, the emerging measure would contain tax breaks for businesses investing in new equipment, increases in food stamps and higher unemployment benefits.