Bush stresses need for economic stimulus

President Bush on Saturday used his weekly address to the nation to highlight the importance of quickly passing an economic stimulus package, while Democrats sought to define their side of the economic debate.

{mosads}“Passing a new growth package is our most pressing economic priority,” Bush said in the address, which follows a week of bad economic news and a jittery stock market. He alluded to his trip Friday to a Maryland lawnmower plant, which served as a backdrop for his praise of American entrepreneurship.

In the Democratic response, House Financial Services Committee Chairman Barney Frank (D-Mass.) pledged cooperation to passing a stimulus measure but made clear that Democrats are coming from a starkly different place.

Frank said the stimulus must also help “those who are bearing the heaviest burdens in this economy.”

The sharpest debate may be over where to go next, after the stimulus. Bush said Congress should turn to making his 2001 tax cuts permanent. Meantime, Frank stated that Congress should address the “anti-regulatory environment” created by six years of Republican rule that, he argued, led to the mortgage crisis and fostered the looming economic downturn.

“Democrats believe that an active government role is needed to maintain confidence in the integrity and fairness of markets for consumers, homeowners, workers, and investors,” Frank said.

The worsening economy has stirred Bush and the Democratic Congress to largely set aside their differences over the Iraq war and spending to come together on developing a plan.

The cooperation has been a marked contrast with last year when Democratic leaders complained that Bush would not even negotiate on federal spending. Late last year, Democratic leaders agreed to Bush’s spending limits, but asserted that within those limits, they had shifted money toward priorities.

Now, Democratic leaders say they can have a package together in two weeks and a bill ready to sign in a month.

In the radio address, Bush laid out his terms. He said the stimulus should add up to about 1 percent of gross domestic product, meaning around $145 billion. Bush indicated the tax relief should go only to those who pay income taxes, and that there should be tax incentives for business to encourage investment.

Bush rejected any consideration of including big, government funded construction projects in the package, saying they would not help the economy quickly enough, and he ruled out any tax increase.

The basic tax relief the administration has in mind is believed to be an $800 income tax rebate, which would double for married filers.

Democrats are also pushing for additional spending on unemployment benefits and food stamps. Some also say that rebates should include those who pay Social Security taxes, but do not make enough money to pay income taxes.

“Economists agree that middle and working class people are likely to spend that money in a way that will effectively stimulate the economy and create jobs,” Frank said.

Though Bush wants Congress to make his tax cuts permanent, he signaled that he will not insist on putting such an extension in the stimulus package.

“Unless Congress acts, the marriage penalty will make a comeback, the child tax credit will be cut in half, the death tax will come back to life, and tax rates will go up on regular income, capital gains, and dividends,” Bush said.