Posted on 01/17/2008 8:14:55 PM PST by NormsRevenge
WASHINGTON - United for urgent action, the White House and Congress raced toward emergency steps Thursday to rescue the national economy from a possible recession, including tax rebates of at least $300 a person — and maybe as much as $800. Federal Reserve Chairman Ben Bernanke endorsed the idea of putting money into the hands of those who would spend it quickly and boost the flagging economy.
All the talk of rescue efforts failed to soothe Wall Street. The Dow Jones industrials plunged 306.95 points, underscoring deepening concern about the country's economic health.
The sudden scramble to take action came as fears mounted that a severe housing slump and a painful credit crisis could cause people to clamp down on their spending and businesses to put a lid on hiring, throwing the country into its first recession since 2001.
President Bush told congressional leaders privately he favors income tax rebates for people and tax breaks for businesses, officials said. Bush spoke with congressional leaders as House aides worked behind the scenes on an emergency package that could also include more money for food stamp recipients and the unemployed.
Aides to lawmakers involved in the talks said the White House is pressing for tax rebates of $800 for individuals and $1,600 for married couples. Lawmakers were likely to settle on a $500 rebate for individuals, said an aide involved in the talks, with details for couples and people with children still being negotiated.
The rebates would likely be limited to individuals with incomes of $85,000 or less and couples with incomes of $110,000 or less, the aide said, speaking on condition of anonymity because no final decisions had been made.
The president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010, one official said. That would eliminate a potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.
Bush planned to lay out his position Friday, but he wasn't expected to go into specifics. Press secretary Dana Perino said he would demand that any package be effective, simple and temporary.
Bernanke voiced his support for a stimulus package in an appearance before the House Budget Committee. He stressed that it must be temporary and must be implemented quickly — so that its economic effects could be felt as much as possible within the next 12 months. "Putting money into the hands of households and firms that would spend it in the near term" is a priority, he said.
Especially important is making sure a plan can put cash into the hands of poor people and the middle class, who are most likely to spend it right away, he said, though he added that research shows affluent people also spend some of their rebates.
He declined to endorse any particular approach, but he did say he preferred one that would not have a long-term adverse impact on the government's budget deficit.
Bush and congressional leaders from both parties consulted via conference call Thursday for about 30 minutes. Both sides basically were in agreement that they needed to cooperate to do something quickly, Perino said.
"There is reason to be hopeful when the president recognizes there is a problem in the country," House Speaker Nancy Pelosi, D-Calif., said afterward. She has talked of a package totaling $100 billion or more. House Republican leader John Boehner of Ohio spoke of a bill on the range of $100-150 billion.
The rush to swing behind a stimulus plan underscored the political imperative of responding to a growing concern about the possibility of recession.
Senior aides to House Democrats and Republicans said in addition to included tax rebates for individuals, the emerging measure would contain tax breaks for businesses investing in new equipment, increases in food stamps, and higher unemployment benefits. They spoke on condition of anonymity, since the talks are ongoing and lawmakers have promised not to reveal details.
Boehner said he was encouraged, and so did Majority Leader Steny Hoyer, D-Md. Hoyer said of his counterpart, "He indicated that he wants to work together to get something done."
Pelosi said she wanted legislation approved within a month and said the government must "spend the money, invest the resources, give the tax relief in a way that again injects demand into the economy, puts it in the hands of those who need it most and into the middle class ... so that we can create jobs."
But Boehner said: "For this bill to become law, it cannot become a Christmas tree" for Democrats to attach their programs. "It's hard to get anything moving within a year, and most of us believe that if we're going to have a stimulative effect at helping to revive what is becoming a sluggish economy, it needs to happen quickly."
Later, Boehner emerged from a meeting with Pelosi saying he had "productive" and "substantive" talks with her and other Democratic leaders.
Sen. Harry Reid, D-Nev., the majority leader, took issue with Bush's scheduling public remarks on the issue before a deal had been struck.
"The president's strategy threatens to unnecessarily politicize the inevitable bipartisan negotiations we will need to quickly enact legislation," Reid said.
The White House took issue with that — and called Reid's office shortly after the conference call to make clear that Bush on Friday would be spelling out his broad principles, not specific legislative proposals.
White House spokesman Tony Fratto said Bush does not believe a stimulus should be offset — or paid for — by any tax or spending changes elsewhere. Some deficit-hawk Democrats have pushed for one but it is not expected to be part of a package.
