By Matthew Benjamin
Jan. 17 (Bloomberg) -- The Bush administration is close to completing an economic-stimulus proposal that will include $800 rebates for individuals and $1,600 for households as well as tax breaks for businesses, people familiar with the plan said.
The proposal is subject to revision as administration officials consult with Republican and Democratic lawmakers in Washington, the people said.
President George W. Bush will lay out the ``principles'' of the economic package tomorrow, though it's ``too early'' to unveil a final proposal, according to his spokesman, who declined to provide details. Congressional leaders say a stimulus package may be as much as $150 billion.
Bush, who returned last night from a trip to the Middle East, has decided the U.S. needs short-term economic assistance from the government to avert an election-year recession, White House officials said earlier today.
``The president does believe that over the short term, to deal with this softening of the economy, that some boost is necessary,'' Deputy Press Secretary Tony Fratto told reporters at a briefing. Bush won't press Congress to extend the tax cuts passed during his first term and set to expire in 2010 as part of the plan.
``The President supports a permanent extension of his tax cuts, and he supports a short-term growth package, but they are separate,'' Fratto said.
White House and Treasury officials have been working since late November on the outlines of a plan to stave off a recession or ameliorate the effects if one occurs.
The plan the administration is close to proposing includes a temporary elimination of the bottom tax rate, which is now 10 percent, and a consequent lump-sum rebate to all taxpayers, according to the people.
Businesses would get a tax break under the plan that would allow them to deduct 50 percent of the price of new equipment they purchase this year. Small businesses would be able to deduct as much as $200,000 in new equipment purchases, up from the current $112,000 limit.
Asked about the details, a Treasury spokeswoman declined to comment.
House Republican leader John Boehner told reporters in Washington that a package of $100 billion to $150 billion is being discussed by administration officials and lawmakers.
Democrats in Congress are working on their own stimulus plan, which is also expected to include a tax rebate, as well as public works spending and additional aid for the poor through food stamps and other programs.
The deteriorating economy has brought both parties to the conclusion that legislation must be passed and implemented quickly if it is to have any effect. The jobless rate rose to 5 percent in December from 4.7 percent a month earlier, and economists at Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley say the U.S. is probably sliding into a recession.
Senator Hillary Clinton today increased the size of her stimulus proposal, to $110 billion from $70 billion because of signs of further weakness in the economy, according to a press release. Clinton, of New York, and Senator Barack Obama of Illinois, are the leaders in the race for the Democratic presidential nomination. Both have proposed packages of measures to boost the economy.
Arizona Senator John McCain, who's seeking the Republican nomination, today announced an economic-growth plan that would lower the corporate tax rate to 25 percent from 35 percent and give other breaks to business. It avoided short-term stimulus.
Federal Reserve Chairman Ben S. Bernanke told the House Budget Committee in Washington today that a fiscal boost of as much as $150 billion would help revive economic growth.
A package of $100 billion ``would certainly be measurable, it would not be window dressing,'' said Bernanke.