Bush Talks Up Ethanol, Health Sectors

President Bush gestures as he gives a speech at the DuPont Theatre in Wilmington, Del., Wednesday, Jan. 24, 2007. (AP Photo/Chris Gardner) (Chris Gardner - AP)

Automakers said they were open to the president's goals of increasing fuel economy standards.

The proposal could benefit Japanese automakers such as Toyota Motor Corp. and Honda Motor Co., which have higher fleetwide fuel economy levels than domestic manufacturers. The proposal also includes a system of trading or "banking" credits to meet new standards, which could lead to Detroit's automakers buying fuel credits from Toyota and Honda, both of which added more than 2.4 percent Wednesday on the NYSE.

But General Motors Corp. and Ford Motor Co. have pledged to build 2 million flexible-fuel vehicles by 2010, so they too could benefit by an influx of ethanol and other renewable fuels. GM said it wanted to ensure, however, "that any fuel economy increases are technically achievable."

The health care taxation plan is the most appealing to the private sector, analysts said. The second part of the provision aims to curb health care spending by taxing any benefits over the $7,500 and $15,000 marks, and it could drive many Americans to individual-oriented plans offered by UnitedHealth Group Inc., Wellpoint Inc. and Aetna Inc.

The private sector, which shoulders some of the expense of the uninsured, welcomed Bush's tax proposal because part of the rates companies pay to hospitals and other health care providers goes to the cost of uncompensated care.

The president devoted roughly 20 minutes of his speech to the global war on terror, with seven of those minutes spent on Iraq.

The defense industry outlook is dictated primarily by policies in Iraq and Bush's recent call to increase U.S. troops there by 21,500 elicited fierce opposition on Capitol Hill, said David Resler, managing director and chief economist at Nomura Securities International in New York.

But since Bush's troop announcement on Jan. 10, the stock prices of defense contractors like Los Angeles-based Northrop Grumman Corp. and Bethesda, Md.-based Lockheed Martin Corp., are up and the Pentagon's fiscal year 2008 budget request could reach more than $600 billion.

Bush's plan to increase the size of the active Army and Marine Corps by 92,000 troops in the next five years would cost at least $10 billion, based on conservative estimates of $100,000 per year per man, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, a Washington think tank.

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AP Business Writers John Porretto in Houston, Theresa Agovino in New York, and Donna Borak, Matthew Perrone and Ken Thomas in Washington, contributed to this report.