Bush seeks tax relief package to boost US economy
( dpa ) - President George W Bush called Friday for about 140 billion dollars in emergency tax relief to boost the flagging US economy and avoid a recession, warning that the nation faces the "risk of a downturn."
Outlining his vision of an economic stimulus package, he urged Congress to pass a set of temporary measures quickly and said they should be worth about 1 per cent of US gross domestic product to have a significant impact.
Bush acknowledged that the economy is cooling due to slowing job creation, higher oil prices and the housing-market slump, all of which had led to "real concerns" about the world's largest economy.
"And there is a risk of a downturn," he said. "Passing a new growth package is our most pressing economic priority."
He called for tax relief for US businesses and individuals to spur investment and put more spending money in people's pockets. Consumer spending makes up about two-thirds of the US economy, the world's largest.
Most likely, the package will include a one-time rebate for US taxpayers. At the same time, the loss to the government's coffers must be limited to avoid "significantly" worsening the budget deficit, Treasury Secretary Henry Paulson said.
Many experts believe the 14-trillion-dollar US economy is headed for - or has already begun - a recession. The Bush administration insists the country is headed only for slower growth, but Paulson acknowledged there was no easy fix.
"There are no silver bullets. Nothing is perfect," he told reporters.
The economy grew at a nearly 5 per-cent annual rate in the third quarter of 2007, but economists believe it slowed sharply in the last three months of the year.
"A huge part of this is going to be speed, getting money out quickly," Paulson said. The bulk of tax relief should be aimed at consumers, he said.
A key goal is to dampen the fallout from the subprime mortgage meltdown and the collapse of a home-price bubble that helped finance consumer spending - an unavoidable bust after years of "unsustainable" price rises in the real-estate market, Paulson said.
Bush said that he remains optimistic about the economy's future and is confident he can reach a deal with the Democratic-led Congress.
"We're in the midst of a challenging period, and I know that Americans are concerned about their economic future. But our economy has seen challenging times before, and it is resilient," he said.
The flagging economy risks clouding Bush's last year in the White House before his term ends next January. Recession fears are rippling into the 2008 presidential election campaign as Democratic and Republican candidates jostle to present plans to bolster the economy.
On Thursday, US Federal Reserve chief Ben Bernanke backed short-term government action to boost the economy.
Independently of the administration, the central bank is expected to cut US interest rates further at its next decision meeting on January 30. Lowering the cost of borrowing can spur investment and consumer spending.
Bush had been expected to present his ideas for a stimulus package in his January 28 State of the Union speech, but the Democratic-led Congress stepped up calls for action while Bush was abroad on a Middle East trip last week.
"We have an opportunity to do it sooner and the president sees no reason to wait for" the annual policy speech, White House spokesman Tony Fratto said.