State of the Union
Keeping Our Economy Healthy
President Bush Lays Out Short- And Long-Term Measures To Keep Our Economy Growing And Creating Jobs
Tonight, President Bush will call on Congress to enact the pro-growth policies needed to ensure our economy continues to grow and create jobs. The U.S. economy has a solid foundation, but there are also areas of real concern. America has seen the longest uninterrupted period of job growth on record, but job creation has slowed. Consumer spending has been growing, but the cost of imported oil has increased. Business investment and exports are still rising, but the housing market is declining. These mixed indicators reinforce the need for a short-term economic boost and long-term policies that hold down taxes, open new markets for U.S. exports through trade agreements, increase energy production, and reform the mortgage markets.
President Bush Urges Congress To Quickly Pass The Growth Package Negotiated By The Administration And Bipartisan House Leadership
The bipartisan economic growth package would allow Americans to keep more of their money to stimulate consumer spending. The growth plan provides approximately $100 billion in temporary relief that will allow Americans to keep or spend more of their incomes. Under the agreement:
- A single parent with two children earning $38,000 would receive a check for $1,050 – a rebate of $450 and a child tax credit of $600.
- A married couple with two children earning $80,000 would receive a check for $1,800 – a rebate of $1,200 and a child tax credit of $600.
- An individual with no children earning $20,000 would receive a rebate check for $600.
The growth package would also offer incentives to spur business investment. The agreement would save businesses approximately $50 billion in near-term taxes through a temporary change to the tax code that will allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. This will encourage businesses to expand and create new jobs now, because buying equipment, software, and tangible property this year will dramatically lower their taxes. The agreement also increases expensing for small businesses.
The package agreed upon by the Administration and House leadership does not raise taxes or include unnecessary spending or regulatory provisions. The President appreciates the hard work of Treasury Secretary Henry Paulson, House Speaker Nancy Pelosi, and House Republican Leader John Boehner in working together on these temporary and effective measures to help our Nation deal with difficult economic challenges.
To Help Ensure Long-Term Economic Growth, The Tax Relief We Have Already Passed Must Be Made Permanent
President Bush believes the most important action to ensure the long-term health of our economy is to make sure the tax relief that is now in place is made permanent. The President's tax cuts are set to expire in less than three years. If Congress allows that to happen, we will see an end to many of the measures that have helped our economy grow – including the 10 percent individual income tax bracket, reductions in the marriage penalty, the expansion of the child tax credit, and reduced rates on regular income, capital gains, and dividends. This would mean that:
The Administration Has Taken Robust Steps To Help Struggling American Homeowners
In September, the President and his Administration launched a new initiative at the Federal Housing Administration (FHA) called FHASecure. FHASecure expands the FHA's ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. By the end of 2008, the FHA expects this program to help more than 300,000 families refinance their homes.
Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson have facilitated the private-sector HOPE NOW alliance. HOPE NOW is a cooperative effort among mortgage counselors, servicers, investors, and lenders to maximize outreach efforts to homeowners in distress and to help homeowners refinance into a new mortgage or receive a modification.
President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007, which will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act created a three-year window for homeowners to refinance their mortgage and pay no Federal taxes on any debt forgiveness they receive.
Last week, President Bush created the President's Advisory Council on Financial Literacy to help ensure the problems now disrupting the housing industry do not happen again. This Council includes representatives from the business sector, non-profits, and faith-based organizations. Chuck Schwab will serve as Chair and John Hope Bryant as Vice Chair.
Congress Has More Work To Do On Measures To Help Families Stay In Their Homes
The President has called on Congress since August to complete work on responsible legislation modernizing the Federal Housing Administration (FHA). This bill will give FHA the necessary flexibility to help hundreds of thousands of additional families qualify for prime-rate financing.
Congress needs to pass legislation permitting State and local housing agencies to help troubled borrowers by issuing tax-exempt bonds for refinancing existing home loans. Under current law, State and local housing agencies can issue tax-exempt bonds to finance new mortgages for first-time homebuyers, but States are unable to do the same for homeowners seeking to refinance.
Congress needs to pass legislation to reform the regulation of Government Sponsored Enterprises (GSEs) like Freddie Mac and Fannie Mae. GSEs provide liquidity to the mortgage market that benefits millions of homeowners, and it is vital that they operate safely and soundly. The President has called on Congress to pass legislation that strengthens independent regulation of the GSEs and ensures they focus on their important housing mission.
The President strongly believes that government assistance must be responsible – the wrong answer, such as a bailout for speculators and unscrupulous lenders, could actually prolong or worsen the problem.