President George W. Bush speaks about the economy

President Bush laid out his principles for framing an economic stimulus package today from the Roosevelt room in the White House. “Our economy has a solid foundation, but there are areas of concern,” he said. His speech outlined some broader principles for economic growth legislation, but did not mention specific components beyond tax relief.

The president pointed out that both consumer spending and jobs are growing but at a very slow rate. He also acknowledged that other sectors like housing are declining.

He said that his advisors and other outside experts expect slow growth, but “there is a risk of a downturn.” The White House has been careful not to use the word “recession” often when speaking about the economic situation.

Among his principles Bush noted that the economic stimulus package must be large enough to affect an economy as large as the U.S. He recommended tax relief amounting to about 1 percent of the Gross Domestic Product, or about $145 billion in relief. Bush called for “broad based tax relief” targeted to business and consumer spending. He cautioned against new taxes and spending project, which are being discussed by congressional Democrats.

Tax incentives for businesses must encourage businesses “to make major investments in their enterprises this year,” Bush said.

He also called for “direct and rapid income tax relief” in the form of tax rebates to the American people. He noted that taxpayers can spend this check any way they want, giving examples of paying bills and fueling up. He said that this infusion of cash into the hands of consumers should increase spending.

The president called on Congress to resolve two versions of legislation regarding the Federal Housing Administration and get that bill to his desk as quickly as possible.

Bush said that his phone call with Treasury Secretary Paulson and congressional leadership yesterday was encouraging and led him to believe that economic stimulus could be passed quickly with bipartisan support. He was quick to point out that while the administration has taken the subject of his tax cuts off the table for the discussion of a short term solution, the most pressing economic priority after a stimulus packaged is passed is making his those cuts permanent.

The president defended the market system while acknowledging that there are times when “swift and temporary actions” can insure that inevitable market adjustments do not become long-term down turns. Bush called a growth package “a shot in the arm to keep a fundamentally strong economy healthy.”