Bush warns Democrats on stimulus package

Opposes proposals that wouldn't have immediate effect

Email|Print| Text size + By Jennifer Loven
Associated Press / January 20, 2008

WASHINGTON - President Bush said yesterday that "the kind of spending projects that would have little immediate impact on our economy" should not be part of any stimulus package, setting the stage for a possible clash with Democrats.

Bush and the Democrat-controlled Congress are emphasizing their desire to work together as they rush negotiations on a short-term measure to prevent the economy from falling into recession. But while there is broad agreement that one-time tax rebates for consumers will be part of the package, there are different priorities at work for the rest of the measure.

The president wants to devote a portion to incentives for businesses to invest. Democrats want to add spending for food stamps, unemployment benefits, and infrastructure projects.

"This growth package must be built on broad-based tax relief that will directly affect economic growth - not the kind of spending projects that would have little immediate impact on our economy," the president said in his weekly radio address. "This growth package must be temporary and take effect right away."

Representative Barney Frank of Massachusetts, speaking for the Democrats in their radio address, said any stimulus package must help Americans hardest hit by the weakened economy. He said Democrats want to work with the president and congressional Republicans on a plan that includes tax rebates for most Americans, as well as one-time increases in some programs.

"Economists agree that middle- and working-class people are likely to spend that money in a way that will effectively stimulate the economy and create jobs," Frank said.

"We must cooperate to enact immediately aggressive measures that respond to the economic downturn, while we simultaneously continue a healthy debate about the role of government in a modern economy," Frank said.

On Friday, Bush said any plan, to be effective, would need to represent roughly 1 percent of the gross domestic product, or about $140 billion to $150 billion.

Treasury Secretary Henry Paulson said the biggest chunk of the economic package the administration is considering would be targeted to individual taxpayers, though he would not talk about how big these checks might be.

A Republican official, speaking on the condition of anonymity because the package is not finalized, said the president was hoping to target about $100 billion toward individuals and about $50 billion toward businesses.

Paulson said Bush doesn't support cash for people who do not make enough to pay federal income taxes. The administration also does not back ideas that are not tax-related, favoring simplicity to ensure a package could be passed and implemented quickly, Paulson said. "We're not looking to decorate a Christmas tree," he said.

Some Democrats were disappointed. Senator Edward M. Kennedy of Massachusetts said he agrees with Bush that a plan must be approved quickly, but he said it must help working families.

"The people who are struggling every day to pay their bills, heat their homes, and pay their mortgages need our help now," Kennedy said.

Democratic leaders are considering a $500 rebate for individuals, according to aides involved in the talks. Details for couples and people with children are being negotiated.

Under the current White House plan, rebate checks would not be sent to the working poor who do not make enough to pay income taxes but do pay Social Security and Medicare payroll taxes.

Families of four earning less than $24,900 a year would not get a rebate under the White House plan, said Chad Stone of the Center on Budget and Policy Priorities.

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