Fast economic fix urged

Bush, Congress moving toward rebates, incentives

January 19, 2008|By David Nitkin, Matthew Hay Brown and Jamie Smith Hopkins | David Nitkin, Matthew Hay Brown and Jamie Smith Hopkins,SUN REPORTERS

WASHINGTON -- Acknowledging the toll taken by a housing slump and lagging consumer spending, President Bush urged Congress yesterday to rush one-time rebates to taxpayers and tax incentives to businesses to give the nation's economy a "shot in the arm."

"While there's some uncertainty right now, if we act quickly and in a smart way that helps growth, we're going to be just fine," Bush said during a visit to a lawnmower manufacturer in Frederick, the type of business he said would benefit from the proposal.

The White House did not disclose details of the plan, expected to come mainly in the form of several-hundred-dollar checks, similar to those issued during a 2001 recovery program. The final package would be determined by Congress, Bush said.

But the administration wants to return about $145 billion to families and businesses, an amount equal to roughly 1 percent of the nation's gross domestic product. Lawmakers and aides involved in the talks say amounts of up to $800 for individuals and $1,600 for married couples have been discussed.

A day after talking to congressional leaders from both parties about the need for a stimulus plan, the president predicted that he and lawmakers "can come together on a growth package very quickly."

The announcement did little to help the stock market. The Standard & Poor's 500 Index finished with its biggest weekly loss in five years. After starting higher, the Dow Jones Industrial Average dropped by a half-percent by day's end.

Some interest groups pounced soon after Bush spoke, saying the president did not go far enough.

Bush's proposals "do not address crucial problems facing working families, and do not target tax benefits to those families who need them most and will spend them fastest," AFL-CIO president John J. Sweeney said in a letter to Democratic congressional leaders.

Sweeney urged lawmakers to include increased unemployment benefits, food stamps, money for state and local governments and spending for construction projects in their final plan. But the White House appeared cool to those suggestions.

"We believe that there's a great benefit to being simple. The Christmas season has come and gone. We're not trying to decorate a Christmas tree here," Treasury Secretary Henry Paulson told reporters. "If we can stay broad-based and simple, we'll be able to be quicker and be able to have a bigger impact on the economy sooner."

Still, underscoring the fragile nature of the economy, lawmakers and administration officials said that there was room to negotiate, sounding a markedly different tone than during recent rancorous Washington debates over the budget, children's health care, war spending and immigration.

"The good news is nobody has sort of dug their heels in and said, `We have to have this provision,'" said Rep. Chris Van Hollen, a Montgomery County Democrat.

"Both sides have said, here are the principles that are going to govern what goes into the package, and now we can work it out together," Van Hollen said. "As Yogi Berra said, `It ain't over till it's over,' and especially when it comes to trying to work things out in the current political environment. But we're heading in the right direction."

Economic concerns are resonating in an election year, and presidential candidates had varied reactions to Bush's plan. Sen. Hillary Rodham Clinton, a Democrat, said the proposal "shortchanges" millions of low-earning families, including blacks and Hispanics. But Republican Mike Huckabee, the former Arkansas governor, said on CNN that the president was "on the right course."

Demonstrating that he was aware of the concerns facing businesses and families, Bush left the White House yesterday to visit Wright Manufacturing Inc. of Frederick, which makes commercial lawnmowers. Founded by Bill Wright, the company has grown from 60 to 100 employees, and it used the earlier tax incentives to invest in new equipment, the president said.

Bush toured the spotless factory, located in an industrial park off English Muffin Way, greeting welders with a hearty "Hola!" before arriving at a display of the company's signature product: a yellow mower called "The Stander."

"Fire this sucker up," the president said before taking his place behind the controls, pivoting the mower back and forth as its wheels squeaked on concrete.

"I love the entrepreneurial class," Bush said. "I love people who have a dream and work hard to achieve the dream."

Accompanying Bush on his tour was Rep. Roscoe G. Bartlett, a Republican who represents Frederick. "I think it's really nice that he was lauding a local, small business, a family business that was [in] manufacturing," Bartlett said.

Some economists agreed yesterday that returning money to consumers and aiding businesses could provide a boost during a tenuous time.

Robert T. Sweet, an economist at MTB Investment Advisors, an M&T Bank division based in Baltimore, said it was "touch and go" whether the country saw any economic growth at the end of last year.

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