US to get $145bn 'shot in the arm'

Bush said such a growth package must also include tax incentives for business investment and quick tax relief for individuals. And he said that to be effective, an economic stimulus package would need to roughly represent 1% of the gross domestic product - the value of all US goods and services and the best measure of the US' economic standing.

White House advisers say that, in current terms, 1% would amount to around $145bn, which is along the lines of what private economists say should be sufficient to help give the economy a short-term boost.

The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the the world's largest economy into its first recession since 2001. The state of the economy has become a major topic in the US presidential campaign, replacing the war in Iraq.

Bush said that Congress and the administration need to settle on a temporary economic package that could be implemented quickly to "keep our economy growing and create jobs."

"Letting Americans keep more of their money should increase consumer spending," he said.

"There is a risk of a downturn," Bush conceded in his remarks at the White House.

Must take effect right away

He outlined several criteria for the package to meet: It must be "big enough to make a difference in an economy as large and dynamic as ours," it must be built on "broad-based tax relief," it must take effect right away but be temporary, and it must not include any tax increases.

Specifically, he called for tax incentives for businesses, including small companies, to make new and major investments this year. "Giving them an incentive to invest now will encourage business owners to expand their operations, create new jobs and inject new energy into our economy in the process," Bush said.

He also called for tax relief for individuals - probably to come in the form of one-time rebates. But he did not say how much money Americans would get to keep, the amount of other tax incentives that could be in the package, nor did the president detail how the US would pay for such a plan.

"Americans can spend this money as they see fit: to help meet their monthly bills, cover higher costs at the gas pump, pay for other basic necessities," Bush said.

The leader of the house of representative, speaker Nancy Pelosi, a Democrat, has talked of a package totaling $100bn or more. House Republican leader John Boehner spoke of a bill on the range of $100bn to $150bn.

'Most pressing economic priority'

Aides have said Bush does not believe the stimulus spending should be offset - or paid for - by any tax or spending changes elsewhere. Some deficit hawks want an offset but it is not expected to be part of any package.

Speaking for about seven minutes, Bush called passing a growth package "our most pressing economic priority." He said passing a growth package was the "most pressing economic priority" for the US But he also used his announcement to defend his tax cuts, which are set to expire unless the Democratic-led congress opts to extend them.

He acknowledged Americans' fears of an economic downturn.

"The economy's still creating jobs, though at a reduced pace," he said. "Consumer spending is still growing, but the housing market is declining. Business investment and exports are still rising, but the cost of imported oil has increased."

He said his advisers and many outside experts expect that the US economy will continue to grow over the coming year, but at a slower rate than the past few years.

"Continued instability in the housing and financial markets could cause additional harm to our overall economy and put our growth and job creation in jeopardy," he said.

He said markets rise and fall, and there are times when swift, temporary action by the government can help ensure that market fluctuations do not undermine the economy. "This is such a moment," he said.

- AP