Bush to outline emergency boost for US economy

Jan 18, 2008, 16:44 GMT

Traders and Specialists work on the floor of the New York Stock Exchange in New York City USA, 18 January , 2008. Stocks opened higher today on news of a stimulus plan offered by President Bush after a three percent decline in the stock prices yesterday. EPA/PETER FOLEY

Washington - President George W Bush planned Friday to outline emergency measures to boost the flagging US economy, focussed on hopes that consumer spending can help avoid a recession.

'There's an urgent need,' Treasury Secretary Henry Paulson, the top US finance official, told NBC television. 'The president is going to be putting forward a broad outline, principles, ideas.'

Speculation about possible measures has focussed on short-term tax relief in hopes that Americans will spend the extra money. White House spokesman Tony Fratto said Bush's proposals would include tax steps.

'We want to see a broad-based effort that will help all businesses and consumers to continue to enjoy the benefits of this economy,' he said. 'The long-term prospects for this economy are sound.'

Tumbling stocks on Wall Street, high oil prices, rising unemployment and the collapse of a real-estate bubble have cast gloom over the US economy.

Some economists believe the US is already in recession, but Paulson insisted the nation is headed only for slower growth.

The Bush administration has been working with Congress to put together an economic stimulus package that could be passed into law quickly. US stocks, which have plunged since January 1, opened higher Friday.

'A big part of the programme should be focussed on consumers,' Paulson said. Consumer spending accounts for about two-thirds of the US economy, the world's largest.

The economy grew at a nearly 5-per-cent annual rate in the third quarter of 2007, but economists believe it slowed sharply in the last three months of the year.

Bush had been expected to present his economic stimulus ideas in his January 28 State of the Union speech, but the Democratic-led Congress stepped up calls for action while Bush was abroad on a Middle East trip last week.

'We have an opportunity to do it sooner and the president sees no reason to wait for' the annual policy speech, Fratto said.

Bush wants to take 'actions quickly that will give a boost to our economy as soon as possible this year,' Paulson said.

The flagging economy risks clouding Bush's last year in the White House before his term ends next January. Recession fears are also rippling into the 2008 presidential election campaign as Democratic and Republican candidates jostle to present plans to bolster the economy.

US Federal Reserve chief Ben Bernanke backed short-term government action to boost the economy Thursday.

Independently of the administration, the central bank is expected to cut US interest rates further when it meets in late January. Lowering the cost of borrowing can spur investment and consumer spending.