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Sat, 06 Oct 2001

JP/Congress agrees to stimulus package of US$60b to $80b

Congress agrees to stimulus package of US$60b to $80b

Agence France-Presse, Washington

U.S. Congress leaders on Thursday said they were ready to spend up to US$80 billion to stimulate an economy staggering under the impact of last month's terrorist attacks.

President George W. Bush had asked Congress Wednesday to approve $60-$75 billion in economic stimulus to boost consumer confidence and limit the downward spiral.

Stressing the urgency of the situation, the lawmakers said they hoped to pass the bill within three to four weeks, impacting the economy within six months.

"Almost all that money has to be spent now to generate growth in the economy," said Senate Budget Committee chairman Kent Conrad.

They did not provide any details of the spending plan, as these still have to be worked out in the appropriate committees, but did indicate most of the stimulus would be in tax reductions and direct expenditures.

The leadership of the Senate and House Budget committees also developed a set of principles to guide Congress and the administration to assess the short-term and long-term impact of an economic stimulus package.

"Just as the president is putting forward a battle plan against terrorism, we need a battle plan for the economy," said House Budget Committee chairman Jim Nussle.

Overall, the package is based on the recognition that long- term fiscal discipline is essential to sustained economic growth and that measures to stimulate the economy should be limited in time to avoid turning the cyclical deficit into a structural deficit.

"The stimulus package should be enough to give a lift to the economy but we don't want it to be so big that it pushes up interest rates," said Conrad.

All economic stimulus proposals, the leaders agreed, should sunset within one year, to the extent practicable.

They also said the stimulus should be broad-based rather than industry-specific and should be directed at individuals "most likely to spend the additional after-tax income and businesses most likely to increase investment spending and employment."