Bush: $145 billion in tax relief

President Bush, acknowledging the risk of recession, embraced about $145 billion worth of tax relief and other incentives Friday to give the economy a “shot in the arm. ”

Bush said such a growth package must also include tax incentives for business investment and quick tax relief for individuals. And he said that to be effective, an economic stimulus package would need to roughly represent 1 percent of the gross domestic product — the value of all U.S. goods and services and the best measure of the country’s economic standing.

“There is a risk of a downturn,” the president said in his remarks at the White House.

White House advisers say that in current terms, 1 percent would amount to around $145 billion, which is along the lines of what private economists say should be sufficient to help give the economy a short-term boost.

The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.

Bush said that Congress and the administration need to settle on a temporary economic package that could be implemented quickly to “keep our economy growing and create jobs.”

“Letting Americans keep more of their money should increase consumer spending,” he said.

Bush outlined several criteria for the package to meet: It must be “big enough to make a difference in an economy as large and dynamic as ours,” it must be built on “broad-based tax relief,” it must take effect right away but be temporary, and it must not include any tax increases.

Specifically, he called for tax incentives for businesses, including small companies, to make new and major investments this year. “Giving them an incentive to invest now will encourage business owners to expand their operations, create new jobs and inject new energy into our economy in the process,” Bush said.

He also called for tax relief for individuals — probably to come in the form of one-time rebates. But he did not say how much money Americans would get to keep or the amount of other tax incentives that could be in the package. Nor did Bush detail how the nation would pay for such a plan.

“Americans can spend this money as they see fit: to help meet their monthly bills, cover higher costs at the gas pump, pay for other basic necessities,” he said.

House Speaker Nancy Pelosi, D-Calif., has talked of a package totaling $100 billion or more. House Republican leader John Boehner of Ohio spoke of a bill in the range of $100 billion to $150 billion. Aides have said Bush does not believe the stimulus spending should be offset — or paid for — by any tax or spending changes elsewhere. Some deficit hawks want this but isn’t expected to be part of any package.

Speaking for about seven minutes, Bush called passing a growth package “our most pressing economic priority.” But he also used his announcement to defend his tax cuts, which are set to expire unless the Democratic-led Congress opts to extend them.

He acknowledged Americans’ fears of an economic downturn.

“The economy’s still creating jobs, though at a reduced pace,” he said. “Consumer spending is still growing, but the housing market is declining. Business investment and exports are still rising, but the cost of imported oil has increased.”

He said his advisers and many outside experts expect that the U.S. economy will continue to grow over the coming year, but at a slower rate than the past few years.

“Continued instability in the housing and financial markets could cause additional harm to our overall economy and put our growth and job creation in jeopardy,” he said.

Bush said markets rise and fall, and there are times when swift, temporary action by the government can help ensure that market fluctuations do not undermine the economy. “This is such a moment,” he said.

“We’re in the midst of a challenging period,” Bush said. “And I know that Americans are concerned … But our economy has seen challenging times before. It is resilient.”

Bush has gone down the tax rebate road before. Back in 2001, he added refunds of up to $300 per individual and $600 per household as a recession-fighting element of the tax cut plan that had been the centerpiece of his 2000 campaign.

Economists said a reasonable range for tax cuts in the new package might be $500 to $1,000. A White House plan is looking at rebates of up to $800 for individuals and $1,600 for married couples.

Bush first signaled his support for the approach of income tax rebates for people and tax breaks for business investment in a conference call Thursday with bipartisan congressional leaders.

Democratic congressional leaders agree that tax relief should be in the package, but are working on a broader measure that would also include aid targeted to the poor and unemployed.

White House deputy press secretary Tony Fratto said there are many ways to get quick agreement. Bush chose to lay out “principles” with few specifics to the American people now, while bipartisan negotiations with Capitol Hill are taking place privately. The White House feels Bush was out of the mix for too long, because he was away for eight days in the Mideast while Democratic leaders talked almost daily about the need to stimulate the economy — and how.

The White House scheduled Bush to talk about a stimulus package twice on Friday. After the Roosevelt Room appearance, he left for a visit at a Frederick, Md., manufacturing plant.

Comments

  1. adamrussell

    Is this deja vu all over again? Didnt daddy Bush try this exact same thing? How did it work that other time?

  2. ekaton

    Here are the mechanics of how the “economic stimulus package” will unwind.

    1. The United States Government has no money. It collects money from you. It withholds money from your paycheck or your quarterly payments if you are self employed. It spends this with holding money as soon as it gets it to repay interest on the national debt. Anything left over goes for government employees pay and for incidentals.

    2. The (non)Federal (no)Reserve(s) writes a check to the taxpayers for $140 Billion Dollars. This check is backed by nothing but air so it is consequently an extremely inflationary tactic.

