Bush signs economic stimulus plan to fend off recession
www.chinaview.cn 2008-02-15 10:37:42   Print

    WASHINGTON, Feb. 14 (Xinhua) -- U.S. President George W. Bush signed a 168-billion-U.S.-dollar economic rescue package Wednesday to fend off a possible economic recession.

    "I know a lot of Americans are concerned about our economic future. Our overall economy has grown for six straight years -- but that growth has clearly slowed," Bush said at a White House signing ceremony.

    He hailed the cooperation between the White House and Congress, saying, "We have come together on a single mission, and that is to put the people's interest first."

    The stimulus plan was achieved after he held talks with leaders of Congress last month about "whether or not we could come together to provide a booster shot for our economy -- a package that is robust, temporary, and puts money back into the hands of American workers and businesses," Bush said.

    According to the stimulus package, individuals who pay income taxes would get up to 600 dollars, working couples 1,200 dollars and those with children an additional 300 dollars per child.

    Workers who make at least 3,000 dollars but do not pay taxes would get 300-dollar rebates.

    Those making more than 75,000 dollars and couples with income exceeding 150,000 dollars are to get smaller rebates, 50 dollars less per 1,000 dollars they make over those thresholds.

    As an incentive to encourage business investment, companies would be able to immediately deduct 50 percent of the costs of purchases of new equipment.

    The package will inject nearly 152 billion dollars into the economy this year and more than 16 billion dollars in 2009.

    Taxpayers will not have to apply for the rebate, and it would come automatically based on their 2007 tax return.

    The Bush administration said the package will provide tax rebates to 128 million American households and that the first checks should arrive in mailboxes in May.

    In addition to the stimulus package, the Federal Reserve has slashed interest rates to 3 percent from 5.25 percent since mid-September to try to boost the spending and investment, helping bolster the economic growth and calm down the turbulence in the financial market.

    The U.S. economy grew at an annual rate of just 0.6 percent in the final quarter of 2007, down sharply from the 4.9-percent pace in the previous quarter.

    That has led many economists to forecast that the United States will slip into a recession, and some have said it may already be in one. But the Bush administration and the Federal Reserve have steadfastly denied that would happen.

    Many economists said the stimulus package and interest cut will give the economy a much-needed boost in the middle of this year, but some others said the actions are too little and too late.

    "I do think this will give the economy a shot of adrenaline," said Stuart Hoffman, chief economist at PNC Financial Services Group.

    "The stimulus will have the effect of increasing jobs by about half a million above the number that would have been the case in the absence of that," predicted Edward Lazear, chairman of the White House Council of Economic Advisers.

    However, surveys showed that a majority of consumers said they will save the tax-rebate money, or use it to pay down debts, while only a minority of consumers said they will spend the rebate checks.

    To be an effective short-term stimulus to the economy of this year, the money would have to be spent.

    When the U.S. government sent out rebates in 2003, consumers only spent less than a third in the first six months, and about two-thirds within the first year, according to findings by the University of Michigan Survey of Consumers, U.S. media reported.

    After rebates were sent out in 2001, some 22 percent said they would mostly spend them, rather than saving the money or using it to pay off debts, and only one-third of the rebate was spent in the short run, according to the same study.

    Democrats also endorsed the rescue package, but adding that the Bush administration should do more to fend off a possible recession.

    "We have much more to do in the long term because many more Americans still need our help. We will continue fighting for those who have lost their jobs in the Bush economy and small businesses suffering in a looming recession," Senate Democratic Majority Leader Harry Reid said in a statement.

    "We will fight for families struggling with rising energy prices and a national housing crisis. And we will fight to reverse President Bush's disastrous budget policies that have hurt the middle class," he said.

Editor: Sun Yunlong
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