Bush urges release of $150bn rescue package

Published Saturday, January 19, 2008

By Agencies

With recession fears rising and the stock market tumbling, President George W Bush is advocating up to $150 billion (Dh5487.5 billion) in tax relief for consumers and businesses and says there is no time to waste.

Bush's urgent remarks gave fresh impetus on Friday to congressional leaders already at work on an economic rescue package that would include extra money for food stamps, scrip with which the poor can buy food, and jobless benefits in addition to tax rebates of hundreds of dollars each for millions of Americans. The hope is that people would immediately spend the rebates and give the debilitated economy a boost.

"I believe we can come together on a growth package very quickly, and we're going to need to," Bush said.

Wall Street remained skeptical. The Dow Jones industrial average dropped 59.91 points after plummeting 306 points a day earlier.

Bush said the rescue effort should be quick and temporary, a one-time boost for a national economy that is in danger of sliding into the first recession since 2001 if it has not already crossed that line. The president's tone was somber in his remarks at the White House, but his mood was upbeat later as he visited a factory to underscore his focus on the economy.

"Crank this sucker up," he exclaimed, an exhortation that could fit his hopes for economic revival, though he was referring specifically to a huge riding mower at Wright Manufacturing Inc. Once the engine was roaring, Bush jumped on and steered the mower playfully.

Despite darkening economic reports, he said that if Congress should pass a quick federal relief package, "We're gonna be just fine."

The president and Congress are scrambling to act as fears mount that a continuing severe housing slump and painful credit crisis could cause people to close their wallets and force businesses to put a lid on hiring, throwing the world's largest economy into its first recession since 2001. The state of the economy has become a major topic in the US presidential campaign, supplanting the Iraq war.

At the White House earlier, Bush avoided the word "recession" but acknowledged the economy was severely strained by a long housing slump and high oil prices and said a downturn could occur.

For a stimulus package to have much impact, he said, it would need to represent roughly 1 per cent of the gross domestic product, or about $140 billion (Dh511 billion) to $150 billion (Dh547.5 billion).

In Congress, Democratic leaders pledged to cooperate with Bush and congressional Republicans. Sen Harry Reid, leader of the Senate's Democratic majority, had criticized Bush on Thursday for deciding to speak publicly on the package before a deal was struck, but Reid said Friday he was encouraged by the president's remarks.

Some Democrats said they were disappointed that Bush had focused only on taxes.

Signaling a willingness to cooperate, Rep Barney Frank was to say in the Democrats' Saturday radio address: "Democrats stand ready to work with the president and congressional Republicans to put together a bipartisan package including tax rebates for most Americans, and one-time increases in programs directed at those who are bearing the heaviest burdens in this economy."

Treasury Secretary Henry Paulson said the administration was being intentionally vague so as not to taint negotiations with lawmakers, but he spoke with vigor about fast action.

Paulson said business incentives the administration envisions would help companies invest, expand and hire more workers. The White House estimates that a stimulus in the range of what Bush wants could create 500,000 additional jobs this year.

Democratic congressional leaders agree that tax relief should be a part of the package. Lawmakers are considering tax breaks for businesses investing in new equipment and $500 (Dh1,825) rebates for individuals, said congressional aides involved in the talks. Details for couples and people with children were being negotiated.

Senior aides to House Democrats and Republicans said the measure also could contain increases for food stamps and higher unemployment benefits.

Bush has gone down the tax rebate road before. In 2001, he added refunds of up to $300 (Dh1,095) per individual and $600 (Dh2,190) per household as a recession-fighting element of the tax cut plan that had been the cenrepiece of his 2,000 campaign. (AP)

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