Bush Proposes $145 Billion Stimulus Plan
Saturday, January 19, 2008
President Bush called yesterday for a $145 billion stimulus package centered on tax breaks for consumers and businesses to rejuvenate the lagging U.S. economy, a move that drew unusual bipartisan praise on Capitol Hill but did not boost confidence on Wall Street.
The principles outlined by Bush opened a path to an agreement with congressional Democrats that could come as early as next week and put as much as $800 in each taxpayer's pocket by spring, according to both sides. Bush dispensed with one of the thorniest obstacles to a quick deal by agreeing not to link it to his longstanding quest to make permanent his first-term tax cuts.
"By passing an effective growth package quickly, we can provide a shot in the arm to keep a fundamentally strong economy healthy," Bush said at the White House.
He then flew by helicopter to Frederick, Md., to tour a lawnmower-manufacturing plant, where he predicted a bipartisan accord. "I believe we can come together on a growth package very quickly," he said. "We need to. We need to get this deal done, and get it out and get money in the hands of our consumers and our small-business owners to help this economy."
The reaction in Congress revealed a divide between Democrats on the campaign trail, who assailed Bush's proposal, and those in Washington, such as House Speaker Nancy Pelosi (Calif.), who expressed optimism about reaching an agreement with the White House.
On Wall Street, however, the president's plan did little to assuage investors, who are increasingly fearful about the possibility of a recession amid a severe housing crunch, high energy prices and stagnant job growth. More bad news hit the corporate world yesterday, including an announcement by Sprint Nextel of Reston that it is cutting 4,000 jobs after numerous customer defections, and a decision by Fitch Ratings to downgrade the country's second-largest bond insurer.
All of the major U.S. stock indices finished the day lower, with the Dow Jones industrial average of 30 blue-chip stocks down 59.91, or 0.5 percent, to 12099.30. The broader Standard & Poor's 500-stock index shed 8.06, or 0.6 percent, to 1325.19, and the technology-driven Nasdaq Composite index fell 8.66, or 0.3 percent, to 2340.02.
Bush drew sharp criticism from Democratic presidential candidates, who accused him of neglecting 50 million low-income workers who do not pay income taxes.
Sen. Hillary Rodham Clinton (N.Y.) said Bush's proposal "makes no sense." Sen. Barack Obama (Ill.) said it would "leave out tens of millions of working Americans," and former senator John Edwards (N.C.) said Bush is "making matters worse."
But on Capitol Hill, Pelosi, Senate Majority Leader Harry M. Reid (Nev.) and other Democratic leaders welcomed Bush's statements. Even Reid, who complained Thursday about Bush's plans to speak publicly the next day, was satisfied that the president had moved closer to a compromise, an aide said.
"There's lots of room for common ground," said Rep. Chris Van Hollen (Md.), a member of the House Democratic leadership. "There's an opportunity to put ideology aside and come together behind a common policy. There's a lot of room here for things to go wrong, but at the moment everyone's on the same page."
Indeed, officials on both ends of Pennsylvania Avenue were using the term "kumbaya" to describe the rare consensus developing after a year of partisan warfare. At day's end, the contours of a possible accord were coming into focus. Both Bush and the Democrats want a one-time tax rebate, and officials said a compromise package could include the tax incentives for business investment that the president wants, as well as the social welfare spending, such as extended unemployment benefits, that the Democrats want.