Bush May Propose Economic Stimulus Package
President Bush said he was considering the possibility of offering a fiscal stimulus package to help boost the economy but said he has not made a decision yet.
"In terms of any stimulus package, we're considering all options and I probably won't make up my mind as to whether or not I lay one out until the State of the Union," Bush said in
an interview with Reuters at the White House, referring to his State of the Union address to Congress Jan. 28.
A growing number of private economists are worried that a surge in oil prices -- which hit $100 a barrel this week -- and the ripple effects from a sharp housing downturn and subprime mortgage crisis could tip the economy into recession.
"We are listening to a lot of good ideas from different people," Bush said. "We've got our people out there carefully -- not only monitoring this situation -- but listening to ... possible remedies."
Bush will meet Friday with Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and top financial regulators as he prepares for Monday remarks on the health of the economy, the White House said.
The meeting with the Treasury-led President's Working Group on Financial Markets comes amid weakening economic data and growing concerns about a housing-led recession that have led some lawmakers to discuss possible fiscal stimulus moves.
Bush said that while he was concerned about the impact of high oil prices on Americans' pocketbooks, the run-up in prices was not the type of emergency that warranted tapping the U.S. emergency stockpile known as the Strategic Petroleum Reserve.
Bush, who attributed the rise in the cost of oil to demand from fast-growing economies abroad, said the stockpile should be reserved for emergencies, such as "terrorist attacks (or) massive dislocations."
"Hundred-dollar oil is a reflection of supply and demand," Bush said. "It certainly creates difficulty but no, it's not the kind of emergency that would define the use of the SPR as
far as I am concerned."
The combined effects of the housing slump and the credit crunch that has followed a spike in mortgage foreclosures appear to have sharply slowed U.S. economic growth in the final
months of 2007, raising the chances of recession.
A gauge of factory activity released Wednesday showed U.S. manufacturing contracted last month, adding to recession fears. The report and oil's brush with $100 a barrel knocked
the Dow Jones industrial average down 1.7 percent in its first day of trading in 2008.
With the bursting of the housing bubble, mortgage delinquencies and home foreclosures have jumped, prompting the Bush administration to broker a mortgage industry plan to temporarily freeze rates on some mortgages facing resets to sharply higher rates in coming years. Most of the problems in mortgage markets are among loans made to borrowers with blemished credit histories, referred to as subprime loans.
The U.S. Federal Reserve has lowered its key interest rate by a full-percentage point to 4.25 percent since mid-September in a bid to buffer the economy. At the same time, higher oil
prices have stirred fears that inflation could tie the central bank's hands in its efforts to give the economy a boost.
In the interview, Bush underscored the Fed's independence from the White House in navigating economic risks.
"I do have all the confidence in Chairman Ben Bernanke's ability to analyze the situation," he said. "I know he's paying very close attention to it. His response will be independent
from the White House."
A number of prominent economists, from former U.S. Treasury Secretary Larry Summers on the left to Harvard University professor Martin Feldstein on the right, have urged the government to give the economy a fiscal boost and lawmakers from both parties have begun to consider what might be done.
With presidential and congressional elections looming in November, Republicans could find themselves on the defensive if the economy takes a substantial turn for the worse.
Bush made clear he would oppose any attempts to reverse some of the tax cuts his administration has put into place.
"I'm going to make darn sure Congress doesn't raise taxes," he said.