By Peter Baker
Washington Post Staff Writer
Friday, January 4, 2008
With the price of oil hovering near $100 a barrel and overall economic anxiety on the rise, President Bush said yesterday that he may use his upcoming State of the Union address to propose a stimulus package intended to promote growth and shore up weak parts of the economy.
Forecasting his priorities as he enters his final full year in office, Bush said he is soliciting ideas from advisers about ways to address particular economic troubles. However, he did not commit to taking new action amid an internal administration debate about whether and how the government could influence the situation.
"In terms of any stimulus package, we're considering all options, and I probably won't make up my mind as to whether or not I lay one out until the State of the Union," Bush told the Reuters news agency in an interview. He added: "We are listening to a lot of good ideas from different people. We've got our people out there carefully, not only monitoring this situation but listening to . . . possible remedies."
Aides have previously said Bush was considering stimulus proposals, mainly in the form of targeted tax cuts, and the president's comments indicated he may unveil them in coming weeks. He is scheduled to meet today with a working group on financial markets led by Treasury Secretary Henry M. Paulson Jr. and is to give an economic speech in Chicago on Monday. Aides said no decision will be made until he returns from a trip to the Middle East on Jan. 16. His State of the Union address is scheduled for Jan. 28.
The concern in the White House follows a number of troubling indicators that some economists say may point to a recession this year. Beyond the volatility in the housing market and the surging price of oil, a new report this week suggested that the manufacturing sector may be contracting. Meanwhile, the Commerce Department reported the largest monthly drop in construction spending on single-family homes in 14 years, while orders for durable goods dropped for two consecutive months. On the other hand, Commerce said yesterday that orders for manufactured goods rose by 1.5 percent in November.
Economists and administration officials are anxiously awaiting this morning's employment report from December, amid speculation about whether it will show slower job growth. Administration officials said they have been trying to sort out often-conflicting data and want to wait for fresh information over the next couple of weeks before settling on a course of action.
"You get a good signal one day; you get a bad one the next," said a senior administration official, who spoke on the condition of anonymity to discuss the situation candidly.
As the Bush team evaluates possible options, the official said, the priority would be using targeted tax breaks to increase business investment or consumer spending. "What everyone's looking at is what is the fastest way to get money out there," the official said.
Bush rejected tapping into the Strategic Petroleum Reserve to try to offset the rise in oil prices, which briefly reached $100 a barrel on Wednesday before falling a bit. "It's not the kind of emergency that would define the use of the SPR, as far as I am concerned," he said. "Hundred-dollar oil is a reflection of supply and demand."
Public concern has accompanied the churning economic news. Forty-four percent of Americans surveyed in the latest Washington Post-ABC News poll named the economy as one of their top two issues heading into the presidential nomination voting that began with yesterday's Iowa caucuses, up from 25 percent in September and eclipsing Iraq as the top campaign issue. Confidence in Bush's economic stewardship has fallen to an all-time low, with 34 percent approving of his performance.
Bush has responded with public speeches and statements on the economy declaring that "the fundamentals are strong," while acknowledging "storm clouds" on the horizon. He has tried to cast the issue in terms of fiscal policy, castigating congressional Democrats for wanting to raise taxes and vowing to veto any such attempts.
But some of the nation's most prominent economists, including former Federal Reserve chairman Alan Greenspan, former Treasury secretary Lawrence H. Summers and former Reagan adviser Martin S. Feldstein, have called for a more aggressive approach by the administration.
Aside from Paulson, the interagency group on financial markets that Bush plans to meet with today includes Federal Reserve Chairman Ben S. Bernanke as well as Christopher Cox, chairman of the Securities and Exchange Commission, and Walt Lukken, acting director of the Commodity Futures Trading Commission. The White House has already signaled that it plans to offer additional measures to respond to the housing slump and the credit crunch, which have led to foreclosures.