Bush: Economy Needs $145B Shot In The Arm

President Urges Tax Relief, Other Incentives To Fend Off Possible Recession

(CBS/AP)  President Bush embraced as much as $150 billion in tax relief on Friday to jump start the lackluster economy. If Congress passes an economic stimulus package, the country will be "just fine," he said.

Mr. Bush said in a White House announcement that such a growth package must also include tax incentives for business investment and quick tax relief for individuals.

The big question is how much money would each person get? The president didn't go into detail - for fear of upsetting negotiations with Congressional Democrats. But behind the scenes, White House officials have told Congress they'd like a rebate of $800 for a single person, $1,600 for a couple - as well as small business tax breaks, reports CBS News senior White House correspondent Bill Plante.

To be effective, Mr. Bush said an economic stimulus package would need to roughly represent 1 percent of the gross domestic product - the value of all U.S. goods and services and the best measure of the country's economic standing.

Later, visiting a manufacturing plant in Frederick, Md., about 50 miles north of Washington, Mr. Bush said: "We need to get this deal done and get it out."

"I believe we can come together on a growth package very quickly," the president said. Earlier, he had said, "There is a risk of a downturn."

Treasury Secretary Henry Paulson said 1 percent of GDP would equate to $140 billion to $150 billion, which is along the lines of what private economists say should be sufficient to help give the economy a short-term boost.

Paulson said the largest part of the stimulus package would be targeted to individual taxpayers. One Republican official, speaking on condition of anonymity, said Mr. Bush was hoping to target about $100 billion toward individuals and about $50 billion toward businesses.

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

While Mr. Bush focused solely on taxes, Democratic and Republican leaders in Congress have been working on a broader package that also would include a temporary increase in food stamps and an extension of and perhaps increase in unemployment benefits.

The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.

"Letting Americans keep more of their money should increase consumer spending," Mr. Bush said.

But will consumers spend the windfall or just hang on to it?

"In an environment such as we have today, where asset prices are down, where consumers are worried about their balance sheets, about their debt, they might very well save it," analyst Michael Shapiro of the University of Michigan told Plante.

He outlined several criteria for the package to meet: It must be "big enough to make a difference in an economy as large and dynamic as ours," it must be built on "broad-based tax relief," it must take effect right away but be temporary, and it must not include any tax increases.

Specifically, he called for tax incentives for businesses, including small companies, to make new and major investments this year. "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," Mr. Bush said.

He also called for tax relief for individuals - probably to come in the form of one-time rebates. But he did not say what size checks Americans would get or the amount of other tax incentives that could be in the package. Nor did Mr. Bush detail how the nation would pay for such a plan.

"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.

House Speaker Nancy Pelosi, D-Calif., has talked of a package totaling $100 billion or more. House Republican leader John Boehner of Ohio spoke of a bill in the range of $100 billion to $150 billion. Aides have said Mr. Bush does not believe the stimulus spending should be offset - or paid for - by any tax or spending changes elsewhere. Some deficit hawks want this but it isn't expected to be part of any package.

Speaking for about seven minutes, Mr. Bush called passing a growth package "our most pressing economic priority."

He acknowledged Americans' fears, while defending the economy's fundamental strength and its continued growth - albeit slower.

"We're in the midst of a challenging period," Mr. Bush said. "And I know that Americans are concerned ... But our economy has seen challenging times before. It is resilient."

Paulson said the markets are due for a needed correction, and that swift, temporary action by the government can help lessen the impact on individuals and the economy as a whole.

The government last sent out tax rebate checks during the 2001 recession, reports CBS News correspondent Anthony Mason. Between July and September of that year, individuals were sent $300 checks; married couples: $600. In all, 90 million households received $38 billion in rebates.

Economists said a reasonable range for tax cuts in the new package might be $500 to $1,000. Congressional aides said the White House plan is looking at rebates of up to $800 for individuals and $1,600 for married couples, but Paulson said the administration wants to be "intentionally not specific" in public to avoid poisoning the well with Congress.

Mr. Bush first signaled his support for the approach of income tax rebates for people and tax breaks for business investment in a conference call Thursday with bipartisan congressional leaders.

Democratic congressional leaders agree that tax relief should be in the package, but are working on a broader measure. Lawmakers are discussing a $500 rebate for individuals, said aides to lawmakers 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 aides said, speaking on condition of anonymity because no final decisions had been made.

Senior aides to House Democrats and Republicans said the measure also 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.

Mr. Bush, clearly sensing the urgency, has even dropped his previous requirement that Congress make his tax refunds and breaks for businesses permanent, Plante reports, adding that Pelosi said she'd like to pass something in the next two weeks.

"Democrats welcome President Bush's willingness to work together with Congress to provide urgent relief to the millions of Americans facing economic hardships," Pelosi said. "Now we will work together on the details."

