WASHINGTON — President Bush outlined the broad details of a roughly $150 billion economic-growth package Friday, seeking Congress' help to provide a jolt intended to stimulate consumer spending and spur the creation of as many as 500,000 jobs.
Bush said any stimulus plan should be big enough to make a difference in the world's largest economy, and proposed that the cost amount to about 1 percent of the U.S. economy. He called for tax rebates for consumers and tax credits and cuts for businesses to entice them to spend more money and hire more workers.
"Letting Americans keep more of their own money should increase consumer spending and lift our economy at a time when people otherwise might spend less," the president said, declining to say how big a rebate he plans to offer.
Although Bush and leading Democrats in Congress agree on the broad categories of a stimulus plan, they're apart on the details.
Democrats seek an income cap of $85,000 for individual filers and $115,000 for joint filers. But that may change as lawmakers from high cost-of-living states such as New York and California push for higher thresholds. They're also looking for ways to get rebates into the hands of the poorest Americans on the presumption that these people are most likely to spend their rebates immediately.
The Bush administration is thought to favor rebates that involve temporarily eliminating taxes on the first $8,000 of individual income and $16,000 of family income. The liberal Center on Budget and Policy Priorities argues that 40 percent of tax filers, those with incomes of $25,000 to $41,000, could be bypassed or receive only partial relief under this approach
"We'd like to include the poor, people who don't pay income taxes. We'll insist on it," said a Democratic aide, speaking on condition of anonymity because he wasn't authorized to disclose details.
After the president's address, Treasury Secretary Henry Paulson skirted details and said the size and nature of the rebate must be worked out in bipartisan fashion with Congress. Congressional leaders from both parties are scheduled to meet Tuesday afternoon with Bush.
After plunging Thursday, Wall Street was unmoved Friday by the president's growth plan. The Dow Jones Industrial Average fell another 59.91 points to 12,099.30. The S&P 500 closed down 8.06 points to 1325.19 and the NASDAQ was off 6.88 points to close at 2340.02.
Still, some on Wall Street think that the plan will spur spending, as it did in the 2001 recession.
"Most of the serious studies suggest that two-thirds of the money got spent within 60 days of being handed out," said David Wyss, the chief economist for the rating agency Standard & Poor's in New York. "Anybody who doesn't think Americans will spend this has not met the American consumer, or is not married to one!"
Legislative aides have suggested that the rebates may be as large as $800 per individual and $1,600 per family. That dwarfs the $300 rebates issued as part of the 2001 stimulus, designed to soften what turned out to be a mild recession.
In the throes of a hotly contested presidential campaign, neither the White House nor Democrats, who are the majority in Congress, want to be blamed for an economic downturn. The slumping economy has brought a rare moment of bipartisanship.
"The president has outlined his principles, as have Democrats and Republicans in Congress. Now we will work together on the details of a stimulus package," House Speaker Nancy Pelosi, D-Calif., said in a statement after Bush's White House speech.
Similarly, a statement from Senate Minority Leader Mitch McConnell, R-Ky., said that if "we can work together to keep partisanship from infecting this process, we can quickly have a significant accomplishment to start the year — and a template for making law, not just making a point."
Paulson, designated the administration's point person on the stimulus package, declined to give a time frame but promised to "run like a bunny" to get rebates in consumers' hands. How quickly that can happen, however, isn't clear.
Federal Reserve Chairman Ben Bernanke said Thursday that it could be at least two months before the Internal Revenue Service could send all taxpayers refunds. Because Congress didn't pass important tax legislation until late last year, regular tax refunds already were expected to be mailed out almost a month later than usual.
Asked whether the IRS can turn around rebates quickly, IRS spokesman Dean Patterson offered little suggestion that it could. He said the IRS wouldn't comment on matters not yet approved by Congress.
If it takes 30 days to pass the stimulus package, it might be mid-May at the earliest before consumers could receive their checks.