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Bush Still Mum Over Stimulus

Bush Still Mum Over Stimulus, But Political Pressure Building
Monday January 7, 7:06 pm ET
Jed Graham

December's weak jobs report has put the idea of a fiscal stimulus package on the front burner.

But President Bush's Monday speech on the economy suggests that the White House is cooking up its ingredients at a simmer.

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Yet in an election year with a Democratic Congress, the pressure for a plan may soon come to a boil, analysts said.

The president said the economy has absorbed numerous shocks in the past seven years, but always bounces back.

"We've been through this before," Bush told business leaders in Chicago. He noted that even as the jobless rate jumped to 5% last month, the U.S. added jobs for a record 52nd straight month.

Yet he added, "We cannot take economic growth for granted."

Still Listening

The speech was greeted with anticipation after Bush said Thursday that his administration was considering a stimulus plan.

"We are listening to a lot of good ideas from different people," the president said. "We've got our people out there carefully -- not only monitoring this situation -- but listening to ... possible remedies."

But on Monday Bush only spoke of the administration's ongoing programs to respond to the mortgage crisis, along with other existing proposals on housing and health care.

He also renewed his call for making the 2001 and 2003 tax cuts permanent to reduce "uncertainty in an uncertain market."

Treasury Secretary Henry Paulson told the New York Society of Securities Analysts he expects "further indications of slower growth in the weeks and months ahead."

Paulson said crafting economic aid "will require patience."

"Getting the policy right is more important than getting the policy announced quickly," he said.

Bush told Reuters last week that he probably wouldn't decide on whether or not to propose a stimulus plan until the Jan. 28 State of the Union address.

Democratic Plan Likely

Either way, Democrats in Congress are likely to offer a stimulus plan of their own.

"Concerted action by the federal government and President Bush will make the difference between economic slowdown and recession," Sen. Charles Schumer, D-N.Y., said Monday.

Senate Majority Whip Dick Durbin, D-Ill., blasted Bush for proposing nothing but extending tax cuts set to expire after 2010.

"Tax cuts in 2011 aren't going to create good jobs today," Durbin said in a call with reporters.

Durbin said Democrats had no stimulus plan yet. But he touted his own bill that would "allow families facing foreclosure to have their mortgage renegotiated."

While Paulson announced that 45,000 out of 1.8 million subprime homeowners had sought help under a Treasury-led effort, Durbin said 90% of foreclosed families are being left behind.

An eventual Democratic stimulus plan could look like that proposed by Clinton administration Treasury Secretary Lawrence Summers in a Financial Times op-ed.

He suggests temporary cuts in payroll taxes and increases in food stamp benefits and jobless benefits for the long-term unemployed.

Durbin also called for lifting limits on mortgage finance firms Freddie Mac and Fannie Mae to help the housing market.

While the Bush administration has steered the country through recession and other challenges, it has favored long-term tax relief over short-term measures to help the economy through a soft patch.

"It's not their style," said Don Luskin, chief investment officer of investment consultant Trend Macrolytics. "They're looking for opportunities to make lasting, important structural change."

But Bush co-opted Democrats in 2001 by adopting a $300 tax rebate.

Luskin expects Bush would probably sign a Democratic-type stimulus package -- "provided that it does not have any tax increases."

Greg Valliere, chief political strategist at Stanford Washington Research Group, says Bush is "coming under pressure from Republicans to do something."

Whatever the administration proposes, he says, "the Democrats will say it's not enough and they will up the ante."

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