Bush may weigh stimulus plan

Lawmakers say Congress ready to team up on economic relief

January 12, 2008|By New York Times News Service

WASHINGTON -- The Bush administration and congressional leaders, increasingly concerned about a possible recession, are moving closer to agreeing that an economic stimulus package is needed soon, Washington officials said yesterday.

A Republican familiar with the administration's thinking said that Bush would present ideas to stimulate the economy, most likely in the form of tax relief, in his State of the Union message on Jan. 28.

Bush will not decide on the details until he returns from the Middle East next week.

Democrats and Republicans on Capitol Hill are also suggesting that they might be able to put aside long-standing partisan differences and work on a stimulus measure soon, lawmakers and congressional aides said yesterday.

In a fresh sign of the possibility of an agreement on a roughly $100 billion package of tax cuts and spending to spur the economy, Nancy Pelosi of California, the speaker of the House, and Sen. Harry Reid of Nevada, the majority leader, wrote to Bush yesterday, saying that "we want to work with you."

On Monday, Bush acknowledged that Americans were "anxious about the economy" and said that he was studying what actions to take. But the Republican source, speaking anonymously to avoid pre-empting the White House, said, "If the decision was going to be `no,' he wouldn't have put that out there."

Some Democrats say they could support tax relief focused on lower-income people, and perhaps even tax cuts for corporations, if the White House and the Republican congressional leadership accepted some spending increases, such as extended jobless benefits or aid to states to help them avert spending cuts.

Responding to the letter from Pelosi and Reid, Tony Fratto, a White House spokesman, said Bush had instructed aides to get views from all sides as he decided on a possible economic package. "We would of course want to proceed in a bipartisan way," Fratto said, adding that Bush planned to meet, perhaps next week, with Pelosi and Reid to report on his Middle East trip.

Some lawmakers said that calls from the presidential campaign trail for limiting partisanship and changing the way Washington works were resonating on Capitol Hill but that it would still not be easy for the Bush administration and Democrats to bury their ideological differences on an economic rescue package.

One model could be the bipartisan measure combining tax rebates, corporate tax relief and unemployment benefits that Congress approved in the last economic slump, in March 2002.

But these Democrats said that the White House would have to agree not to try to attach favorite tax measures, such repealing the estate tax or making permanent Bush's 2001 and 2003 tax cuts, just as Democrats would have to refrain from attaching extraneous spending programs.

"It would make sense for the president to do something in a bipartisan way," said Rep. Charles B. Rangel, a New York Democrat and chairman of the Ways and Means Committee. "But I'm scared to death to even talk about tax rebates because of what that might open up."

A senior Republican aide said: "Republicans will have to talk about making the tax cuts permanent and all that kind of stuff. Democrats are going to want things on their long-term agenda. But if you figure those cancel each other out, there's probably a playing field where everyone can agree."

Democrats appeared to be further along in their thinking than the administration, having decided in December to spend the early part of 2008 blaming Bush for the economic anxieties of the middle class. Until recently, Republicans in Congress and in the presidential campaigns have said the economy was healthy.

With the House returning next week, Rep. Rahm Emanuel of Illinois, the House Democratic caucus leader; Rep. James E. Clyburn of South Carolina, the Democratic whip; and Rep. Barney Frank of Massachusetts, the chairman of the Financial Services Committee, plan major economic speeches.

Democrats are planning a party retreat at the end of the month where they are scheduled to hear from Ben S. Bernanke, the chairman of the Federal Reserve.

Still, some Bush administration officials say any action should be sooner rather than later. "Time will be of the essence," Henry M. Paulson Jr., the Treasury secretary, said yesterday.

The tone changed quickly over the last few weeks, especially after the level of unemployment grew, oil prices reached $100 a barrel, the stock market stumbled and the housing crisis worsened. Leading Republican and Democratic economists soon began voicing fears of a recession, with some even suggesting one had already begun. New polls show Americans are increasingly alarmed, and the topic has figured more and more in presidential debates.

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