For now, Bernanke was hopeful the country could skirt a dangerous downturn. "We're not forecasting recession but, rather, at this point, slow growth," he told lawmakers. Still, the toll of the housing and credit debacles will be felt for some time, he added. "We believe we'll see below-trend growth certainly in 2008 and probably early into 2009, as well."
When asked about a stimulus package totaling around $100 billion, he said the impact could be "significant," not "window dressing."
Temporary equipment tax write-off provisions for businesses also could spur spending, which would help the economy, Bernanke said. But he warned: "I hope Congress can resist having a huge list of things" that would weigh down legislation and not help the economy in the short run.
The fragile state of the economy has gripped Wall Street and Main Street and is a rising concern among voters. The situation has galvanized politicians — including those vying to be the next president — and poses the biggest test to Bernanke, who took over the Fed nearly two years ago.
Said House Budget Committee Chairman John Spratt, D-S.C.: "It has become increasingly clear that our economy is slowing down, entering a slump if not a recession." Rep. Dan Lungren, R-Calif., likened a stimulus package to a "vitamin B-12 shot."
In his testimony, Bernanke again pledged to aggressively slash a key interest rate as needed to bolster the economy. Many economists believe the Fed will lower its key rate, now at 4.25 percent, by a bold half-percentage point at its next meeting on Jan. 30. Some critics on Wall Street and elsewhere have second-guessed Bernanke for not taking action sooner and more forcefully.
I guess not since wages are down, homebuilding down, people and companies in debt, jobs disappearing and gas and food prices up. Something ugly comes our way.
Idiots running to stick their finger in the dike.
it won’t make up for what we’ve lost in the stock market or from lost pensions due to a company bankruptcy.....it won’t even pay for the huge oil run up.....
Meanwhile, over on the other side of the tracks, Joe Sixpack will get $800 for himself and $800 for his wife, despite having paid $0.00 in federal taxes in 2006. I will have to buy stock in beer and cigarette makers, to recover at least some portion of the subsequent spending spree.
Yes but the people who didn’t pay anything in are most likely to spend it and stimulate the economy unlike a person like me. I’ll either pay down my car faster or put it in a CD.
Well, it all started with Karl Marx and his strange ideas. Now we have been convinced that Jesus would steal your money and force you to give it to people that you don't want to help. That makes you a "nice" person. What that does is takes the pressure off the Mega churches to have to give to the poor so they can buy G5 jets for their pastors. That way they can fly to Washington to tell the government they need to steal more to give to the poor. Instead of the Church supporting the needy, we point them to the nearest welfare office.
I could go on for an hour, but you get the drift. We have become delusional.
I'll believe it when it's in the bank.
The REAL point of debate here, thanks.
I did see that! What are they smoking to have an idea like that?
Sailor: "Hey Captain, the boat has a leak and is taking on water! What shall we do?"
Captain: "I know - let's punch another hole in the side, that'll fix 'er!"
We can forget the undocumented Americans in our shadows. They deserve some of the largess as well!
Excellent point. Don't give one cent to anyone who is NOT paying taxes in the first place.
In my opinion, the energy and oil companies can’t wait until they can line their pockets with the money. They are just waiting to be able to run the price up higher. That is where it will go.
Look on the bright side.
You don't have to push 2 for English...... yet!
Right. Let's just turn the printing presses on and our problems will be gone. If it works in Zimbabwe it has to work here.
“If you can’t, you get a $0.50 rebate for candles”
—Candles destroy the earth! /s
Pure socialism, wealth redistribution, just like “free healthcare”. They’ve taken my money and now they are going to give it to those they deem worthy.
Has this happened before? I remember a tax rebate check in 2001 or before. Maybe? I tried to google, it but I have to get the kids going on their school work. Anyone remember?
See what I mean?
Oil Prices Rise As Economy Fears Ease
Friday January 18, 10:28 am ET
By John Wilen, AP Business Writer
Oil Prices Rise, Following Stock Markets Higher, As Fears of an Economic Slowdown Ease
http://biz.yahoo.com/ap/080118/oil_prices.html
Free to some, but not free to those of us who have paid it. If they want to give me back the money they have taken away from me at the point of a gun this year, I will take it back. It ain't "free money". It is my money they took away from me. I earned it. They took it way from me by force.
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