Momentum increased Monday for a new economic stimulus package to help cash-strapped Americans as President Bush and Federal Reserve Chairman Ben Bernanke threw their weight behind an idea they earlier opposed.
By JEANNINE AVERSA, AP Economics Writer
Above: Left to right, Federal Reserve Charman Ben Bernanke, Treasury Secretary Paulson, President Bush. AP Photo
Press secretary Dana Perino told reporters on Air Force One as the president flew to Louisiana on Monday for an economic event that the White House will have to see what kind of package Congress crafts. Perino says the administration has concerns that what has been put forward so far by Democratic leaders in Congress would not actually stimulate the economy.
Earlier Monday, Bernanke told the House Budget Committee the country’s economic weakness could last for a while and it was the right time for Congress to consider a new package. Earlier this year, most individuals and couples received tax rebate checks of $600-$1,200 through the $168 billion stimulus package enacted in February.
“With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate,” Bernanke said in prepared testimony to the panel.
Bernanke’s remarks before the House Budget Committee marked his first endorsement of another round of government stimulus. Democrats on Capitol Hill have been pushing for another stimulus plan, but the Bush administration has been cool to the idea as the federal budget deficit explodes.
Bernake also appeared to open the door for further interest rate cuts. Wall Street stocks rose on the news and on signals that the important credit markets were loosening further.
House Speaker Nancy Pelosi chimed in on the stimulus idea. “I call on President Bush and congressional Republicans to once again heed Chairman Bernanke’s advice and as they did in January, work with Democrats in Congress to enact a targeted, timely and fiscally responsible economic recovery and job creation package,” Pelosi said in a statement Monday.
Pelosi has said an economic recovery bill could be as large as $150 billion. Economists have told leading Democrats the plan should be twice the size.
Bernanke suggested that Congress design the stimulus package so that it will be timely, well targeted and would limit the longer-term affects on the government’s budget deficit, which hit a record high in the recently ended budget year.
The economy has been beaten down by housing, credit and financial crises. Its woes are likely to drag into next year, leaving more people out of work and more businesses wary of making big investments.
U.S. stocks rose in afternoon trading Monday. The Dow Jones industrials rose about 1.6 percent and the….
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