Bush To Sign $215b Stimulus Bill On Wed

Source : The Straits Times, Feb 11, 2008

WASHINGTON - UNITED States President George W. Bush said he would sign a US$152 billion (S$215 billion) package on Wednesday that is aimed at keeping the world's largest economy out of recession with tax rebates and business investment incentives.

Citing private-sector economists, Mr Bush said on Sunday he did not believe the US economy was in recession despite an implosion in the housing market, a widening credit crunch and, for the first time in 53 months, a loss of jobs in January.

'I will be signing this bill Wednesday,' Mr Bush said in an interview on Fox News Sunday.

Asked whether he would consider further action if the economy continued to sputter, Mr Bush said: 'We just have to play it by ear.'

Beyond prompting fears of a global ripple effect, the health of the US economy has become a key campaign issue for Republican and Democratic candidates seeking to contest November's presidential election to succeed Mr Bush.

US economic growth slowed abruptly to 0.6 per cent in the fourth quarter last year, following a surge of 4.9 per cent in the third quarter, the US government said.

The housing sector continued to soften. Pending sales of previously owned homes fell by 1.5 per cent in December and were off a sharp 24 per cent from a year ago, the National Association of Realtors said. Major retailers reported a slowdown in consumer spending.

Finance officials from the Group of Seven industrial nations said this weekend that while the US economy was likely to escape a recession in 2008 and economic fundamentals remained 'solid', far more work was needed to restore financial markets to good working order and safeguard global growth.

The G7 ministers pointed to serious risks from the US property market slump and subsequent tightening of credit conditions, which has slowed the flow of money to the consumers and companies that drive the world's largest economy.

Business incentives
'The current financial turmoil is serious and persisting,' US Treasury Secretary Henry Paulson said as the G7 finance leaders laid out plans to treat the root causes of market distress at a meeting in Tokyo.

'As the financial markets recover from this period of stress, as of course they will, we should expect continued volatility as risk is re-priced.'

Some Democrats have talked about offering a second measure aimed at providing more aid to the economy but Mr Bush warned Congress against going too far to adopt regulations that could constrain businesses and the economy.

'That's why I was so supportive of this current package, because it was temporary,' Mr Bush said.

After a brief spat over the size of the stimulus package, the Senate and House of Representatives agreed on Thursday to a measure that would provide one-time rebates of up to US$600 for individuals, US$1,200 for couples and US$300 for each child.

Low-income people, including retirees on Social Security and disabled veterans who pay no income taxes, would receive cheques of US$300. The cheques could be in the mail within months.

The package should fuel corporate investments by allowing firms to write off equipment purchases made this year more quickly.

Some economists have said that while the measures will buy time, they may not be enough to avert recession. -- REUTERS