JIM LEHRER: The Bush plan for boosting the economy, NewsHour correspondent Kwame Holman reports.
KWAME HOLMAN: The fast-moving train toward an economic stimulus package picked up steam this morning, as the president outlined his proposal in the Roosevelt Room of the White House.
GEORGE W. BUSH, President of the United States: By passing an effective growth package quickly, we can 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.
This growth package must be temporary and take effect right away so we can get help to our economy when it needs it most. And this growth package must not include any tax increases.
Specifically, this growth package should bolster both business investment and consumer spending, which are critical to economic growth. Giving them an incentive to invest now will encourage business owners to expand their operations, create new jobs, and inject new energy into our economy in the process.
To be effective, a growth package must also include direct and rapid income tax relief for the American people. Americans could use this money as they see fit, to help meet their monthly bills, cover higher costs at the gas pump, or pay for other basic necessities.
KWAME HOLMAN: Minutes later, Treasury Secretary Henry Paulson said the package could cost between $140 billion and $150 billion and create half a million new jobs. He said it needed to be enacted quickly.
HENRY PAULSON, U.S. Treasury Secretary: We’ve got broad consensus in Congress we need to do something, so now we need to turn that into the reality of legislation. And then, I can tell you, when we get the legislation, we’re going to run like a bunny here to get the relief out.
KWAME HOLMAN: Edward Lazear, chairman of the President’s Council of Economic Advisers, added the administration does not believe it’s too late for an economic stimulus plan to help prevent a genuine recession.
EDWARD LAZEAR, Chair, Council of Economic Advisers: We are still at 5 percent unemployment; 5 percent unemployment is below the average for the last three decades. We don’t want to talk down the economy and make it sound worse than it is.
It is still a relatively healthy economy. We want to keep it that way, and that’s the reason that we’re moving in this direction.
KWAME HOLMAN: The administration officials said they prefer to leave it to Congress to settle on the details of the economic plan.
A 2001 stimulus plan gave individual taxpayers refunds of $300 and $600 for households. This time, refunds reportedly could reach $800 for low- and moderate-income individuals and $1,600 for households.
Congressional leaders also are working urgently on a stimulus package, and across party lines. Majority Democrats, however, emphasized measures targeting lower income Americans, such as increasing spending on food stamps.
Secretary Paulson said the administration’s focus is on speed and simplicity.
HENRY PAULSON: We’ve looked at a lot of things. We believe that there’s a great benefit to being simple. You know, the Christmas season has come and gone. We’re not trying to decorate a Christmas tree here, that a huge part of this is going to be speed.
KWAME HOLMAN: Senate Democrat Chuck Schumer, chairman of the Joint Economic Committee, said today he’s optimistic.
SEN. CHUCK SCHUMER (D), New York: I am gratified. I have seen an unusual amount of desire to cooperate on this issue, on both sides of the aisle and at both sides of Pennsylvania Avenue. So I think there’s an understanding of urgency.
And if you talk to Chairman Bernanke, speed is of the essence. If we’re to twiddle our thumbs and wait until May or June, it may be too late. I think, if we avoid any of the ideological fights, we could actually pass something so that it would take effect by March 1st.
KWAME HOLMAN: Congressional leaders say a bipartisan package could be presented ahead of the president’s State of the Union address January 28th.
JIM LEHRER: And to Shields and Brooks, syndicated columnist Mark Shields, New York Times columnist David Brooks.
Mark, by March 1st there could be a consensus, economic stimulus package in law?
MARK SHIELDS, Syndicated Columnist: I really believe there could, Jim. This is not political posing. I mean, what Chuck Schumer said is true. Talking to Democrats, they've rarely seen, in the entire Bush administration, the level of willingness to cooperate, the openness on both the part of Roy Blunt in the House, and John Boehner, as well as Chairman Bernanke, Secretary Paulson, and the White House itself.
I mean, there is a sense that I think their attention is concentrated by the fact that there could be a political hanging if the economy does go south. So I think there's some self-interest in this, but it is a remarkable level of cooperation.
JIM LEHRER: Do you read it the same way?
DAVID BROOKS, Columnist, New York Times: They're giving away candy. What's to complain about? They're going to take...
JIM LEHRER: Eight hundred for you, $1,600 for you...
DAVID BROOKS: I mean, everybody gives -- the politicians love to give away candy. I mean, I think we ought to be suspicious of all this.
I mean, we have a $14 trillion economy. How do we know that $145 billion is going to stimulate it? How do we know they're going to get the timing right? Stimulus packages rarely do.
How do we know that the specific proposals they have are actually going to stimulate the right parts of the economy? The last stimulus package, we got very lucky with the timing, but even so the results are very mixed about whether the rebates that were given to taxpayers actually stimulated the economy.
