WASHINGTON President George W. Bush and leaders of the Democratic-led Congress vowed on Tuesday to move quickly to work out the details of a $150 billion stimulus package for the U.S. economy, as fears of a recession prompted a sell-off in global financial markets.
"I'm confident that we can get an agreement passed, and we can get an agreement passed in relatively short order," Bush said after meeting at the White House with Democratic House of Representatives Speaker Nancy Pelosi and Senate Majority leader Harry Reid.
"All of us want to get something done, all of us want to get something done that will be temporary and effective, and all of us want to get something done as fast as possible," Bush added.
A vicious rout of global stock markets at the start of the week sent the Federal Reserve scrambling to slash U.S. interest rates on Tuesday by three quarters of a point, the largest cut in more than 23 years.
Global equities pulled out of their nose dive after the cut but U.S. stock prices ended the day weaker with the Dow Jones industrial average down 128 points, or just over 1 percent.
It was unclear if the Fed action or the talk of a stimulus package would be enough to stem the turbulence.
"We have an economy sliding toward recession. Hundreds of thousands of families at risk to lose their homes. The price of gas and heat skyrocketing to all-time highs," Reid, a Nevada Democrat, said on the Senate floor before his visit to the White House to meet with Bush.
Later, Reid told reporters he hoped legislation could be finished and ready for Bush's signature by mid-February.
"We talked about doing something as soon as is legislatively possible -- something that is targeted and something that is temporary in order to inject stimulus into the economy," Pelosi, a California Democrat, said as she Reid left the meeting with Bush at the White House.
"Now we see across the world that the state of the economy in the U.S. is having an impact as well. So the urgency we feel at home is now even more urgent as we see the impact of our markets on others." Pelosi said.
The package, which would mark a rare instance of cooperation between Bush and the Democratic lawmakers, is likely to include tax rebates, incentives for business investment and assistance for low-income people who would be hardest hit by the downturn.
But lawmakers are still negotiating the details of who should benefit from the tax rebates and how much of the package should be directed to low income and poor people.
"I expect we'll have a vigorous argument over that issue," said House Republican Leader John Boehner of Ohio, who has been in negotiations with Pelosi on the package.
The president has said he thought a plan worth 1 percent of the economy size, or up to $150 billion, could give the economy a significant lift.
But the White House left the door open to the possibility of a larger package, saying Bush was "not closing any doors."
"While the president is waiting to talk about more of the details, the size of the package is going to have to be worked out," White House spokeswoman Dana Perino said. "But he does believe it has to be around 1 percent GDP in order to have an impact."
Perino said the package could help "avoid a potential downturn" but she added that Bush's advisers were not forecasting a recession.
Treasury Secretary Henry Paulson welcomed the Fed's interest-rate cut.
"This is very constructive and I think it shows this country and the rest of the world that our central bank is nimble and can move quickly in response to market conditions," Paulson said.
The meeting between Bush and the lawmakers had initially been scheduled as a session to discuss his recent trip to the Middle East but the two sides decided it would also be a chance to discuss the economic package.
Under discussion is a plan that would temporarily eliminate the lowest income tax rate of 10 percent and give people the money back in a rebate. That would result in tax rebates of up to $800 for individuals and $1,600 for families.
The proposal would also allow businesses to take faster tax deductions for investments in new equipment.
The two sides are also reviewing extensions of unemployment insurance and extra spending on food stamps.
(Additional reporting by Tabassum Zakaria and Thomas Ferraro; Editing by David Wiessler and Stuart Grudgings)