Bush Considering Tax Cuts; Dems Do Nothing, Again

http://www.foxbusiness.com/markets/economy/article/bush-administration-considering-tax-cuts_424652_3.html

Friday, Jan. 4 2008

Bush Administration Considering Tax Cuts

WASHINGTON -- The Bush administration, faced with a deteriorating economy

and a big jump in unemployment, said Friday it was considering an economic

stimulus package that might include tax cuts to ward off a recession.

On Friday, the Labor Department reported that unemployment was at a two-year

high of 5% in December, while employers clamped down on hiring for the

month. The amount of new jobs employers added to their payrolls was at a

four-year low.

Officials stressed that President Bush has not decided yet to offer a

proposal but was looking at a variety of options with a plan possibly being

unveiled around the time of his Jan. 28 State of the Union address.

"The president is always looking at options ... always talking to people and

looking at data," Commerce Secretary Carlos Gutierrez said in an interview

with The Associated Press.

Bush met Friday with top economic officials including Treasury Secretary

Henry Paulson and Federal Reserve Chairman Ben Bernanke, who are part of the

president's working group on financial markets, a group formed after the

1987 stock market crash to monitor markets.

The president was given an assessment of how the economy is behaving and how

financial markets are performing after the severe credit squeeze that hit in

August. A number of big financial institutions have declared

multibillon-dollar losses because of rising defaults in the subprime

mortgage market.

White House spokesman Tony Fratto said tax cuts were an option being

considered.

Bush in his first term included a tax refund of up to $300 per person to

combat the impact of the 2001 recession. Private economists said another

round of tax cuts would be the best approach to get money to people who

would spend it.

Some suggested a one-year tax rebate of $500 might provide a sufficient

shot-in-the-arm for the economy. But they stressed that the proposal would

have to be passed quickly.

"The critical time is the first part of this year. If it doesn't get passed

until just before the November election, it will be totally useless," said

David Wyss, chief economist at Standard & Poor's in New York.

Dan Danner, executive vice president for public policy for the National

Federation of Independent Business, said his group and other business

organizations will be lobbying for tax incentives to be included in any

stimulus package.

"We are very hopeful that as the administration looks at economic stimulus,

they will look at the sector that has helped keep the economy afloat and

that is small business," Danner said.

Former Treasury Secretary Lawrence Summers, who served in the Clinton

administration, said in a speech last month that a stimulus package of $50

billion to $75 billion of temporary tax cuts and emergency spending would be

needed to avoid what he said could be the worst recession since the steep

1981-82 downturn.

It was expected that Bush would combine any new tax cuts with a renewed call

to make permanent his first term tax cuts, which are now scheduled to expire

at the end of 2010.

He warned Congress against taking steps that would increase taxes. "The

worst thing that Congress can do is raise taxes on the American people and

on American businesses," he said.

Analysts said any stimulus package should provide only temporary tax relief

to avoid making budget deficits worse in future years.

The quickest help probably will come from the Federal Reserve, in the form

of another interest rate cut later this month. That was considered more

likely given the jump in unemployment in December, to a two-year high of 5%.

Bush urged Congress to quickly pass legislation left over from last year to

offer assistance to people trying to obtain mortgages or refinance to more

affordable mortgages. "For those of you who are paying more and are worried

about the value of your home, I understand that," he said.