President Bush and Federal Reserve Chairman Ben Bernanke today embraced calls for an economic stimulus package to avert recession. Bernanke said such a plan should be quickly implemented and temporary so that it won't complicate longer-term fiscal challenges.
The Fed chief, in testimony to the House Budget Committee, did not embrace any specific provisions or a specific plan. Rather, he spoke to the general concept of an economic rescue package. It is likely that any such package would include tax rebates.
"Fiscal action could be helpful in principle" and may provide "broader support for the economy" than the Fed can furnish alone through reductions in interest rates, Bernanke said. However, he also said that "the design and implementation of the fiscal program are critically important."
White House spokesman Tony Fratto said that Bush "does believe that over the short term, to deal with the softening of the economy, that some boost is necessary. His comments marked the first White House confirmation that Bush, confronting a deepening economic crises that has shaken much of the nation, supports government intervention. Until now, the White House said the president was just considering some type of short-term boost.
Fratto would not divulge the details or what the stimulus would look like, other than to say all options are being considered. Bernanke already had indicated earlier that he was open efforts to develop a rescue package, and reinforced that position today.
The fragile state of the economy has gripped Wall Street and Main Street and is a rising concern among voters. The situation has galvanized politicians &
including those vying to be the next president &
and poses the biggest test to Bernanke, who took over the Fed nearly two years ago.
With the economy suffering, one of Bush's first acts after returning to Washington Wednesday evening from the Middle East was to be a conference call today with congressional leaders in both parties to discuss a possible short-term stimulus package. Treasury Secretary Henry Paulson was to take part in the call.
The White House spoke up after watching a number of indicators of a battered economy. Consumer confidence has plummeted, economic woes have become the top concern of the American public, and the 2008 presidential contenders have scrambled to get in front of the issue.
Fratto said that Bush made the decision that a stimulus is needed while he was away from Washington on a Mideast trip that ended Wednesday.
But Fratto said that while Bush has decided to pursue some sort of boost, he suggested that he has not yet decided what he thinks it should contain. Listening to the congressional leaders' ideas is one step in that process, he said, as is "probably daily conversations" by Bush's economic team with people from the financial sector, business leaders and prominent economists, among others.
Fratto declined to say when the president could announce a package, or whether it would be before or after the State of the Union address later this month.
Bush and Bernanke back package to stimulate weakening economy