Bush Backs up to $150 Billion in Tax Breaks to Help Economy

WASHINGTON — President Bush urged Congress on Friday to approve up to $150 billion in temporary tax relief, saying if that economic "shot in the arm" were provided quickly, the country would be "just fine."

"We need to get this deal done and get it out," Bush said while visiting a factory in Frederick, Md., roughly 50 miles north of Washington. "I believe we can come together on a growth package very quickly."

Bush's outline of his "principles" for an economic stimulus package drew a mild response from the Democrats who control Congress, a sign that agreement on the details might be reached quickly.

The White House said the package must include tax incentives for business investment and speedy tax relief for workers. It said that to be large enough to have an impact, the package should be roughly equivalent to 1 percent of the gross domestic product, the sum of all U.S. goods and services.

Treasury Secretary Henry Paulson said that would equal $140 billion to $150 billion. On Thursday, Federal Reserve Chairman Ben Bernanke told Congress it would be "reasonable" for the government to spend up to $150 billion.

Paulson said that a stimulus of the size favored by Bush could create 500,000 additional jobs this year.

"The cost of not acting has become too high," Paulson said. "We must act now."

He said most of the stimulus package should be aimed toward individual taxpayers, reflecting worries among economists about a drop in consumer spending as the economy slows.

But Bush also urged targeting tax incentives to businesses to spur investments. "Giving them an incentive to invest now will encourage business owners to expand their operations, create new jobs and inject new energy into our economy in the process," he said.

Bush did not say what size tax rebates or other tax breaks individuals might expect in the package, but he said it would help the economy. "Americans can spend this money as they see fit: to help meet their monthly bills, cover higher costs at the gas pump, pay for other basic necessities," he said.

During the last recession in 2001, the Bush administration backed passage of tax rebates of up to $300 per individual and $600 per household. Congressional Democrats have been talking about bigger rebates this time — up to $500 for individuals. But those might be limited to individuals with incomes of $85,000 or less and couples with incomes of $110,000 or less.

The Democrats also are calling for other types of aid, such as temporary increases in food stamps, unemployment benefits and job training programs.

"We must do the most for those who need it most," said Sen. Edward Kennedy, D-Mass., chairman of the Health, Education, Labor and Pensions Committee. "The people who are struggling every day to pay their bills, heat their homes, and pay their mortgages need our help now."

But other Democrats, including some who have battled Bush on economic issues, released statements praising his remarks and his willingness to seek bipartisan agreement on the stimulus package.

House Speaker Nancy Pelosi, D-Calif., issued a statement that did not address any of Bush's specific points, but said "Congress will continue to work with the administration to stimulate the economy in a way that is timely, targeted, and temporary."

On Thursday, Democratic and Republican leaders spoke with Bush on a conference call about their priorities. All have pledged swift action to help an economy being pulled down by rising mortgage defaults, increasing unemployment and financial market turmoil.

More and more economists are now saying the country may well be on the verge of slipping into a recession, defined as two consecutive quarters of shrinking GDP. Many, including Bernanke, say that by quickly putting more money into Americans' pockets, the depth of the downturn can be lessened.

Bush, now in the final year of his two terms, said the U.S. economy is "in the midst of a challenging period." But he added that it "has seen challenging times before. It is resilient."

Bush repeatedly has said he wants Congress to make permanent all of the temporary tax cuts made in 2001 and 2003. But the White House has made it clear that in the face of intense opposition from Democrats, it will treat those tax cuts as a separate issue so that the economic stimulus package can move quickly.