Paulson: No Rush on Plan to Jump-Start the Economy
Treasury Secretary Henry Paulson said Monday the Bush administration was considering
how to give the economy a boost as it weathers a housing correction, but does not want to rush.
"Our most immediate goal is to minimize the impact on the real economy," Paulson said in a speech in New York carried live on CNBC.com. "This will require patience as we thoughtfully evaluate next steps.
"Working through the current situation and getting the policy right is more important than getting the policy announced quickly," Paulson added.
Special Note: Paulson will guest host the 8 am hour of CNBC's "Squawk Box" on Tuesday.
Expectations have been growing that the Bush administration might be preparing a package of stimulus measures to unveil as early as the annual State of the Union message, which President Bush is scheduled to deliver to Congress on Jan. 28.
Bush, meanwhile, said that economic indicators are 'increasingly mixed,' causing anxiety for many Americans. But he said the economy is resilient and the U.S. has dealt with anxiety before.
"A lot of Americans are anxious about the economy," the president told business leaders in Chicago. "This frankly is not unprecedented," he said, pointing to the recession in the early months of his administration, terrorist attacks, corporate scandals, wars in Iraq and Afghanistan and natural disasters.
'In seven years we've had experience in dealing with anxiety,' Bush said. But he said it was important, in a time of economic uncertainty, to send a signal that taxes will remain low.
Paulson said a correction in the U.S. housing market -- characterized by slumping home prices and weak sales -- was "inevitable and necessary" after years in which banks and other
mortgage grantors followed "lax" lending practices and prices had risen too quickly.
"Let me be clear that no single policy or action will undo the excesses of the last few years," Paulson said. He added that administration officials "recognize the risks we face" and will try to keep the economy "as strong as possible as we weather this housing correction."
A welter of recent data has shown the U.S. economy lost much of its steam as 2007 ended, including a government report Friday that showed a meager 18,000 jobs were created in
December while the unemployment rate climbed to a two-year high of 5 percent.
That has fanned fears that the economy may he headed toward recession -- a theme that contenders for the Democratic presidential nomination have picked up on and used to hammer
the Bush administration's handling of the economy.
New York Democratic Sen. Hillary Clinton raised the issue during a debate in New Hampshire on Saturday night, saying the U.S. middle class was under increasing pressure as costs rise
and housing prices wane.
Paulson said financial institutions were writing down the value of the assets they hold but insisted that no one should be "surprised or disappointed" to see that happening because
the long-term effect will be to strengthen their balance sheets.
"This is market discipline in action and should enhance market confidence over time," the former Goldman Sachs chief executive said.
Paulson said if institutions do get their balance sheets in order and maintain their ability to finance businesses and individuals, it will minimize the damage from market turmoil on
He took a swipe at the Democrat-controlled Congress, saying it should speed up reform of government-sponsored enterprises that engage in mortgage lending by temporarily raising loan
limits to permit GSEs to package so-called "jumbo" mortgages into securities that can then be resold to investors.