House Democrats weigh new economic stimulus

By Richard Cowan and Donna Smith

WASHINGTON (Reuters) - Democrats in the House of Representatives huddled in the Capitol on Monday with some of their top economic advisers, just weeks before the elections, to look at ways to head off a recession that many fear is about to grip the United States.

"We need to address the fragility of markets, the stability of our economy," House Speaker Nancy Pelosi told reporters at the start of a meeting that included former Treasury Secretary Lawrence Summers and Joseph Stiglitz, a White House adviser during Bill Clinton's presidency.

Pelosi said they will be looking at ways to "protect taxpayers" and "create jobs."

Among items on their agenda are a possible second economic stimulus measure that would pump around $150 billion into the economy through construction projects, aid to states and the poor and other measures.

Early this year, before a steep drop in global financial markets and the teetering of several U.S. banks, Congress and President George W. Bush enacted a $168 billion stimulus law that was credited with helping short-term economic growth.

The Bush administration so far has opposed a second stimulus bill. White House spokesman Tony Fratto dismissed Monday's "economic forum" headed by Pelosi, saying, "This meeting today is about campaign politics, not helping the economy. We'll see where we are next month when Congress returns" from a recess.

Fratto also said that "Democrats are not taking into account the enormous amounts of both fiscal and monetary stimulus that are just now working their way into the economy."

On November 4, the United States will hold elections to choose a new president. The entire 435-member House also is up for re-election, as is one-third of the Senate.

U.S. financial markets suffered one of their worst weeks in history last week, dropping nearly 20 percent, and fueling fears for a global financial meltdown.

Amid the economic chaos, U.S. automakers were discussing possible mergers, European governments announced rescue packages totaling hundreds of billions of dollars that were designed to combat the global financial crisis, in which credit markets have seized up.

Trading in the United States kicked off on a more positive note on Monday in reaction to Europe's moves, with the Dow Jones Industrial Average up nearly 6 percent at one point mid-morning.

Pelosi did not provide specifics on new legislation she might seek if Congress returns for a post-election session in mid-November. She noted that the United States was at a "very challenging moment."

Pelosi is scheduled to hold a press conference to discuss Monday's session at around 12:15 EDT (1615 GMT).

(Editing by David Wiessler)