Stimulus plan may be ready by March: lawmaker

By Lesley Wroughton

WASHINGTON (Reuters) - A stimulus package to boost the U.S. economy and avoid a full-fledged recession could be ready by the beginning of March, a senior Democratic lawmaker said on Sunday.

Sen. Charles Schumer, a New York Democrat and chairman of the Joint Economic Committee, said he expects Democrats and Republicans to find common ground and there was already agreement that the plan should include tax cuts.

But in an election year, details of such a package should evoke much debate, especially over the tax cuts.

"I'm optimistic we can get a package done, signed and ready to go by March first," Schumer told "Fox News Sunday." "I think ... both parties realize our economy is headed south in a significant way and we need relief."

U.S. President George W. Bush on Friday proposed temporary tax cuts and other measures worth up to $150 billion to fire up the economy, hit by reckless lending in the U.S. housing mortgage market and related financial turmoil.

Some U.S. economists and Wall Street bankers believe the United States economy is already in a mild recession, although technically it is defined as two consecutive quarters of declining growth.

Bush said the plan would focus on tax rebates for families and incentives to encourage business investment, also creating work for about 500,000 people.

Rep. Charlie Rangel, another New York Democrat and chairman of the House of Representatives Ways and Means Committee, said moving quickly to approve a package was vital.

"It has to be timely. We have to get it out there in order for it to have any positive impact," Rangel told ABC's "This Week"

"It has to be temporary to make certain that it's not long-lasting increase in the deficit in the future," he added.

Currently, views differ over whether the economic rescue package should provide for people who pay income taxes or should reach those who may not be on the tax rolls by extending jobless benefits and raising spending for food stamps and other welfare benefits.

Rangel said political compromise would be necessary.

"The Republicans are anxious to get permanent tax reform placed in it. But let's face it, there nothing about 2010 in the president's tax cut that's going to spur the economy now to avoid or alleviate the pains of a recession," Rangel said.

"So, we're going to get together. We got to get it done, and we got to get it done speedily. We have to," Rangel added.

The U.S. Federal Reserve has slashed its key interest rate by a full percentage point since mid-September and financial markets expect the central bank to cut rates again at the Fed's next meeting on January 29-30 to stave off recession.