Bush open to larger stimulus package to fend off recession

WASHINGTON, Jan. 22 (Xinhua) -- The U.S. White House said on Tuesday President George W. Bush will not rule out the possibility of a larger economic stimulus package than that he outlined last week.

"I'm not going to close the door, but I'm not suggesting that anyone believes it has to be bigger than" the 150 billion U.S. dollar figure already bandied about, said the White House spokeswoman Dana Perino.

However, she refused to make comments on a possible economic recession.

"We don't comment on daily fluctuations," she told reporters. "We are not forecasting a recession. Clearly there is a slowdown."

Bush is meeting at the White House with congressional leaders to discuss details of the economic package, which both sides hope to move out quickly, according to the U.S. media.

Last Friday, Bush outlined a package of tax cuts and other measures totaling about 150 billion dollars to fend off a possible recession.

"This growth package must be big enough to make a difference in an economy as large and dynamic as ours, which means it should be about 1 percent of GDP," Bush said then at a White House announcement.

In current terms, 1 percent of GDP would amount to more than 140 billion dollars.

As expected, Bush didn't go into specifics. He laid out the principles and called for tax measures to give business an incentive to make major investments this year and direct tax relief for individuals.

Some lawmakers said under Bush's plan, taxpayers could receive rebates of up to 800 dollars for individuals and 1,600 dollars for married couples.

Earlier Tuesday, the Federal Reserve decided to cut a key interest rate by 75 basis points amid growing fears of a recession, the biggest one-day move by the central bank in recent memory.

The Fed "took this action in view of a weakening of the economic outlook and increasing downside risks to growth, said the Fed in a brief statement

"While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households," it warned.

"Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets," it added.

The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night, according to U.S. media.

Global financial markets plunged Monday and Tuesday amid worries over a possible U.S. economic recession.

The Fed Tuesday morning made the emergent move before markets opened, hoping that the bold move would limit the decline in U.S. stocks. U.S. markets were closed Monday for the Martin Luther King holiday.

Meanwhile, Treasury Secretary Henry Paulson told the U.S. Chamber of Commerce that Congress and the Bush Administration share a sense of urgency and will work together on a package of tax cuts.

"Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible," he said.

He admitted that the U.S. economy is experiencing a significant housing correction, saying it "is inevitable after years of unsustainable home price appreciation, and it is exacting a penalty to our economic growth. That, coupled with high energy prices and capital market turmoil has caused our economy to slow materially in recent weeks."

However, Paulson insisted that the U.S. economy is resilient and diverse.

"The unemployment rate remains low and job creation continues, albeit at a modest pace. The structure of our economy is sound and our long-term economic fundamentals are healthy," he said.