Paulson indicated that the White House approach would not include rebates or relief for those who do not pay income taxes. He also signaled Bush's distaste for non-tax-related ideas, saying the White House goal is simplicity and speed. "We're not looking to decorate a Christmas tree," Paulson said.

White House estimates show that a stimulus in the range of what Mr. Bush talked about could create 500,000 additional jobs this year, Paulson said.

White House deputy press secretary Tony Fratto said Mr. Bush chose to lay out "principles" with few specifics to the American people now, while bipartisan negotiations with Capitol Hill continue privately. The White House feels Mr. Bush was out of the mix for too long, because he was away for eight days in the Mideast while Democratic leaders talked almost daily about the need to stimulate the economy - and how.

So the White House scheduled two appearances by Mr. Bush on the economy Friday. At the lawn equipment manufacturer in Frederick, he toured assembly lines and briefly - and playfully - operated a standing lawnmower.

"While there's some uncertainty right now, if we act quickly and in a smart way, that helps growth. We're gonna be just fine," he said.

I was just wondering who qualified for the refunds in 2001 because I never got a check and I was wondering why. And if its going to be the same this year, are certain people qualified for this or is it everybody? I''ve been reading everything I can find on it and nobody answers this question.

[b-easy63]

How will 145 billion that (if paid to businesses) will help businesses expand help the 95% already working, who do not have money for inflated oil and food prices right now? They already have jobs and they already can''t buy extras and pay the high bills--so how will giving money to businesses to buy stuff help? Will businesses freeze inflation? Lower the price of food or gas? If not--what will the money do in the long run? The 95% who can''t spend before the rebate are the same 95% that will not be able to spend after the rebate.

[b-easy63]

Yep. That ought to do it. After the businesses are given the 145 Billion to help them expand, the 95% still working who do not have enough money for their debts and buying junk will somehow keep spending anyway, because they will know deep down, it is not about them or their mortgage foreclosure or car and credit card loan defaults--it is about provding money for businesses, so they can hire others, so that somehow--the economy will survive, even though no one can afford to keep spending after the rebates....Makes about as much sense as pouring gas on a fire--to put it out. Yep.

[bblume8323]

Who would get it

Democrats could get on board with an income tax rebate if it''s fully refundable, meaning that everyone with earned income would get the full rebate, even if they didn''t make enough money to owe income tax, said Furman.

Otherwise, roughly 40 percent of tax filers (which is more than 50 million households) would get only a partial rebate or no rebate at all, according to the liberal Center on Budget and Policy Priorities.

A significant portion of that 40 percent would be families of four making between $25,000 and $40,000, the CBPP said.

I saw this in an artical today.

[b-easy63]

Did everyone notice that only families with income over 40-60,000 dollars would get any rebate. Once again Bush reward the wealthy!!

Posted by rbburnerjr at 06:53 PM : Jan 20, 2008

If you think people who make 40 to 60K are wealthy in today''s economy, you must reside in a cardboard box. The poor and the current "ordinary middle class" are to get the bail out money. that means all who make 110K and under. By today''s standards, even 110K in some areas is not a competitive salary.

[rbburnerjr]

Did everyone notice that only families with income over 40-60,000 dollars would get any rebate. Once again Bush reward the wealthy!!

[watcher269-2009]

Leaving Iraq with the 200 Billion Bushit wants for it would revive the American economy and Bushit and Cheney won''t do it.

Well you know who''s side they''re on and it is not OURS!

Why does Bushit and Cheney HATE AMERICA SO MUCH?

WHY?

[omega39-2009]

Sorry b-easy, I misread your post.

[omega39-2009]

It was over 7500 people, showing up for about 400 jobs at the new Walmart--not 1700.

Posted by b-easy63

That makes it better in your eyes? That 1700 showed up for 450 crappy low wage, no benefit jobs, still makes a huge statement about our economy.

[fornicario]

And now that our little Emperor has bled our economy white for generations, and has left the American people with a national debt so high that a recession is all but guaranteed, I would like to see a real economic plan put forward that helps the middle class, without giving Big Business another free ride at the expense of the taxpayer. Too bad it will never happen, since the RINOs have the power to keep the boot on the necks of the American people.

[b-easy63]

1700 people showed up for 450 jobs. It certainly doesn''''t sound like a 5% unemployment rate and it certainly doesn''''t indicate a need for guest workers.

Posted by omega39 at 12:48 PM : Jan 19, 2008


It was over 7500 people, showing up for about 400 jobs at the new Walmart--not 1700.

[carterarce]

I keep hearing people saying our government should bail out people who made bad choices and took out loans they can''t afford but to me this seems like exactly what they are doing. The rebate check we get are going to immediately be spent catching up on debts. Meanwhile we are spending 2 billion a week in Iraq. I''m not an economist or a banker but something seems not right about this.
Will someone explain how this is going to save us from a recession? Do they count mortgage payments as consumer spending? Just wondering.....
I''m trying to have an open mind even though when I hear Bush quoted saying "We will be Just fine.", I shudder.

