(Agencies)
Updated: 2008-01-18 22:58

The president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010, officials said. That would eliminate a potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.

White House counselor Ed Gillespie said Friday on CNN the White House would still like to see the tax cuts made permanent, but the president believes a stimulus plan needs to be put into place within the next few weeks.

Bernanke voiced his support for a stimulus package in an appearance before the House Budget Committee. He stressed that it must be temporary and must be implemented quickly -- so that its economic effects could be felt as much as possible within the next 12 months.

"Putting money into the hands of households and firms that would spend it in the near term" is a priority, he said.

Especially important is making sure a plan can put cash into the hands of poor people and the middle class, who are most likely to spend it right away, he said, though he added that research shows affluent people also spend some of their rebates.

Bernanke declined to endorse any particular approach, but he did say he preferred one that would not have a long-term adverse impact on the government's budget deficit.

Senior aides to House Democrats and Republicans said in addition to included tax rebates for individuals, the emerging measure would contain tax breaks for businesses investing in new equipment, increases in food stamps, and higher unemployment benefits. They spoke on condition of anonymity, since the talks are ongoing and lawmakers have promised not to reveal details.

House Speaker Nancy Pelosi said she wanted legislation enacted within a month and said the government must "spend the money, invest the resources, give the tax relief in a way that again injects demand into the economy, puts it in the hands of those who need it most and into the middle class ... so that we can create jobs."

For now, Bernanke was hopeful the country could skirt a dangerous downturn.

"We're not forecasting recession but, rather, at this point, slow growth," he told lawmakers. Still, the toll of the housing and credit debacles will be felt into early next year, he added.

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