January 18, 2008
Bush Pushes Tax Cuts As Cure For Economy's Ills
As expected, President Bush publicly called on Congress today to prioritize an economic stimulus package that will include immediate tax rebates for Americans. The new sense of urgency comes one day after Federal Reserve Chairman Ben Bernanke recommended the government take immediate measures to perk up economic growth.
"I've concluded that additional action is needed," Bush said in a brief statement at the White House. "Congress and the administration need to work to enact an economic growth package as soon as possible."
The president indicated that the White House and congressional leaders from both parties were largely in agreement on the outline of the package. The legislation is expected to include $145 billion in immediate tax relief, mostly in the form of rebates.
"The package must be big enough to make a difference in an economy as large and as diverse as ours," Bush said, recommending that the stimulus be equivalent to 1 percent of GDP. "This package must be temporary and take effect right away, so we can get help to our economy when it needs it most."
The president's previous assessments of the economy have been mostly upbeat, despite the carnage resulting from the housing and credit meltdowns. In December, Bush announced a program designed to aid struggling homeowners and put the brakes on foreclosures. Big banks and brokerages including Merrill Lynch and Citibank reported record losses stemming from the subprime crash in the last quarter. Those negative reports, plus sluggishness in productivity and job growth, plus continued softness in the dollar, plus record-high gas prices, have sent Wall Street into a tailspin.
Volatility in the markets combined with Bernanke's recommendations yesterday seem to have forced the White House to move more quickly on a stimulus plan than it intended. Economists are also concerned that widespread consumer angst will act as a self-fulfilling prophesy. In other words, if Americans cut back on spending enough, they very well could push the economy into a recession.
The president called for "direct and rapid income tax relief for the American people," which they would use "as they see fit." The rebates are expected to be more than the $300 many Americans received as part of the post-9/11 stimulus package. On Tuesday, the non-partisan Congressional Budget Office signed off on proposals to inject cash into households, extend unemployment benefits and boost food stamps.
Democrats and Republicans in Congress seem to be on board with the basic outlines of the package, and leaders in the House and Senate have indicated they will prioritize speed when hammering out the legislation. Leaders of both parties teleconferenced with Bush during Bernanke's testimony yesterday.
"I was encouraged by those discussions, and I believe there is enough consensus that we can pass a package that can be approved with bipartisan support," Bush said. But as per usual, he warned lawmakers not to tuck tax increases into the bill.
Bush again called on Congress to make his tax cuts permanent, although it seems Republicans won't attempt to pursue that in the stimulus package for expediency's
Some economists are forecasting a recession this year, it's by no means an overwhelming majority. Quite a few market analysts believe the nation's collective neurosis about a recession is premature, and Bush seemed to indicate he agrees.
"We can provide a shot in the arm to keep a fundamentally strong economy healthy," Bush said. "Americans have shown time and again they are the most industrious, creative and enterprising people in the world. That's what's made our economy strong and that's what will make us stronger in the challenging times ahead."
Posted at 12:19 PM
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Bush Administration, Congress, Economy, President Bush, Taxes
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