U.S. President George W. Bush is calling for a temporary package of tax rebates and other measures worth about $145 billion US to stimulate the slumping U.S. economy.

U.S. President George W. Bush makes a statement on the economy in the Roosevelt Room of the White House on Friday.
(Ron Edmonds/Associated Press)

In remarks Friday morning, Bush said the growth package should include tax incentives to encourage business investment and one-time "direct and rapid" tax relief for individuals.

"Letting Americans keep more of their money should increase consumer spending, and lift our economy at a time when people otherwise might spend less," he said.

The Bush announcement was short on specifics. But reports said the White House was pushing for $800 US tax rebates for individuals and $1,600 US for households.

Bush said the stimulus package should amount to one per cent of U.S. GDP — a level of help that many economists say would have a chance of helping the struggling economy. 

"My advisers and many outside experts expect that our economy will continue to grow over the coming year, but at a slower rate than we have enjoyed for the past few years," Bush said. "And there is a risk of a downturn."

Bush said he hopes Congress sends him legislation quickly, saying the passage of a new growth package "is our most pressing economic priority."

Bush said U.S. Treasury Secretary Henry Paulson would lead efforts to reach an agreement with Congress "so that we can deliver this needed boost to our economy as quickly as possible."

Later in the day, the U.S. president visited a factory not far from Washington. "While there's some uncertainty right now, if we act quickly and in a smart way, that helps growth," he told workers.

"We're gonna be just fine." 

Markets not reassured 

The markets, which have taken a big tumble this week, did not appear reassured Friday that the stimulus package would be enough to make a big difference.

The Dow Jones industrial average, which had been up more than 100 points early in the morning, ended the day with another loss — down 60 points to settle at 12,099.  

The American economy is suffering from a collapse in its housing market, a severe credit crunch, rising unemployment and weak retail sales. Several U.S. investment banks have said the U.S. economy will head into recession this year or may already be in one.