Bush Calls for $150 Billion Stimulus Plan for Economy

Bush Calls for $150 Billion Stimulus Plan for Economy

Jan. 18 (Bloomberg) -- The Bush administration proposed a growth package of as much as $150 billion to counter escalating risks to an economic expansion now in its seventh year.

``Passing a new growth package is our most pressing economic priority,'' President George W. Bush said at the White House after meeting with his economic advisers.

Treasury Secretary Henry Paulson said the plan would help create about a half-million jobs this year. Bush said Paulson will lead the administration's efforts at crafting a deal with the Democratic-majority Congress.

While the economic fundamentals are strong, ``there is a risk of a downturn,'' Bush said. The plan must include tax incentives for businesses and ``direct and rapid income tax relief for the American people,'' he said.

Bush said the package should total about 1 percent of gross domestic product, which was an annualized $13.97 trillion in the third quarter. Paulson later cited at a press briefing an estimate of $140 billion to $150 billion.

A continued decline in the housing market and the rising cost of oil may cause more harm to the economy and jeopardize job creation, the president said.

The U.S. unemployment rate in December climbed to 5 percent, the highest in two years, from 4.7 percent the previous month. Employment growth in the U.S. was 1.33 million last year, down from 2.26 million jobs a year earlier.

Federal Reserve Chairman Ben S. Bernanke told lawmakers yesterday that a stimulus plan of up to $150 billion would be ``significant'' and not ``window dressing.''

No Specifics

Bush didn't offer specifics on a stimulus plan, saying he wants to reach an agreement with Congress. The administration is considering offering $800 tax rebates for individuals and $1,600 for households, people familiar with the discussions said.

``My advisers and many outside experts expect that our economy will continue to grow over the coming year, but at a slower rate than we have enjoyed for the past few years,'' Bush said.

While the administration has taken steps to help homeowners avert foreclosure and asked Congress to allow the Federal Housing Administration to provide additional relief, more help is needed to bolster the economy, Bush said.

``This growth package must be big enough to make a difference in an economy as large and dynamic as ours, which means it should be about 1 percent of GDP,'' Bush said.

The plan must be temporary and shouldn't include any tax increases, Bush said.

Conferring With Congress

``Yesterday I spoke to members of the congressional leadership from both political parties,'' Bush said. ``I was encouraged by those discussions, and I believe there is enough broad consensus that we can come up with a package that can be approved with bipartisan support.''

The White House and Congress are trying to hammer out an agreement quickly, with some Democrats saying it could come in 30 to 45 days.

White House spokesman Tony Fratto suggested the president may never offer a specific package of stimulus proposals on his own. ``That remains to be seen,'' Fratto said. Bush has appointed Paulson ``to come up with a bipartisan approach,'' said Ed Gillespie, the president's top political adviser.

Bush later today was to visit workers and executives at Wright Manufacturing, Inc., a lawn equipment maker, in nearby Frederick, Maryland, to show the White House is aware that Americans are feeling the pinch of higher gasoline prices and falling home values.

BLOOMBERG