January 11, 2008 / 5:27 PM / 12 years ago

UPDATE 1-Clinton proposes $70 billion economic stimulus

(Adds confirmation from Clinton campaign, previous NEW YORK)

By Jeff Mason

LOS ANGELES, Jan 11 (Reuters) - Seeking to take the lead on economic issues, Democratic presidential contender Hillary Clinton on Friday proposed a $70 billion emergency spending package to help victims of the U.S. housing crisis and stave off what she sees as a coming recession.

“Economists and politicians are finally waking up to what many of America’s families already know: that we might be sliding into a recession,” Clinton said in a statement.

“We need an immediate strategy to get our economy back on track. I would work with leaders from both parties to pass an aggressive, fast-acting stimulus package to create good new jobs and revitalize our economy.”

Clinton’s proposal came three days after she defied opinion polls to narrowly beat Democratic rival Barack Obama in the New Hampshire primary and as candidates head into more state-by-state contests to choose the party’s nominee for the November presidential election.

Worry about a possible recession, the housing slump and rising energy prices has been growing and opinion polls show the economy has overtaken the war in Iraq as voters’ number one concern ahead of the election.

Federal Reserve Chairman Ben Bernanke said on Thursday that the central bank may be ready to make “substantive” interest rate cuts to avoid recession. President George W. Bush also is considering an economic stimulus plan.

Clinton’s plan would provide $30 billion for an emergency housing crisis fund for states to help low-income families unable to make mortgage payments; $25 billion to help low-income families pay their heating bills; $10 billion to extend unemployment insurance for people unable to find jobs; and $5 billion for alternative energy programs.

A $40 billion tax rebate package should also be prepared by the U.S. Congress for release to low-income and middle class workers if economic conditions in the country worsen, it said.

Clinton will out lay out her plans for jump-starting the U.S. economy in a speech at 2:15 p.m. EST/1915 GMT.

Even before the New York senator and former first lady spoke, Republicans called her proposals “reckless.”

“Clinton says she wants to ‘put money in people’s hands,’ but her plans require massive tax increases on hardworking families,” the Republican National Committee said in a statement. “Hillary Clinton’s misguided rhetoric concerning our economy is not believable or credible.”

Clinton told the New York Times in an interview she “absolutely” believed it was possible for Democrats in Congress to work with Bush to enact a stimulus package early this year.

But Bush has said any stimulus he is considering would most likely focus on tax cuts rather than spending.

A weakening U.S. job market and manufacturing sector downturn last month has raised concerns the economy was near or perhaps already in recession, but Bernanke said the Federal Reserve expected continued, but slow, growth.

Unemployment rose to 5 percent, data released last Friday showed. (Reporting by Daniel Trotta in New York and Jeff Mason in Los Angeles; editing by Stuart Grudgings)

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