    3. The U.S. Treasury issues $140 Billion Dollars (roughly $1000 per taxpayer) in bonds that will be purchased by China, Japan, Saudi Arabia, large financial institutions and central banks. These bonds will be paid back double by redemption date including principal and interest.

    4. The U.S. has now obligated the taxpayers to repay double whatever they have received in “economic stimulus”.

    5. This money will not create jobs because most of it will be spent to pay bills and clear out existing inventories. At the end we will be worse off than ever because no jobs will have been created and the country will be another $140 billion dollars in debt.

    The solution is to stop spending 750 Billion Dollars Yearly on an interventionist, militaristic foreign policy and stop borrowing money from other nations. These other nations obtain these dollars they lend back to us by virtue of an ever widening gap in our balance of trade. To reverse this we will need to cancel many “free trade” agreements and slap high tariffs on all that Chinese JUNK sold by WalMart. When foreign goods become too expensive they will have to be manufactured inside this country and people will be put back to work.

    Free trade is wonderful if you are a BIG CORPORATION and you can close your doors here, reopen in China and pay $.25 cents an hour and have no environmental concerns that keep you from pouring mercury and lead into the air and the waterways. But for the workers? Maybe not so good.

    THERE AIN’T NO FREE LUNCH

    — Kent Shaw

  3. almandine

    Them problem with public works projects is that the infrastructure would remain valuable to the people without advancing the oh-so-politically- attractive public/private partnerships being foisted on us by Bushco and Congress.
    They wouldn’t get their future consultancies and kickbacks from all those foreign companies like Spain’s Cintra which is being awarded the contracts to build roads in the US, for which our citizenry will then pay tolls to drive on. Just look at the Trans Texas Corridor to see how it all works.

    They have put our country up for sale and/or lease… and the sorry condition they keep it in actually works in favor of our people being willing to go along with their line of thinking.

    Besides, it takes money to fix the roads and bridges, etc., and if we spent it on that, we couldn’t fund our wars and spy on our citizens and support corporate welfare and save all those bankers.

  4. Carl Nemo

    Hi Pablo…

    “Other than a car purchase, there are virtually no choices out there.”

    I must inform you that many parts that go into American autos have been outsourced to China, India, Malaysia and other places. Most of the American auto makers have cut their ties to American based parts makers bigtime. Labor costs, especially medical and retirement percs are just too expensive to be able to compete. So American based manufacturers that jump ship and hookup with offshore sources for parts get a leg up in the marketplace, putting their U.S. based competitors at a disadvantage. Every little bit saved in the construction of a vehicle puts more bucks into management and stockholders’ pockets.

    Our Congress has been systematically disassembling the U.S. manufacturing base since Bill Clinton took office in the early 90’s. Ross Perot’ warned Americans during that campaign that if people foolishly went for Clinton, along with the ratificataion of NAFTA et. al. disadvantageous trade treaties that there would be a loud “sucking noise” as jobs left this country. Ross was spot-on and “we the people” are now paying the price for getting sucked into the siren song of “republicrat” leaders who keep telling us that “free trade” and globalism is the best thing for this nation…NOT!

    If I recall Perot’ was speaking to a group of black leaders and referred to them as “you people” or something to that effect and our everso politically correct bunch of village idiots regardless of race went ballistic on the guy.

    Ross offered to hold office for single term, promising to roll up his sleeves and use his keen business acumen to turn things around. The rest is history. Eight years of Clinton, with another intensely damaging 8 years of Bush/Cheney, then another 4-8 years of another Clinton will assure it’s a “wrap” for this once great nation as it simply declines to being a minor plantation, desperately struggling to survive in the New World Order’s greater global plantation.

    Carl Nemo **==

  5. Pablo

    It is an excellent suggestion to buy American…Does anybody know where I can find these products? I don’t support Walmart, but even everywhere else I go I only see “made in China”. I have even shopped furniture lately and it ends up it is made in China…imagine how little they get paid that it is cheaper to ship such heavy items across the ocean, simply amazing! And imagine the carbon footprint of the transportation! Even the most expensive brands of clothing, the ritzy stuff is made in China. Other than a car purchase, there are virtually no choices out there. I’d pay a higher price for whatever product, just to support my country, but the products not made overseas, especially in China, are getting extremely scarce.

  6. jay_spaan_sr

    The ‘trickle-down theory’ only works if you actually MAKE something. We have become the parasites who are the salesman between maker and buyer. Problem is; we buy and sell it to OURSELVES! We have become vultures, feeding off each other. Know what happens when the mortgage companies suck us dry and foreclose? They sell our homes and property to China. As long as they get their pieces of silver these bastard Judases will be traitors and sell our country and flip the finger to our children. Look at the label and damn it buy just American!

