Jan. 17 (Bloomberg) -- The Bush administration is close to
completing an economic-stimulus proposal that will include $800
rebates for individuals and $1,600 for households as well as tax
breaks for businesses, people familiar with the plan said.
The proposal is subject to revision as administration
officials consult with Republican and Democratic lawmakers in
Washington, the people said.
President George W. Bush will lay out the ``principles'' of
the economic package tomorrow, though it's ``too early'' to
unveil a final proposal, according to his spokesman, who declined
to provide details. Congressional leaders say a stimulus package
may be as much as $150 billion.
Bush, who returned last night from a trip to the Middle
East, has decided the U.S. needs short-term economic assistance
from the government to avert an election-year recession, White
House officials said earlier today.
``The president does believe that over the short term, to
deal with this softening of the economy, that some boost is
necessary,'' Deputy Press Secretary Tony Fratto told reporters at
a briefing. Bush won't press Congress to extend the tax cuts
passed during his first term and set to expire in 2010 as part of
the plan.
``The President supports a permanent extension of his tax
cuts, and he supports a short-term growth package, but they are
separate,'' Fratto said.
Planning
White House and Treasury officials have been working since
late November on the outlines of a plan to stave off a recession
or ameliorate the effects if one occurs.
The plan the administration is close to proposing includes a
temporary elimination of the bottom tax rate, which is now 10
percent, and a consequent lump-sum rebate to all taxpayers,
according to the people.
Businesses would get a tax break under the plan that would
allow them to deduct 50 percent of the price of new equipment
they purchase this year. Small businesses would be able to deduct
as much as $200,000 in new equipment purchases, up from the
current $112,000 limit.
Asked about the details, a Treasury spokeswoman declined to
comment.
House Republican leader John Boehner told reporters in
Washington that a package of $100 billion to $150 billion is
being discussed by administration officials and lawmakers.
Democrats in Congress are working on their own stimulus
plan, which is also expected to include a tax rebate, as well as
public works spending and additional aid for the poor through
food stamps and other programs.
Bipartisan Support
The deteriorating economy has brought both parties to the
conclusion that legislation must be passed and implemented
quickly if it is to have any effect. The jobless rate rose to 5
percent in December from 4.7 percent a month earlier, and
economists at Goldman Sachs Group Inc., Merrill Lynch & Co. and
Morgan Stanley say the U.S. is probably sliding into a recession.
Senator Hillary Clinton today increased the size of her
stimulus proposal, to $110 billion from $70 billion because of
signs of further weakness in the economy, according to a press
release. Clinton, of New York, and Senator Barack Obama of
Illinois, are the leaders in the race for the Democratic
presidential nomination. Both have proposed packages of measures
to boost the economy.
Arizona Senator John McCain, who's seeking the Republican
nomination, today announced an economic-growth plan that would
lower the corporate tax rate to 25 percent from 35 percent and
give other breaks to business. It avoided short-term stimulus.
Federal Reserve Chairman Ben S. Bernanke told the House
Budget Committee in Washington today that a fiscal boost of as
much as $150 billion would help revive economic growth.
A package of $100 billion ``would certainly be measurable,
it would not be window dressing,'' said Bernanke.
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