Bush Favors Tax Rebates In Stimulus Plan

Chairman of the Federal Reserve Board Ben Bernanke addresses the Cato Institute's 25th Annual Monetary Conference November 14, 2007 in Washington, DC. Bernanke announced that the Fed will double the number of times a year, from two to four, what its projections are for the health of the economy and will say what it thinks the business environment will be for the following three years instead of two.
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President Bush told congressional leaders privately on Thursday he favors personal income tax rebates and tax breaks for businesses to help avert a recession, officials said, as Federal Reserve Chairman Ben Bernanke joined in calls for an economic stimulus package.

Bush spoke with congressional leaders as top House aides worked on an economic rescue package that included more money for food stamp recipients and the unemployed as well as tax rebates and cuts.

Officials described the developments on condition of anonymity until a formal announcement was made, and no further details were immediately available about the size of the rebates or components of the emerging package.

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.

One official said the president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010. That would eliminate a potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.

Bernanke voiced support for a stimulus package in an appearance before the House Budget Committee, but said it had to be quick and temporary.

"Putting money into the hands of households and firms that would spend it in the near term" is a priority, Bernanke told the committee.

Bush planned to talk about his criteria for the program at the White House Friday morning and later that day in a speech at a manufacturing plant in Frederick, Md.

In his committee appearance, Bernanke said such a plan should be aimed at quickly getting cash into the hands of people, especially those with low and moderate incomes. Bush wasn't going to spell out any specifics in his remarks, but instead demand that any package be effective, simple and temporary, said White House press secretary Dana Perino.

Perino said that Bush and congressional leaders from both parties consulted via conference call Thursday for about 30 minutes about their plans to work together on growth measures. In the Capitol, House Speaker Nancy Pelosi, D-Calif., has talked of a package totaling $100 billion or more.

The rush to swing behind a stimulus plan underscored the political imperative of responding to a growing concern about the possibility of recession.

The economic headwinds caused by the housing slump seem to be getting stronger, reports Mason. In Atlanta, now through the weekend, more than 500 foreclosed houses, are being auctioned to the highest bidder.

Bernanke declined to endorse any particular approach in Capitol Hill appearance, but did say that he preferred one that would act quickly, and not have a long-term adverse impact on the deficit. "The design and implementation of the fiscal program are critically important," he said.

He spoke as senior aides to House Democrats and Republicans reviewed an emerging plan that included tax rebates for individuals, breaks for businesses and more money to help food stamp recipients and the unemployed. Additional aid to help states complete construction projects was also among the proposals under consideration, according to officials familiar with the discussions. They spoke on condition of anonymity, saying they did not want to pre-empt an eventual announcement.

Additional details were not immediately available.

Former Treasury Secretary Larry Summers told CBS' The Early Show that the federal government needs to address the nation's economic troubles on several levels.

"Injecting more money into the economy so consumers are able to spend more. When consumers are able to spend more, there's more demand in the economy. That may come through tax relief that's properly targeted to those who are most likely to spend it," Summers explained.

Summers indicated that relief may also come from accelerating benefits to those who are most likely to spend it: Middle and lower income Americans.