WASHINGTON — President Bush, acknowledging Monday that the country is suffering through a period of economic uncertainty, called on Congress to do more to help people and businesses hurt by the housing slump and credit crunch.
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In a brief introduction to his annual economic report, Bush said the $168 billion economic rescue package passed by Congress last week will keep "our economy growing and our people working.”
Bush is expected later this week to sign the stimulus package, which includes rebates of $600 to $1,200 to most taxpayers, and $300 checks to disabled veterans, the elderly and other low-income people.
"Money will be going directly to America — workers and families and individuals,” he told reporters. "It's going to help deal with the uncertainties in this economy.”
In addition, the package includes tax breaks for businesses and would take some steps to boost the ailing housing market. Bush said that other steps need to be taken to strengthen the economy, and he exhorted Congress to make his tax cut permanent and do more to help struggling homeowners.
Bush urged lawmakers to pass additional legislation that would revamp mortgage giants Fannie Mae and Freddie Mac and modernize the Depression-era Federal Housing Administration, which insures mortgages for low- and middle-income borrowers. The president also said Congress should approve legislation allowing state housing agencies to issue tax-free bonds to help squeezed homeowners refinance their mortgages.
These and other steps could help struggling homeowners "weather turbulent times in the market,” Bush said.
The stimulus package includes provisions that would temporarily raise to $729,750 the limit on Federal Housing Administration loans and the cap on loans that Fannie Mae and Freddie Mac can buy. Raising that cap on Fannie Mae and Freddie Mac should provide relief in the market for "jumbo” mortgages — those exceeding $417,000. The credit crunch hit that market hard, making it very difficult, if not impossible, for people to get those loans. And, that has plunged the housing market even deeper into turmoil.
Fallout from the housing bust and harder-to-get credit have catapulted home foreclosures to record highs, forced financial companies to rack up multibillion-dollar losses in bad mortgage investments, rocked Wall Street and dealt a powerful blow to the national economy.
The economy nearly stalled in the final three months of 2007, growing at a pace of just 0.6 percent. The odds of a recession have grown considerably over the last year, and an increasing number of analysts believe the economy may actually be shrinking now.
"Our economy is undergoing a period of uncertainty, and there are heightened risks to our near-term economic growth,” Bush said in the report to Congress. He said the stimulus package should "insure against those risks.”
The administration is hopeful the country will skirt a recession; the last one was in 2001, shortly after Bush first took office.
"I don't think we are in a recession right now,” said Edward Lazear, chairman of the White House Council of Economic Advisers, told reporters at a briefing. Lazear said the administration is not forecasting a recession, but rather "slower growth” in the first half of this year.
Bush again renewed his campaign for Congress to make his tax cuts permanent. "Unless Congress acts, most of the tax relief that we have delivered over the past seven years will be taken away and 116 million American taxpayers will see their taxes rise by an average of $1,800,” the president said.
Contributing: Associated Press Writer Ben Feller
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