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US may get economic stimulus plan in 30 days

Package on fast track in Congress after rival parties reach agreement

WASHINGTON – AN ECONOMIC stimulus package to avert a possible recession in the United States could be passed within 30 days, a leading US congressman said.

The package is on the fast track in Congress after Democratic and Republican leaders in the US House of Representatives on Wednesday reached a rare agreement to quickly pull together a bipartisan plan.

President George W.Bush was scheduled to host a conference call with lawmakers yesterday to discuss the package after he returns from a Middle-East trip.

‘I believe it can be done in 30 days,’ US House Majority Leader Steny Hoyer, a Maryland Democrat, said on Wednesday. ‘Whether it will be done in 30 days is another question.’

There is a consensus in Congress and the administration that an economic programme must be passed this quarter to boost an economy that is slowing, lawmakers said.

Federal Reserve chairman Ben Bernanke backs a swift response, according to New York Senator Charles Schumer.

‘I called chairman Bernanke personally,’ Mr Schumer, a Democrat, said at a hearing in Washington.

‘He said that while he wasn’t going to endorse a specific plan, if an economic stimulus package was properly designed and enacted so that it entered the economy quickly, it could have a very positive effect.’

Among Democrats, ‘there is a growing consensus’ that to make the stimulus legislation work, they should abandon their commitment to balance any tax cuts or new spending that would increase the deficit with measures to raise revenue, Mr Schumer said.

Still, the parties differ over what measures should be included in stimulus legislation, and some analysts expressed doubt that an agreement can be reached.

There is a risk ‘that Democrats and Republicans will use the stimulus issue as a political football, making it an issue for the general election’, Mr Tony Crescenzi, the chief bond market strategist at Miller Tabak & Co, said.

 

COMING TO TERMS

Lawmakers say there is a consensus in Congress and the administration that an economic programme must be passed this quarter to boost a slowing economy.

THE two political parties differ on some measures:

  • US Democratic lawmakers are proposing a package of US$100 billion to US$125 billion (S$143 billion to S$178.75 billion) that is likely to include tax rebates for ordinary Americans of about US $250 to US$600 per person – to get money quickly into the hands of consumers – as well as expanded unemployment and food-stamp benefits.
  • Their Republican colleagues want to slash the corporate tax rate to 25 per cent from 35 per cent, and include temporary incentives for businesses to invest in equipment.

Source: BLOOMBERG NEWS (The Straits Times 18 Jan 08)

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