I just think there's grounds for caution, that there's actually anything that's going to be productive out of this, aside from the fact that politicians get to act.
Concerns over short-term stimulus
JIM LEHRER: Is there a negative -- I mean, let's say they do, in fact, do it. Could that hurt anything? Could it make it worse?
DAVID BROOKS: Well, I think there are two things that should give us pause or give me, a skeptic's, pause.
JIM LEHRER: All right.
DAVID BROOKS: And that is that very serious economists -- and I'm thinking of Larry Summers, who's a Democrat, and Martin Feldstein of Harvard, who's a Republican -- both think the economy is in real trouble, not only modest trouble, which it seems to be in, but they think it's headed for some real trouble.
And both support a stimulus package because they think, in this case, we could be heading for a really serious recession. So that's one to give us pause.
The second, financially, $145 billion will hurt the deficit, but it won't do any real financial harm. There could be moral harm, that every time we get a slowdown the government decides to give away some money.
And I do think, you know, we have this long-term fiscal hangover sitting out there. If every time, you know, there's a slowdown, we give away money, I do think that has some sort of political benefit or deficit.
And I would say the only two people on the campaign trail that are raising this concern are Fred Thompson and John McCain, who have so far not gone on the stimulus bandwagon.
MARK SHIELDS: John McCain has become a born-again supply-sider, however, there in South Carolina, with Jack Kemp joined at the hip.
DAVID BROOKS: But the difference being long-term policies and short-term stimulus.
MARK SHIELDS: OK, all right.
JIM LEHRER: We'll get to the presidential politics. What do you think about what David said?
JIM LEHRER: Don't jump on the bandwagon.
MARK SHIELDS: He's always been a skeptic.
JIM LEHRER: David has?
MARK SHIELDS: David's always been a skeptic, and he's always been skeptical about the Bush administration.
I will say this. I will say this. I mean, I think the agreement and the consensus among economists seems to me -- and politicians who care about the economy -- is it has to be targeted, and it has to be timely, and it has to be temporary.
Boosting lower income groups
JIM LEHRER: And it has to be quick, right?
MARK SHIELDS: It has to be quick, and that's the timely part. The biggest argument I heard today and the biggest criticism is that by saying only taxpayers -- that is, those who pay taxes -- you are removing 65 million households who do pay taxes, who pay Social Security and Medicare taxes at a rate of better than 15 percent.
I mean, the bottom fifth of the economy, of Americans, earning Americans, pay on the average 18 percent of their income, 18 cents on the dollar, in taxes. The top fifth on the average pays 19 cents on the dollar.
The fastest buck, if you want to get a bang for the buck -- and Ben Bernanke said this yesterday, testimony on the Hill -- extend unemployment benefits, enlarge food stamps.
I mean, that's the quick buck. That's where you're getting a -- if you give it to the top income group, they're going to pay off debt, they're going to pay off their credit cards. They might put it in the bank.
If you put it to people who need it, and that's 65 million households who either get no rebate or just a partial rebate, those are the people who are going to spend and really stimulate. And stimulating is what you're interested in.
Developing a substantive plan
JIM LEHRER: Is this plan that the president has outlined -- and not only the president's plan, but the plan that the Congress is working on -- would it do this, David? Would it...
DAVID BROOKS: No one knows. There is no plan.
JIM LEHRER: There is no plan. You're right.
DAVID BROOKS: There are priorities. There will probably be some Keynesian demand side stuff. There will probably be a little supply side stuff.
But the idea they're going to come together and produce something simple, it seems to me -- that I'd also be skeptical about, because they're going to have to compromise two entirely different economic philosophies to get one plan they can both agree upon.
JIM LEHRER: What about -- I know we want to move on here. Congressman Spratt was on this program last night, Mark. And he made the point that, wouldn't it be wonderful for the American people to finally see the Congress of the United States and the president of the United States get together on something quickly, that meant something and that was beneficial? He was talking about the psychological effect for the public.
MARK SHIELDS: John Spratt is a workhorse and not a show horse. You don't see him, you know, on a lot of TV shows. He's a very substantive guy.
JIM LEHRER: Do you agree with him?
MARK SHIELDS: I do. And I thought he and Paul Ryan showed a level of collegiality and cooperation last night, in spite of differences, that was encouraging. It should be encouraging for Americans.
JIM LEHRER: You spoke about that earlier. You don't think that is enough in itself, though?
DAVID BROOKS: Well, those two are very serious legislators, but giving away free money is something politicians like to do in times of recession.
JIM LEHRER: OK, we'll be back to you all in a moment.