Treasury Secretary Henry Paulson said the $150 billion economic stimulus package worked out by President George W. Bush and U.S. House leaders was a “rare bipartisan moment'' that's likely to be repeated in the Senate.
“I don't think the Senate is going to want to derail that deal,'' Paulson said on the “Fox News Sunday'' television program. “And I don't think the American public is going to have much patience for anything that slows down this process of getting money into our economy.''
Paulson cautioned lawmakers against making many changes to the plan worked out between the Bush administration and House leaders, which was announced on Jan. 24. He repeated that while he expects the economy to continue to grow after slowing “significantly'' late last year, “risks are to the downside.''
If the Senate approves the package “very quickly,'' Paulson said, “I think we're going to be able to move quickly and get the money out into the economy by May.'' That would make “a very big difference'' in the economy, he said.
Since the agreement between the Republican president and leaders of both parties in the Democratic-controlled House, members of the Senate, also controlled by Democrats, have suggested changes such as increasing unemployment benefits and food stamps.
“Once you start considering additions — the food stamps, unemployment insurance and so on, it's a slippery slope, and there is a real danger that we're going to bog down and screech to a stop,'' Paulson said later on CNN's “Late Edition.''
Paulson said he doesn't think the U.S. economy is in a recession. “The markets will be pleased to see us all come together in Washington and work something out,'' he said, adding that the Senate “needs to take action.''
The housing slump probably worsened at the end of last year, bringing the economy to the brink of recession and prompting businesses to curb hiring and spending, economists said before government reports this week payday loans lenders.
Economic growth slowed to a 1.2 percent annual rate from October to December, a quarter of the previous three months' pace, according to the median estimate of economists surveyed by Bloomberg News. Other reports may show the unemployment rate held at a two-year high this month and consumer spending cooled in December.
While the agreement is a “good fundamental foundation to work from,'' House Speaker Nancy Pelosi of California has known all along that the Senate would make changes, Senator Charles Schumer of New York, chairman of the Joint Economic Committee, said last week in an interview on Bloomberg Television's “Political Capital with Al Hunt.''
About $100 billion from the package would pay for tax rebates to 117 million families and $50 billion would be for business tax breaks. The plan also addresses the rising number of foreclosures by allowing government-chartered mortgage companies Fannie Mae and Freddie Mac to buy home loans of as much as $729,750, up from the current limit of $417,000.
Under the package, individuals must earn at least $3,000 to receive a $300 rebate, while higher-income individuals would get up to $600 and couples could receive $1,200 plus $300 per child. Rebates would be limited to individuals earning less than $75,000 and couples earning less than $150,000.
Two business incentives were included in the package. One would allow large companies to deduct more of the price of new equipment they purchase this year. Small businesses would be allowed to deduct twice the current limit of $112,000 for new equipment purchases.