Bush, Congress face pressure on economy

By Caren Bohan - Analysis

WASHINGTON (Reuters) - U.S. President George W. Bush and the Democratic-led Congress, who battled last year over issues from Iraq to health care, face rising pressure to try to seek common ground on a plan to help the struggling economy.

Many private economists fear a recession is looming for the United States, which has been hit by a housing crisis, a credit crunch and oil prices hovering near $100 a barrel.

Any effort to counter a recession with measures such as temporary tax breaks for households could run into difficulties in the partisan atmosphere typical of a presidential election year.

But some analysts said the concerns about the economy are serious enough that Bush, a Republican, and the Democrats might feel compelled to set aside their political differences.

"It's very common when you are at or near a recession that the two sides will see if they can work together to help the economy," said Kevin Hassett, an economist at the conservative American Enterprise Institute. "It's the normal playbook."

One congressional Republican said the White House has floated the idea of tax rebates, though no firm decisions have been made. Tax rebates are also popular with Democrats but the two sides may differ on whether they should be focused on a specific income group such as the middle class or also aimed at poorer households who pay very little income tax.

Some private economists say a stimulus in the range of $50 billion to $100 billion would be needed to give the economy a meaningful boost.

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