  7. acf

    “Letting Americans keep more of their money should increase consumer spending,” he said.

    And there you have it, in one short sentence, the reemergence of the ‘Let’s make my tax cuts permanent’ line. How have the tax cuts for the wealthy worked for us so far? Have the benefits trickled down to you, yet?

  8. jay_spaan_sr

    GEEZZ… anyone think about forcing the mortgage companies to return the ARM rates back to the “teaser rates” and fix them for 3 or so years so people can keep their homes and stop this foreclosure madness? I don’t need a hand-out. I need my mortgage payment to be what it was 18 months ago. Look, you people quit buying new TVs and all the crap from China unless you really need it. Slow down that China Connection and gas goes down, China gets a dose of reality, and we start getting respect from the world and our government. Remember ‘supply and demand’? Too much gas,TVs,homes on the market, it goes down. End of recession. Just quit buying unless you need it America.

  9. Carl Nemo

    Hi Pablo…

    Everyone’s financial situation varies, so there’s no one solution serves all answer. Susie Orman would advise folks to pay off or down all high interest debt first, hopefully with the intention to eventually eliminate all CC debt.

    Stay away from home equity loans which possibly have dried up like a slugs in the noonday sun unless you are sitting on a piece of property with many years under your belt and are on the home stretch of paying the mortgage off. So if in this situation but burdened by high interest CC debt, then a refinancing of the home with some cash paid out will liquidate this high interest CC debt. But one must stick with a plan to simply use this method to liquidate high interest debt and not to fritter cashback equity money away on superficial “bling” as many people have done and are now in deep trouble.

    Concerning a mortgage default is that it’s much more to complex address from the lenders standpoint than a simple CC default leading to a declaration of bankruptcy. You’ll be allowed to keep your home, a certain amount of clothing, tools for your trade, cars (non-luxury) etc.

    If people have a large amount of CC debt and see little hope of ever paying it off then I’d advise to go for bankruptcy and “stick the man” so-to-speak, but never, ever get yourself into the same predicament again…period!

    Rest assured some companies will be sending you credit cards within 90 days of your bankruptcy. Keep the lowest interest card profferred and only use it as tool in the event you must use the card to rent a car, buy airline tickets or what have you but pay it off within one billing period. If you know you can’t pay it off in one billing period than forego using the card and pay cash or refrain from the purchase. Ask yourself, do I need this item or service or do I simply “want” it? If you need the purchase then buy the best quality you can afford, but if you simply have a “want”, then use some self-discipline and pass.

    For people that are sitting on large cash holdings in CD’s, brokerage account MM funds etc., it would be wise to allocate 10 percent of your total net worth to a holding in gold. Obviously owning the physical gold is the best bet, but you can also invest in gold by using the ETF, exchange traded fund symbol GLD to do so. Each share represents a one tenth ounce holding in the current spot price of gold. This market is extremely volatile and purchasers of I-Shares, Symbol, GLD should only buy shares on pullbacks until there’s a change in trend from up to down which is generally when the price drops below it’s 50 day moving average then onward towards it’s 200 day average downward as our DOW is doing right now. In essence the ownership of gold is for “strong hands” an old Oriental expression meaning you hold it for the long run as protection from being wiped out. Of course with rampant inflation on the horizon that just isn’t going to happen anytime soon. My point is you don’t simply jump-in and buy shares because you can get burned from the getgo. As a followup stay away from collectibles, diamonds, silver (not precious per se) and exotic rare coin and bullion markets such as platinum etc. This is for only experienced investors who know what they are doing. The reason “diamonds are forever” is that once you buy diamonds you are stuck with them and will have extreme trouble liquidating them. Gold is very liquid worldwide market whereas everything else is questionable to iffy.

    If you do buy the physical; ie., gold then it would be wise to buy tenth ounce bullion coins paying the small premium to do so because as gold rises towards multi-thousands per ounce as it will then each tenth ounce could be valued as high as $200 in USD. If you have to sell some off it will be more efficacious to do so in smaller fractionated amounts.

    All this amounts to is a hedge against inflation of the USD. Nothing is gained except it prevents one watching their dollars valuation implode, headed downward, towards possibly oblivion. It’s happened many times throughout history and we are not immune from having our national currency end up in the ashbin of time too.

    There’s other minor ways to protect oneself from commodity price increases is to stock up on physicals you use regularly. If you can afford to do so, keep your home heating oil tank “always” topped off. As the price of heating oil rises you are hedging the cost increase by owning the physical. If you heat your home with wood pellets, or cordwood then load the boat on pellets and cordwood having several years worth stored; ie., if you have a dry place to store pellets. If they get damp they lose their heating value. With inflation amok these commodities will not be getting any cheaper each season.

