WASHINGTON (MarketWatch) -- President Bush urged Friday for "direct and rapid" tax relief for both U.S. consumers and businesses, calling such a plan the country's "most pressing economic priority."
Returning money to consumers and firms would be "a shot in the arm" that would boost the economy, he said.
Bush said the enactment of such a package should provide "direct and rapid income-tax relief to the American people."
'A successful stimulus package will put a meaningful amount of cash into consumers' pockets quickly and create incentives for businesses to invest immediately.' — Business Roundtable, in letter to President Bush
A key part of the White House's plan involves income-tax relief but leaves out breaks on payroll taxes paid by poorer Americans. Washington's 2001 rebate was an income-tax rebate, not a payroll-tax rebate. That plan included rebates of either $300 or $600. This time the biggest rebates could reportedly be more than double those.
The package should be equal to about 1% of gross domestic product, Bush said, which would be about $140 billion for a full year. Bush said that there's a risk of an economic downturn but that the White House expects the economy to continue to grow, echoing a view expressed by Federal Reserve Chairman Ben Bernanke in Capitol Hill testimony Thursday.
U.S. stocks rallied Friday before Bush spoke at the White House, dropped back in late morning action and then traded narrowly mixed by midday. See Market Snapshot.
The nation's equities market had suffered through its worst three-day stint in more than five years before Friday's trading.
On Thursday, Bush, Bernanke and top congressional leaders all called for Washington to act quickly to boost the economy. See full story.
Bush spoke by phone with congressional leaders for about 30 minutes Thursday afternoon, discussing ideas to stimulate growth just hours after Bernanke had issued his firm endorsement of a quick, temporary fiscal program to help steer the economy away from recession.
Clinton says plan shortchanges some
Before Bush spoke Friday, Sen. Hillary Clinton, D-N.Y., said the president's plan "shortchanges the 50 million Americans who most need an economic shot in the arm."
"The Bush approach would fail to fully help the millions of lower-income senior citizens who live on fixed incomes and are under enormous financial stress," said Clinton, who is seeking the Democratic nomination for president.
"And it would disproportionately leave out African-American and Hispanic families who have, on average, lower incomes than white families," she said.
But House Majority Leader Steny Hoyer, D-Md., said he is "encouraged" by Bush's announcement and is hopeful an agreement will be reached in the days ahead.
"There is a broad consensus that quickly enacting a simple, focused and temporary plan that puts money in the hands of low- and middle-income Americans will be the most effective shot in the arm to our nation s economy," Hoyer said in a statement.
Robert Greenstein, director of the Center on Budget and Policy Priorities, said the administration's plan would bypass or only give partial help to more than 40% of tax filers with the most modest incomes. Families of four making less than $40,950 would get partial help or nothing at all, he wrote.
A major business group, meanwhile, called for temporary consumer- and business-tax breaks.
"A successful stimulus package will put a meaningful amount of cash into consumers' pockets quickly and create incentives for businesses to invest immediately, providing the jolt that this economy needs," wrote the 160 chief executives of the Business Roundtable in a letter Friday to Bush.
Separately, the Conference Board said Friday that U.S. growth could slow during the first half of 2008. See full story.
George Bush making the speech
George W. Bush, the president of the United States has suggested an economic growth package that could be worth almost 1% of the United States' GDP (the US GDP is appoximately US$15 trillion). The package is expected to come in the form of tax cuts. 

In a speech which took place yesterday Mr.Bush said that the economy is an area of "real concern," to the US government. He added that the US "economy is still creating jobs, though at a reduced pace."

Democrats want the tax refunds to cover payroll taxes paid by lower-income groups and be combined with more unemployment benefits, food stamps and federal aid to states. It warned against bundling proposals to make Bush's first term tax cuts permanent with the stimulus package, and the Bush administration has separated the two in this proposal. 

When announcing the proposal George Bush said that "as Congress considers such a plan, there are certain principles that must guide its deliberations: 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." He added that "this growth package must be built on broad-based tax relief that will directly affect economic growth -- and not the kind of spending projects that would have little immediate impact on our economy. This growth package must be temporary and take effect right away -- so we can get help to our economy when it needs it most." He also added that he believed the package "must not include any tax increases."

In the speech George Bush also made it clear that he believes the package should be passed through congress quickly. He said that his belief was that by passing the package through congress quickly would "provide a shot in the arm to keep a fundamentally strong economy healthy. And it will help keep economic sectors that are going through adjustments, such as the housing market, from adversely affecting other parts of our economy."