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Congress Divided on Economic Relief, Housing Measures

President Bush played down the possibility of recession Thursday, while Fed Chairman Ben Bernanke explained to Congress the difficulties of balancing rising inflation with a slowing economy. Two senators debate proposals to aid the economy, including a supplemental stimulus package and a bid to expand home foreclosure relief.

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  • JIM LEHRER:

    Ray Suarez has the economy story.

  • RAY SUAREZ:

    The president used this morning's news conference to take on concern over the nation's struggling economy and the various Washington proposals to remedy it.

    Mr. Bush made clear where he thought the economy wasn't heading.

    GEORGE W. BUSH, President of the United States: I don't think we're headed to a recession. But no question we're in a slowdown. That's why we acted, and acted strongly, with over $150 billion worth of pro-growth economic incentives.

  • RAY SUAREZ:

    The president took aim at several measures now in debate on Capitol Hill, including the possibility of another stimulus package.

    Senate Democrats are proposing a wider bill that would increase or extend funding for unemployment benefits, food stamps, and infrastructure projects.

    Two weeks ago, the president signed a $168 billion stimulus package. That plan will give more than 130 million Americans a rebate check worth between $300 and $1,200, depending on their income.

    Today, the president said that bill was sufficient for now.

  • GEORGE W. BUSH:

    Why don't we let stimulus package one, which seemed like a good idea at the time, have a chance to kick in?

  • RAY SUAREZ:

    Mr. Bush also criticized a Senate proposal that would allow bankruptcy judges to change the terms of a mortgage.

  • GEORGE W. BUSH:

    Congress needs to act to help homeowners avoid foreclosure. Unfortunately, the Senate is considering legislation that would do more to bail out lenders and speculators than to help American families keep their homes.

    The Senate bill would actually prolong the time it takes for the housing market to adjust and recover, and it would lead to higher interest rates.

  • RAY SUAREZ:

    Senate Democrats fired back, saying the housing bill was important to provide assistance for homeowners in trouble. Here's Senator Charles Schumer of New York.

    SEN. CHUCK SCHUMER (D), New York: This is a carefully thought out, modest, balanced package that aims at the bull's eye of our economic crisis, which is housing. And, Mr. President, make no mistake about it: Unless we address the housing crisis, we are not going to be able to clear up this economy.

  • RAY SUAREZ:

    The debate in Washington comes amid more bad news on the housing front this week. Prices of new homes dropped 15 percent from a year ago, and foreclosures have increased nearly 60 percent during that same period.

    Meanwhile, energy and gasoline prices are also up. Crude oil has been closing above $100 a barrel all week. And the dollar is now trading at record lows against the euro.

    These were some of the issues Federal Reserve Chairman Ben Bernanke addressed in two days of testimony on Capitol Hill. Today, he explained the difficulty of balancing growth while preventing inflation.

  • BEN BERNANKE, Federal Reserve Chairman:

    We are facing a situation where we have simultaneously a slowdown in the economy, stress in the financial markets, and inflation pressure coming from these commodity prices abroad. And each of those things represents a challenge.

  • RAY SUAREZ:

    Senate Democrats tried to pass a housing bill this afternoon, but were blocked by Republicans. They're expected to try again in the next week or so.