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Bush to call for fiscal stimulus package

US President George W. Bush is putting together his first public call for an emergency fiscal stimulus bill while negotiations in Congress focus on rebates for taxpayers and other steps to jump-start the sagging economy.

Bush planned to lay out his position yesterday, but he wasn't expected to go into specifics. Press secretary Dana Perino said Bush would demand that any package be effective, simple and temporary -- mirroring calls by Democratic lawmakers for a "timely, targeted and temporary" stimulus measure.

Taxpayers could receive rebates of up to US$800 for individuals and US$1,600 for married couples under a White House plan. Although lawmakers were considering smaller rebate checks and more money for food programs and the unemployed, Bush told congressional leaders that he favors income tax rebates for people and tax breaks for business investment.

US Federal Reserve Chairman Ben Bernanke entered the stimulus debate on Thursday, endorsing the idea of putting money into the hands of those who would spend it quickly and boost the flagging economy.

The scramble to take action came as fears mounted that a severe housing slump and a painful credit crisis could cause people to clamp down on their spending and businesses to put a lid on hiring, throwing the country into its first recession since 2001.

Aides to lawmakers involved in the talks said the White House also wants to eliminate the 10 percent income tax bracket for one year and issue a rebate within months. Advocates for the poor said that tens of millions of people in lower income ranges would be left out or not fully feel the benefit of the White House plan.

Lawmakers were instead discussing a US$500 rebate for individuals, the aides said, with details for couples and people with children still being negotiated.

The rebates would likely be limited to individuals with incomes of US$85,000 or less and couples with incomes of US$110,000 or less, the aides said, speaking on condition of anonymity because no final decisions had been made.

The president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010, officials said. That would eliminate a potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.

Bernanke voiced his support for a stimulus package in an appearance before the House Budget Committee. He stressed that it must be temporary and must be implemented quickly -- so that its economic effects could be felt as much as possible within the next 12 months.

"Putting money into the hands of households and firms that would spend it in the near term" is a priority, he said.

Especially important is making sure a plan can put cash into the hands of poor people and the middle class, who are most likely to spend it right away, he said, though he added that research shows affluent people also spend some of their rebates.

Bernanke declined to endorse any particular approach, but he did say he preferred one that would not have a long-term adverse impact on the government's budget deficit.

Senior aides to House Democrats and Republicans said in addition to included tax rebates for individuals, the emerging measure would contain tax breaks for businesses investing in new equipment, increases in food stamps and higher unemployment benefits. They spoke on condition of anonymity, since the talks are ongoing and lawmakers have promised not to reveal details.

US stock markets opened higher yesterday as investors waited for Bush to unveil details of his stimulus plan and as General Electric's profits matched expectations.

The Dow Jones Industrial Average jumped 110.39 points, or 0.91 percent, to 12,269.60 just after Wall Street opened for trading. The leading blue-chip index has been battered in recent weeks and closed down over two percent on Thursday.

The tech-rich NASDAQ composite gained 16.22 points, or 0.69 percent, to 2,363.12, while the broad-market Standard & Poor's 500 index increased 6.86 points, or 0.51 percent, to 1,340.11 in early activity.
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