Bush, Congress Discuss $150 Bln Lift to Economy

President George W. Bush speaks via conference call to Bicameral and Bipartisan leadership from the Oval Office as Treasury Secretary Henry Paulson (R) looks on from the White House in Washington, January 17, 2008. [Photo: Joyce N. Boghosian/The White House/Handout/Reuters]

President George W. Bush told lawmakers on Thursday he wants tax rebates for families and breaks for businesses in a rescue plan for the struggling U.S. economy that could total up to $150 billion.

Amid worries that the United States may already be in a recession, Bush held a private conference call with leaders of the Democratic-led Congress and their Republican counterparts.

A delicate set of negotiations took place and the president shifted gears from his initial plan to outline an economic stimulus plan on his own. Instead, he agreed to hammer out the details of the package in collaboration with legislators, congressional sources said.

"In the next few days, through ongoing bipartisan negotiations, we are hopeful that we will agree on legislation that provides timely, targeted, and temporary assistance to America's middle class," House of Representatives Speaker Nancy Pelosi said in a statement.

Under discussion is a total package of $150 billion that would include both tax breaks and some spending, such as help for the unemployed, according to sources familiar with the matter who spoke on condition of anonymity.

About two-thirds of the package would be aimed at providing cash and assistance to families, with the rest focused on businesses, one source said.

The White House declined to discuss the details of the talks and officials would not say which approach Bush favors.

Bush is to speak on Friday in general terms about what he kinds of economic measures he would like to see.

"The most important thing is that they should be temporary, they need to be effective, they need to be things that we can get done quickly," said White House spokesman Tony Fratto.

The talks between the White House and Congress have focused on cutting the 10 percent income-tax bracket to 3 percent or zero and giving households the money in advance as a rebate.

Businesses would be allowed to take an immediate tax deduction for 50 percent of their new investments.

BERNANKE ADDS WEIGHT

The conference call between Bush and members of Congress took place after Federal Reserve Chairman Ben Bernanke threw his weight behind the idea of a fiscal package to shore up the economy.

But Bernanke said in a congressional hearing it was "critically important" that any fiscal measures be designed to kick in quickly -- comments that may lend momentum to the efforts to reach a deal.

Bridging the differences between Bush and the Democratic-led Congress, however, will not be easy. The two sides battled fiercely last year on issues from health care to the Iraq war.

On the stimulus package, Republicans favor steps like tax breaks for businesses, which they say would help create jobs.

But Democrats want to see more help for low- and moderate-income people, including tax rebates, assistance for the unemployed and additional spending on food stamps. They also want financial aid to state governments.

Bush, who just returned from a nine-day Middle East tour, had indicated before the trip that he was looking at economic options but also signaled he might include in any proposal the idea of making permanent his 2001 and 2003 tax cuts.

That would be a nonstarter with Democrats and the White House has backed away from seeking to make it part of a short-term stimulus package.
There have been loud calls for a measure to boost the economy from the campaign trail, where candidates are vying to succeed Bush in the November 4 election.

All three major Democratic candidates -- Sen. Hillary Clinton, Sen. Barack Obama and former Sen. John Edwards -- have offered plans containing spending and tax-cut ideas.

Republican Sen. John McCain on Thursday laid out a proposal for cuts in corporate tax rates and incentives for companies to invest in new equipment and research. One of his main Republican rivals, former Massachusetts Gov. Mitt Romney, is also getting ready to unveil a plan.