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Deal closer on US economic plan Deal reached on US economic plan
(about 8 hours later)
The US government and Congress are close to agreeing a fast-track plan to boost the economy. The White House and Democrats in Congress have reached a deal on an economic stimulus package that will offer tax rebates to boost growth.
Democratic and Republican leaders in the House of Representatives and Treasury Secretary Henry Paulson had lengthy talks on Wednesday. Although no exact details have yet been announced, White House press secretary Dana Perino confirmed that a bipartisan agreement had been reached.
They might announce a $150bn (£75bn) package of tax rebates and other incentives as early as Thursday. The package could total $150bn (£76m), with rebates of up $600 for individuals and more for those with children.
Reports said the measures would by-pass steps in the approval process and go straight to a congressional vote. Washington is moving fast to try to avoid the US falling into a recession.
Tax rebates Both parties have agreed to move much faster than normal to put forward plans for an economic stimulus, in light of the rapidly growing difficulties in the US economy.
And they plan to speed its passage through Congress, by-passing the normal committees.
Property slump
The agreement comes two days after the Federal Reserve slashed US interest rates to 4.5% from 5.25%, its biggest cut in 25 years.
Economists say the package needs to be put into action as soon as possible, before it is too late to help the economy.Economists say the package needs to be put into action as soon as possible, before it is too late to help the economy.
The plan is expected to include a $300 tax rebate for all those in paid employment. Families will get an additional $300 dollars for each child, with a cap at $1,200. House Republican leader John Boehner, House Speaker Nancy Pelosi and Treasury Secretary Henry Paulson met for more than five hours on Wednesday to forge the agreement.
Business will receive incentives to encourage investment and other tax breaks.
House Republican leader John Boehner, House Speaker Nancy Pelosi and Treasury Secretary Henry Paulson met for more than five hours on Wednesday.
'Budgetary hangover'
They are hoping the plan, combined with Tuesday's sharp cut in interest rates by the US Federal Reserve, will help stop the economy slipping into recession.They are hoping the plan, combined with Tuesday's sharp cut in interest rates by the US Federal Reserve, will help stop the economy slipping into recession.
The US has been hit by a slump in the property market and a credit crisis caused by banks investing in assets backed by sub-prime mortgages.The US has been hit by a slump in the property market and a credit crisis caused by banks investing in assets backed by sub-prime mortgages.
Some politicians are worried about the damage the plan will do to government finances.Some politicians are worried about the damage the plan will do to government finances.
It could potentially double last year's budget deficit of $163bn.It could potentially double last year's budget deficit of $163bn.
"I am concerned that in our rush to help, we talk ourselves into a quick, feel-good hit today that will leave us with a bigger budgetary hangover tomorrow," said Rep Paul Ryan of Wisconsin, senior Republican on the House Budget Committee."I am concerned that in our rush to help, we talk ourselves into a quick, feel-good hit today that will leave us with a bigger budgetary hangover tomorrow," said Rep Paul Ryan of Wisconsin, senior Republican on the House Budget Committee.