WASHINGTON (Reuters) - Treasury Secretary Henry Paulson on Wednesday
stood by his view that the economy will avoid recession this year and
grow at a slower pace, and that the Treasury will act quickly to
distribute tax rebate payments.
"The U.S. economy is diverse and resilient, and our long-term
fundamentals are healthy. I believe our economy will continue to grow,
although at a slower pace than we have seen in recent years," Paulson
said in prepared testimony to the U.S. House of Representatives Budget
Committee.
President George W. Bush on Wednesday is expected to sign into law a
$152 billion fiscal stimulus package that will provide tax rebates to
some 130 million Americans, with most about $600 for an individual and
$1,200 for a couple.
Paulson said the Internal Revenue Service would simultaneously
manage the spring tax filing season and preparations for issuing the
rebate payments starting in early May.
"Payments will be largely completed this summer, putting cash in the
hands of millions of Americans at a time when our economy is
experiencing slower growth," he said. "Together, the payments to
individuals and the incentives for businesses will help create more
than half a million jobs by the end of this year."
Paulson also called on Congress to aid the housing sector by passing
legislation that will modernize the Federal Housing Administration and
create a new, stronger regulator for Fannie Mae and Freddie Mac, the government-sponsored housing finance enterprises.
Under the stimulus plan, Fannie and Freddie will be temporarily
allowed to invest in larger mortgages, providing more resources for
refinancing troubled mortgages in costly coastal housing markets.
He also urged Congress to pass legislation that will allow states to
issue tax-exempt bonds for innovative mortgage refinancing programs.
Paulson also repeated that he would work to help markets reprice risk and work through their current stress.
"While we are in a difficult transition period as markets reassess
and reprice risk, I have great confidence in our markets. They have
recovered from similar stressful periods in the past, and they will
again," he said.
(Reporting by David Lawder, Editing by Chizu Nomiyama)
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