    If you have a fuel tank on your property, generally for rural folks make sure it’s topped off; ie., if you can afford to do so. Gasoline gets stale and needs a stabilizer additive to keep it fresh over long periods whereas diesel does not. So having more on hand then you can use in a reasonable period of time is not wise.

    I don’t foresee any food crisis happening in this country although the delivery to markets could be slow or interrupted due to fuel costs becoming a moonshot or simply limited in supply as it was back in the 70’s during the arab oil embargo.

    Lastly another way to protect your dollar holdings is to invest in foreign currencies. In the old days the only way to do so would have been through opening a commodities account to trade FOREX (foreign exchange) instruments; highly risky due to the large position risks, but nowadays one can do so through their broker by buying foreign currency ETF’s just like gold. These are not mutual funds but are traded like shares of stock. You even receive interest on the holdings.

    IMO the only currency that is somewhat safe against dollar devaluation at this time is the Euro, Rydex Symbol FXE the reason being is that if oil producing countries finally jump ship;ie., no longer using petrodollars enmasse’ then the dollar will die like a slug in the noonday sun with the value of the Euro a moonshot. It might happen within the next few weeks. There’s a rumor that the European central banks are due to raise interest rates, just the opposite of our ever-fumbling Federal Reserve under Bernanke’s watch. I’ll provide some links so people can get the feel for what I’m talking about.

    Disclaimer: I am not a financial adviser and have no financial interest in the Rydex Family of currency related funds other than my personal holdings.

    http://www.rydexfunds.com/ETF/home/etf_profiles.rails
    http://www.currencyshares.com/

    I’m also providing a link to StockCharts.com which offers an extensive free charting service. My prefferred charting method is the Point & Figure chart which simply evaluates supply vs. demand of a given instrument, eliminating market noise. I advise people take the time to learn P&F charting because it will save you a lot of grief when investing in gold or even stocks at the wrong time. Right now, although gold is in a powerful uptrend it’s currently pulling back due to the uncertainties in the world capital markets. I hope this helps. Once you pull up my Stockcharts.com link you can plug other symbols to that base chart. You can change charting styles. Of course go to their homepage and take some of their free tutorials if necessary. As Martha Stewart might say…”it’s a good thing”… 🙂

    We’ll pull through this crisis just fine, but it’s going to be a long, painful road ahead for “we the people”…

    Carl Nemo **==
    p.s. For those that already own stocks, mutual funds, and etf’s who really don’t know what they are doing, I suggest you too learn P&F charting. It will save your portfolio from being trashed. If you learn P&F and use stops you just might surprise yourselves how well you can do over time. P&F keeps it simple and simple is best when it comes to the markets.

    Note: For those that will pursue the link info you will have to simply copy the entire Stockcharts link then do a copy into your address bar, then “Go”. This will allow you to view the current gold market activity, symbol GLD Rydex funds.

  10. SEAL

    Janice: don’t know if you realize it but your suggestion is what FDR did to help get us out of the great depression. The WPA put people to work building roads, bridges,and buidings that you can still see today as some of the best construction this nation has ever seen.

  11. jgw

    Here we go again. If there is anything that this (Bush) administration is proven is that they can be incompetent at EVERYTHING but politics. This being the case we are, I am sure, going to be treated with yet another example of how not to do something and, this time, its going to cost ONLY 145 BILLION dollars!

    Lets see, the economy is going into the crapper, we are spending/borrowing between 2 and three billion a week just to keep our wars going, pork is at an all time high and, now, we are going to fix it all by spending/borrowing another 145 billion dollars. Not only that but we are being told we gotta do it ‘quick’ (kinda like how we start wars).

    Unending, and VERY expensive, entertainment! By the time the Republicans AND the Democrats are through we will be lucky to have anything left (well, except for a really impressive debt or, what I expect will be called the ‘Bush’ debt/legacy). If he can keep it up, for another year, I expect he will be, literally, cursed for generations.

    jgw
    Port Angeles, WA

  12. Pablo

    Another hope-filled message of reality from Mr. Nemo, thanks again! I appreciate your perspectives and input, although reality is such a downer!

    You’ve recommended investing in gold. Now, what else could I do with the “rebate” $? How about paying a lump sum on my highest interest loan, my mortgage? What’s your take? I’m hoping the housing market will bounce back eventually, especially with the hyper-inflation we will soon no doubt witness. Another idea I had was to give the $ to an opposing party, but we really don’t have one, and the only opposing-party presidential candidates that I believe offer hope of real change have already been sidelined.

    I can’t help but wonder if the “rebates” are actually a payoff to make the Republican party seem more appealing to a simple-minded populace in time for the coming elections. “Gee, that nice repugnican bush gave me $, so I should vote for guliani”, or something along those lines.