[joyous88]

This was nothing more than the conservative agenda at work, it is Greed Driven

[pilgrimsway-2009]

Maybe someone should of stood up and said no to NAFTA. Instead they gave it a pass!

[pilgrimsway-2009]

What we should do as Americans is give all of our jobs away! We should give our economy away also. This way our idea of being Americans are lifted for all to see. The idea gives us some sot of comfort of tolerance towards others. Why can''t our government see the handwriting on the wall? Maybe its because they want to see only what they want to see!

[mrconservatv]

cont-"Free Lunch": David Cay Johnston on hidden government subsidies for the very, very rich
1/3/08 -- David Cay Johnston is interviewed by Terry Gross on NPR''s "Fresh Air"

http://prairieweather.typepad.com/the_scribe/2008/01/free-lunch-davi.html

[mrconservatv]

TG: But what about the point the White House made that the citizens of Arlington voted in favor of the tax benefits to build the stadium?

DCJ: Well, first of all, it was a special election that drew a small number of voters. So it was a distinct minority in favor of this. Legally, there%u2019s no question that we can do this. And it%u2019s going on all across America. So it leads to a bigger question, it seems to me. The great economic mystery of our time is how can we have had almost thirty years of wonderful economic growth %u2013 more than half the wealth in America has been created since Ronald Reagan was elected president of the US. The Wall Street Journal%u2019s editorial page often reminds us of that! And yet the statistics show %u2013 the official government data show %u2013 that the vast majority of Americans are either not better off, barely better off, or worse off. What%u2019s happening is we have put in place all these policies, including tax increases in a variety of communities, that take money out of the pockets of the many and funnel it into the pockets of the few. I don%u2019t think most Americans, if they understood that, would be in support of that idea. This is not market capitalism. This is handcuffing the market and having government make your money for you.

cont-

[mrconservatv]

TG: So what did you answer?

DCJ: Seems to me that for a president who is constantly extolling the market, it%u2019s certain ironic that he didn%u2019t make his money in the market. He made his money off the tax increase. The difference in value of the baseball team from when it was bought to when it was sold is less than the amount of the subsidy. So one of two things happened. Either the president didn%u2019t capture the entire subsidy and therefore it was inefficient, or they so mismanaged the baseball team that they reduced its value. And the tax payers made it up. That%u2019s not capitalism, that%u2019s not the market. That%u2019s corporate socialism. That%u2019s the tax payer being forced to pay sales taxes to benefit this narrow group of individuals and make them rich %u2013 or richer.

cont-

[mrconservatv]

TG: %u2026Let%u2019s look at a chapter you devote to President Bush and the Texas Rangers.

The president and his investors were wealthy enough to build the stadium themselves. Instead they had a tax increase they used to finance the stadium. That money paid for the building of the stadium which they then had a right to buy for a fraction of what it close to build. Having this beautiful new stadium made the team very valuable. They were then able to sell at a big gain. President Bush made a gain of $17 million off of this deal.

TG: What do you find inappropriate about the amount of money that he made? You say that a lot of that money is taxpayer money. Which part is the taxpayer money?

DCJ: You%u2019re a little child buying crayons or you%u2019re a grown-up buying a car. You paid higher taxes half a cent more per dollar. That higher tax money was funneled into the pockets of George Bush and his investors through this mechanism. The total came to $202 and a half million of extra tax money that people paid. President Bush has characterized this as a %u201Cwin/win%u201D everybody was a winner. But the vast majority of people in Arlington, Texas don%u2019t go to baseball games. They, however, still buy things. They buy crayons and automobiles and other stuff that they have to pay sales tax on. So money was funneled out of their pockets and into his pocket.

[mrconservatv]

TG: %u2026Let%u2019s look at a chapter you devote to President Bush and the Texas Rangers.

The president and his investors were wealthy enough to build the stadium themselves. Instead they had a tax increase they used to finance the stadium. That money paid for the building of the stadium which they then had a right to buy for a fraction of what it close to build. Having this beautiful new stadium made the team very valuable. They were then able to sell at a big gain. President Bush made a gain of $17 million off of this deal.

TG: What do you find inappropriate about the amount of money that he made? You say that a lot of that money is taxpayer money. Which part is the taxpayer money?

DCJ: You%u2019re a little child buying crayons or you%u2019re a grown-up buying a car. You paid higher taxes %u2013 half a cent more per dollar. That higher tax money was funneled into the pockets of George Bush and his investors through this mechanism. The total came to $202 and a half million of extra tax money that people paid. President Bush has characterized this as a %u201Cwin/win%u201D %u2013 everybody was a winner. But the vast majority of people in Arlington, Texas don%u2019t go to baseball games. They, however, still buy things. They buy crayons and automobiles and other stuff that they have to pay sales tax on. So money was funneled out of their pockets and into his pocket.